(qlmbusinessnews.com via telegraph.co.uk – – Tue, 4th Sept 2018) London, Uk – –
TSB’s outgoing boss Paul Pester is still in line for payments and bonuses of nearly £1.7m, despite standing down today following criticism of his handling of a bungled IT switch earlier in the year that left thousands of customers unable to access their accounts for days.
Mr Pester, who was singled out for harshly worded criticism by MPs on the Treasury select committee, will leave with immediate effect.
He will get a £1.2m severance payment and a bonus of up to £480,000 that was determined prior to TSB's takeover by Spanish bank Sabadell in 2015. Other variable compensation will be frozen subject to investigations.
TSB said Mr Pester would be paid “in line with the bank’s remuneration policy and the terms of his contract”, with any bonus dependent on the “outcome of performance conditions as well as ongoing regulatory and independent investigations”.
The outgoing boss has already given up a bonus worth £2m that was directly related to the delivery of the IT project – a move Mr Meddings said was “wholly appropriate” earlier this year.
The news follows a second outage over the weekend that again left some customers struggling to use the bank’s online services.
Profile | Who is Paul Pester?
CREDIT: PA
Ex-TSB boss Paul Pester was once hailed as the “luckiest man in banking” after he narrowly avoided taking the top job at the Co-operative Bank, shortly before it found a black hole in its accounts.
But he’s probably not feeling so fortuitous now, after a bungled switchover of TSB's IT systems in April left some customers unable to access their accounts. The bank is now being investigated by the Financial Conduct Authority and is shelling out millions for compensation payouts. Pester has now stood down from the job after seven years.
A doctor of theoretical physics and regular triathlete, Pester spent his early working life in consulting before taking the reins at Virgin Money, at the time a provider of savings and investment plans, in 1999.
He has since worked at Santander and run the comparison site Moneyfacts, but it’s Lloyds Banking Group that has loomed over the most dramatic moments of his career.
Having previously run what was then Lloyds TSB’s consumer arm, Pester returned to his old employer in 2010, not long after it was nearly sunk by its decision to buy HBOS during the financial crisis.
There he was put in charge of Project Verde, Lloyd's plan to sell off 636 branches in order to comply with European state aid rules that kicked in after it was bailed out by the British government.
The plan had originally been to sell the branches to the Co-op Bank, with Pester becoming head of the combined group. But in February 2013 the mutual pulled out, forcing Lloyds to float TSB on the stock market instead.
Pester pitched it as an opportunity to build a bank without the scandalous baggage that has bogged down the industry’s big players, with a focus on “local banking” and transparency. He remained in charge when TSB was taken private by Spanish lender Sabadell in 2015.
In 2017 he said the switch from Lloyds’ IT systems would be a moment of “liberation” for TSB as it stepped out from the shadow of its former owner.
But now the keen surfer has found himself upended in choppy waters.
Richard Meddings, TSB’s chairman, will take on executive responsibilities until a successor is appointed.
Mr Meddings said: “Although there is more to do to achieve full stability for customers, the bank’s IT systems and services are much improved since the IT migration. Paul and the board have therefore agreed that this is the right time to appoint a new CEO for TSB.”
In June the Treasury committee said it had “lost confidence” in Mr Pester over his handling of the IT outage and called upon TSB’s board to consider his position.
He had led the bank since 2011 and oversaw its spin out from Lloyds Banking Group in 2013.
Despite the problems, Mr Pester insisted on Tuesday that the bank had “achieved real success in creating a bank which is truly consumer-focused, attracting customers from the UK’s established banks, and growing TSB’s balance sheet from c.£18bn to around £31bn today”.
TSB faces an investigation and possible fine over the outage from City watchdog the Financial Conduct Authority and has also hired law firm Slaughter & May for its own internal probe into what went wrong.
It is recruiting hundreds of additional staff to tackle a backlog of complaints, with more than 1,300 customers having become victims of fraud.
TSB said in its interim results earlier this year that the fiasco had cost it £176m in just over three months.
By Jack Torrance
