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TSB systems could be on the move again as BBVA eyes its parent
TSB was migrated to the systems of Sabadell in a project remembered for its monumental IT meltdown in 2018
Financial services company BBVA has received approval from the UK regulator for a takeover of Spanish rival Sabadell, which would see it take control of the UK’s TSB Bank and pose interesting questions over its future IT strategy.
TSB customers were migrated from the systems of Lloyds Bank, which hosted them, to a UK-specific version of Sabadell’s existing core banking system, Proteo.
In 2018, the move to Proteo4UK, as the UK system is known, experienced major problems. Over a five-day period, users were locked out, experienced money disappearing, and some were even able to see other customers’ accounts.
The UK regulator fined TSB nearly £50m for its failures, and paid £32.7m in redress to customers who suffered detriment. Its then CEO, Paul Pester, fell on his sword, leaving the company soon after the disaster. The UK Prudential Regulation Authority also fined the former chief information officer of TSB Bank, Carlos Abarca, £81,620 for his part in the catastrophic migration.
Proteo was seen as being vital to the success of its acquisition of TSB, which at the time used systems from Lloyds Banking Group, increasing costs and limiting its ability to innovate. It planned that once the £1.7bn takeover was complete, it would cut costs by £160m annually, the company said. The agreement includes Lloyds Banking Group providing £450m towards IT integration costs.
Spain’s BBVA has its own ambitious IT strategy, and where Proteo would fit will be a key early decision.
One IT professional in the UK banking sector said BBVA expects to take things “very slowly”. “It is very complicated, and it [BBVA] will need to look at all the systems in both the firms and decide which to keep and which to use,” he said. “It’s complicated and they won’t want a repeat of the 2018 TSB migration disaster.”
Read more about TSB’s core banking system migration failure
- TSB’s very public IT problems will send shivers down the spine of IT teams at large banks that are yet to migrate to new core banking system.
- TSB failed to properly assess and manage the internal service provider that lead its botched IT migration.
- A report released by Treasury Committee criticises lack of rigour in preparation for core banking system migration, but TSB says report’s content is out of date.
In its proposal to Sabadell shareholders in May this year, BBVA said: “We are presenting to Banco Sabadell’s shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets. Together we will have a greater positive impact in the geographies where we operate, with an additional €5bn loan capacity per year in Spain.”
Last year, BBVA added a job portal as it continued to grow its tech teams across the globe, with an additional 2,600 technology experts sought in a 12-month period, with software developers and data engineers being the most in-demand, followed by security, infrastructure and architecture professionals. The plan was to adjust its workforce due to competitive pressure including the arrival of digital bank competition.
At the time, it said in a statement: “An adjustment plan is needed to ensure the competitiveness and the sustainability of employment in the future, given the current context of profound transformation in the sector, marked by a tremendous competitive pressure, low interest rates, the accelerated adoption of digital channels by customers and the entrance of new digital players.”
The acquisition will see BBVA enter the UK market.
BBVA said the UK regulator’s approval follows the green-light from authorities in the US, France, Portugal and Morocco.
