Stephen Hester, the chief executive of the Royal Bank of Scotland (RBS), is facing questions about this year’s bonuses for senior executives after a serious computer problem that was triggered by a failed software upgrade.
Millions of customers of RBS, NatWest and Ulster Bank have been prevented from paying bills or moving money for almost a week, following a routine software update that went wrong. The banking group’s systems are now working normally but it is expected to take several more days for the backlog of transactions to be cleared.
At the start of this year Hester turned down a share award worth more than GBP1m but he could still be awarded a share bonus of over GBP2m this year and is also eligible for longer term performance-related awards totalling GBP7.9m.
Liberal Democrat peer Lord Oakeshott told Sky News that Hester and his colleagues should not be eligible for a bonus “after this fiasco”.
Asked about the matter on Monday, the chief executive said that the management will face “proper accountability” for the crisis and acknowledged that the bonuses of senior RBS executives are likely to be reduced because of the incident. He added, however, that he had “no patience” for anyone in the group currently thinking about bonuses because right now the focus is on fixing the problem and helping customers.
Questions are also being raised about what caused the malfunction, with some critics pointing to the outsourcing of IT jobs to India, but an RBS Group spokesman has said that the computer glitch happened in the UK and had nothing to do with outsourcing.
Nevertheless, trade union Unite said that it had “grave concerns” that 30,000 job cuts at RBS and the outsourcing of certain functions means that staffing challenges are exacerbating the problems facing the bank.
A week after the start of the IT problems, the Financial Ombudsman Service has warned that it could take weeks for all the knock-on effects to be sorted out.
