TSB to pay former boss £800,000 this year despite IT meltdown bonus ban

TSB’s former boss could be paid £800,000 this year after resigning in the wake of the bank’s IT meltdown, while other bankers miss out on last year’s bonuses.

Paul Pester, who stepped down in September, will receive the previously agreed notice payments in monthly installments, the bank’s annual accounts showed today.

Read more: TSB swings to £105m loss after IT crisis

In its full year results, TSB reported heavy losses of £105.4m following the IT chaos which prevented up to 1.9m from accessing their bank accounts for a number of weeks last year.

Around 80,000 customers left the bank over the course of last year, it said.

The bank pledged to emerge stronger after its “most challenging year” despite the threat of potential regulatory fines on the horizon.

TSB said the move away from its IT system, including customer compensation and fraud losses, cost the challenger bank £330m.

Bank staff – excluding executives – were rewarded for their efforts in dealing with the crisis, each receiving £1,500 in December.

But TSB decided that no other bonuses would be paid in 2018.

Executive chairman Richard Meddings said: “If our performance is not good enough, we take the consequences together.

“Paying bonuses was simply not the right thing to do.”

The annual accounts also noted that Meddings will receive no addition pay for taking charge on an interim basis, despite being thrown into the firing line after Pester’s departure.

But the bank’s bosses confirmed Pester would scoop the £800,000 notice pay in 2019.

TSB clarified that if Pester gets another job after 5 March, the bank would reduce his bonus payments by the amount of his new salary.

Pester agreed to waive his bonus payments of £2m during the crisis in May but still pocketed a £1.2m severance payment – £400,000 of which was paid at the end of 2018.

Further bonuses on top of that are are subject to the outcome of regulatory investigations.

Former CYBG chief operating officer Debbie Crosbie will take over as chief executive in the spring.

Read more: TSB backs Met with £200,000 fraud-fighting budget

The bank said it was set to recover £153m from its IT provider Sabis.

Meddings said that following the debacle, TSB was ready to compete again this year.

He said: “Last year was TSB’s most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK – firmly on the side of the customer.”