TSB’s “upgrade” of its IT system has been a shambles that the bank has yet to explain fully, so it was fitting that the inevitable exit of its chief executive, Paul Pester, carried a farcical note. The chairman, Richard Meddings, addressed Nicky Morgan as “dear Morgan” in his letter to the chair of the Treasury select committee and dated his dispatch with the wrong year. They’re struggling with the basics at TSB these days.
The explanation of the timing of Pester’s departure was an exercise in obfuscation. No, he hadn’t been fired, said Meddings. The decision was by “mutual agreement”, the standard cop-out phrase for boards. Nor was he the fall guy for failings created in Spain at the parent bank Sabadell. And apparently it is entirely coincidental that Pester is going a day after TSB was obliged to apologise yet again to customers for computer glitches, despite simultaneously claiming services were “much improved” since April.
We’ll have to await the regulators’ reports before knowing how technical blame should be apportioned between Sabadell and TSB for this fiasco. Spanish kit was being adopted but Pester was the executive with direct UK regulatory responsibility for managing the process. Yet nobody needs a lengthy official inquiry to know that Pester’s handling of the fallout – the aspect that was unequivocally his job – made a bad position worse.
At the outset he played down the scale of the crisis and claimed the “underlying engine” was working just fine, a boast that sounds ridiculous now that the bill for the owners has reached £176m and customers are still suffering problems. In his first appearance in front of the Treasury committee, Pester seemed determined to annoy as many MPs as possible as he constantly returned to his pet refrain of being passionate about challenging the big banks. He had to be reminded that if he really wanted to challenge, he should start by running a reliable operation.
By the time of Pester’s second outing, the head of the Financial Conduct Authority had rebuked TSB for its failure to be open and transparent with customers. Pester’s credibility was broken at that point, which was perhaps what Meddings was struggling to admit in his ramblings about the identity of the chief executive being “a distraction”. Pester had to go.
The minor miracle is that surprisingly few customers have switched their accounts. That suggests the TSB brand itself may not be permanently damaged and that recovery is possible under new management. But it will require TSB to start speaking plainly and display some everyday competence. There are no signs yet.
