RBS shares fall as crisis may cost hundreds of millions

Stephen Hester
Stephen Hester
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ROYAL Bank of Scotland shares continued to fall today as analysts warned the ongoing computer crisis could cost it hundreds of millions of pounds.

As many as 13 million customers of RBS, NatWest and Ulster Bank have been unable to access their accounts as a result of the technical glitch which hit the bank last week.

Stories have emerged of house sales falling through because cash has not been transferred, people stranded without accommodation because they have run out of money and even one man who had to spend an extra night in jail because his bail could not be paid.

As the crisis entered its seventh day, RBS shares continued to fall this morning, down 2.63 per cent to 236.80p.

Branches are expected to open from 8am to 6pm all week as staff work extra hours to clear the backlog.

Chief executive Stephen Hester has apologised for the chaos. He said: “We’re well on the road to recovery. Fingers crossed all the bugs have been got out.”

However, he faced calls to forfeit his bonus and resign over the meltdown.

Liberal Democrat peer Lord Oakeshott said the computer problem was the latest in “a series of disasters” to hit RBS. He said there was “no question” of Mr Hester being able to take a bonus and added: “There is a serious question whether he should still be in his job.”

Asked if he had considered his position following the debacle, Mr Hester said: “The most important thing that I or anyone at RBS can do is to put this right. There’s plenty of time afterwards to say why did it happen, how do we stop it happening, what’s the accountability.”

The chief executive, who earlier this year waived his near-£1 million 2011 bonus, was asked if he thought the saga would affect 2012’s pay rewards.

He said: “All of us are judged in part by customer service, from me downwards, and we should be, but today this is about helping our customers through this.”

He added: “There will be proper accountability.”

The computer software problem started on Tuesday night and reportedly arose following an attempt to install a software update on RBS’s payment processing system, which was then corrupted.

The bank has said this issue has now been fixed.

Gary Greenwood, analyst at Shore Capital, said the saga could cost RBS hundreds of millions of pounds.

He said: “The extra cost of branch openings and fee waivers is likely to cost the company tens of millions of pounds, although compensation costs for customers could push the total cost into the low hundreds of millions of pounds.”

The bank has promised that any overdraft fees or charges on current accounts incurred by customers will be waived or refunded and has said it will work directly with credit agencies to ensure no-one’s credit score is affected.