By Patrick Corby
The Royal Bank of Scotland (RBS) on Thursday experienced hardware failures that left its customers with no way to withdraw cash from its ATMs, use their bank cards or access their online banking accounts.
The RBS Group collectively serves 17.5m individuals in banking transactions, none of whom could access their deposits on Wednesday night between 2100 GMT and 2300 GMT.
Many were left in restaurants or at supermarkets without any statement from the bank, the news reported on Twitter before the bank could respond.
Last week RBS announced it had pre-tax losses in 2012 of £5.17 Billion that included charges brought against RBS for its role in two major financial scandals: the manipulation of the interest rate set up between banks (LIBOR) and it’s miss-selling of interest rate swaps (IRS) to unsophisticated clients.
If that wasn’t enough for the publicly owned company, this latest episode represents the second time in nine months that RBS has experienced mass IT failure.
Last June the problem cost RBS £175m with Executive Stephen Hester, who is in his last year of restoring the bank to good health, waiving his bonus towards the sum.
“It was much easier to fix, though clearly an unacceptable failure,” read a statement by RBS after the glitch had been fixed. The statement went on: “we apologise for the disruption our customers experienced last night. All systems are up and running as normal, though any customers with any individual problems should get in touch with us”.
This year the Chancellor, George Osborne, announced plans to privatise RBS again by 2014 to recover some of the £45bn the public spent on buying 81% of RBS in 2008.
But this week the governor of the Bank of England, Mervyn King, released a statement suggesting the break-up of RBS In order to raise more capital by being sold as smaller manageable entities.
King said: “We should simply accept the reality today that [RBS] is probably worth less than we thought and we should find a way to get the bank out in a way that can be useful to the UK economy.”
The Co-operative bank and Triodos last year saw significant increases in their applications from those RBS customers affected last year.
On Thursday, shares in RBS at midday fell 1.1% against the backdrop of a 0.2% fall across European banks.
I also write for The Upcoming, which you can read here.