Bank of England Governor Mervyn King said the U.K. Financial Services Authority should investigate the computer failure at Royal Bank of Scotland Group Plc that left some of the lender’s 17 million customers unable to withdraw cash during the past week.
“One of the big lessons from this is how important the basic functions of banking are,” King told lawmakers in a U.K. parliamentary hearing in London today. “Once the current difficulties are over, we will need the FSA to go in and carry out a very detailed investigation and find out, first of all, what went wrong and then perhaps even more importantly, why it took so long to recover.”
Britain’s biggest government-owned bank said the glitch may drag into next week and is extending hours at more than 1,200 branches in the U.K. and Ireland this week following what it said was a “systems outage” that started on June 19. The ability of some of the bank’s customers to make cash withdrawals, money transfers and payments was curtailed by the breakdown.
“My office was in touch with the very senior RBS management right through the weekend,” the governor said. “It’s still going to take time for it catch up, to get back to normal.”
RBS said today most transactions have been cleared for its NatWest and RBS customers. Ulster Bank clients continue to experience “unacceptable delays” and may have to wait until next week for their service to fully resume.
RBS was down 2.7 percent to 230.4 pence at 11:28 a.m. in London, the biggest faller of Britain’s five largest banks.
“This is an issue that has had a significant impact for large numbers of people and businesses,” Joseph Eyre, FSA spokesman said in a telephone interview today. “We will expect RBS-NatWest to provide us with a complete account of the issues once this is fully resolved and to take any necessary steps to ensure that the risks of these problems occurring again are addressed.”
The glitch may cost the lender “hundreds of millions of pounds,” Gary Greenwood, a banking analyst at Shore Capital (SGR), estimated yesterday. Canceling fees and paying employees for working extra hours may cost tens of millions of pounds, while compensation claims could push the total into the hundreds of millions, Greenwood said.