Ulster Bank Slapped With Record Irish Fine Over Failure

Royal Bank of Scotland Group Plc’s Irish unit was fined 3.5 million euros ($4.4 million) by local regulators for an information-technology failure in 2012 that left thousands of customers unable to access their accounts.

The fine, the maximum possible and highest penalty imposed by the Dublin-based Irish central bank, comes on top of the 59 million euros Ulster Bank Ireland Ltd. has paid customers in redress, the regulator said in a statement. The failure left 600,000 bank customers “deprived of essential and basic banking services” over 28 days in June and July 2012, it said.

“The IT failure caused significant and unacceptable inconvenience to affected customers,” Derville Rowland, the central bank’s director of enforcement, said in the statement. The fine “reflects the seriousness with which the central bank views the failings of the firm.”

The incident formed a broader technology crash at Edinburgh-based RBS in 2012, for which it made a 175 million-pound ($278 million) provision to reimburse affected customers. The U.K.’s Financial Conduct Authority and Prudential Regulation Authority market regulators last year also opened an investigation into the matter.

Governance Lapses

The Irish central bank said Ulster Bank showed a lack of “adequate governance arrangements to ensure appropriate oversight of the IT services” provided by its parent, RBS. The unit accepted the Irish watchdog’s findings and the matter is now closed, according to the statement. Ulster Bank said it has taken steps to improve its systems.

“The inconvenience that was caused to our customers went to the heart of the trust they have in us as a bank and we are quite clear that they should never have to experience anything like this ever again,” Ulster Bank Chief Executive Officer Jim Brown said in the statement.

RBS said last month it set aside 780 million pounds in the third-quarter for litigation and conduct costs, with the largest part earmarked for a currency rigging probe and compensating customers mis-sold loan insurance. Some of the provision will be used to settle the FCA’s investigation into software failures, CEO Ross McEwan told reporters at the time without giving details.

A spokesman for RBS in London declined to comment on the Ulster fine.

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