IT meltdown to cost RBS £125m

The banking group has had to set aside £125m following tech problems in June that saw computer systems unable to refresh customers' bank balances

The Royal Bank of Scotland has put aside £125m ($195m) to cover costs and compensation following its June technology meltdown, according to the group's first half financial results.

The RBS IT problems affected NatWest, RBS, and Ulster Bank customers. A maintenance error caused a batch-processing glitch and as a result the bank could not update customers' balances, creating a huge backlog of work . RBS declined to say on Friday how many customers had been affected.

Computer problems at RBS in June will cost the banking group £125m, it has revealed. Image credit: RBS

"We fell down on the job in the IT incident," RBS chief executive Stephen Hester said on a conference call.

The £125m covered the reversal of charges, plus any additional costs, for example, if someone went overdrawn, an RBS spokeswoman told ZDNet on Friday.

"It's to pay back customers who were out of pocket," said the spokeswoman.

The IT incident is being investigated by the Financial Services Authority (FSA) , and the regulator has asked for a report from RBS.