back to article Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

RBS, Natwest and Ulster Bank have today been hit with a £56m fine from regulators for their IT meltdowns in 2012. They received a £14m smack from the Bank of England's Prudential Regulation Authority and a £42m penalty from the FCA. The PRA said the IT incident could have threatened the safety of the banks and "in extremis" …

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Who benefits financially and materially*

And to whom are the fine millions/hundreds of millions paid.

*Or is it and IT all a virtual exercise and Great Game which is being played spectacularly badly and most revealedly.

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Re: Who benefits financially and materially*

Indeed. All the fines on banks for various naughty practices are presumably going to the government. In order to maintain profits for shareholders, banks will need to gouge a little more for their services. It seems to be a tax.

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Re: Who benefits financially and materially*

Indeed. Fines should be taken from directors packages.

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Re: Who benefits financially and materially*

If memory serves the fine will be paid to the Lord Chancellor's Office (the government), probably out of the bank's reserves, so the banks owners (the government) will pay, albeit indirectly.

It may seem a little silly for the government to fine the government but the point of the exercise is to give the impression that someone got a bollocking.

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I hope I'm not...

the only person that thought it amusing that the Financial Conduct Authority shares an acronym with the Ferengi Commerce Authority, considering the banking sectors very Ferengi ways in their pursuit of profit. Sadly, when watching the new this morning, the FCA spokesperson wasn't called Liquidator Brunt.

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Pint

Re: I hope I'm not...

Nick,

Funny that, in a previous role at a FSA regulated business we explained the acronym as F*cking Stupid Assholes.

Such was their level of awareness of what happens in the real world.

Or am I being a little unfair?

J

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Re: I hope I'm not...

Unkind...not unfair.

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Trollface

Re: I hope I'm not...

ACTING grand Negus Brunt!

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The PRA & FCA have both fined the banks for the same cock-up.

As much as I want to hate the merchant bankers, but isn't this a case of Double Jeopardy?

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Upvoted because that struck me as odd too, likewise not defending the bankers, but curious why 4 downvotes with no explanation from any of them as to what's wrong with your post or sentiment.

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Well it was such a massive and monumentally stupid and unnecessary cock-up that a little double jeopardy is getting a way lightly.

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The cause of the IT incident...

"The cause of the IT incident was the failure of the banks to have the proper controls in place to identify and manage exposure to the IT risks within their business" - The Regulator

I thought that the cause was the bank outsourcing their IT operations to people that had never seen a mainframe before.

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Anonymous Coward

Re: The cause of the IT incident...

The fine was for failing to fully recognise the risk of the fucking stupid idea to outsource services and get rid of 7,500 man years of site knowledge.

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Anonymous Coward

Re: The cause of the IT incident...

The people involved were all Scottish, the upgrade and recovery management (which is where the bad decisions were made, an almost unilateral decision I made add) were completely UK based.

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Gimp

Re: The cause of the IT incident...

"an almost unilateral decision I made"

No wonder you posted AC!!

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Ulster Bank fine

It might be worth mentioning that the fine levied on Ulster Bank was the maximum possible. The accompanying judgement was spectacularly forthright in it's condemnation of both Ulster Bank's and its parent's incompetence and mismanagement.

More of this sort of thing, please.

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Re: Ulster Bank fine

"More of this sort of thing, please."

Why? RBS have been repeatedly fined for dishonesty and incompetence, often many billions of quid, and they just keep on doing it. Their approach to regulatory fines is much like the behaviour of advertisers in response to an ASA slobbering - they do stop what they were doing, but they just move onto something new.

RBS is institutionally rotten. A start would be to separate out the investment banking, prop trading and other City gambling operations, and let the twerps involved crash and burn next time they get caught out. Even so the retail bank clearly has more than enough rotteness to deal with even after that separation, and I think a start on that would involve demerger into smaller businesses with their own systems. Maybe wait until they need another bail out, fully nationalise them, then demerge into a number of building societies with full retail banking licences and their own IT. Doesn't solve all the problems by a long way, but goes a long way towards it.

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Re: Ulster Bank fine

If they're both (parent and child) that incompetent, why weren't they forced out of offering financial services? And their senior managers and directors blacklisted from ever again holding any position of responsiblity for, or in respect of, financial IT?

Until the sociopaths who run all large corporations are identified by name and permanently blacklisted, we're going to see this kind of malfeasance over and over and over again.

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Re: Ulster Bank fine

"If they're both (parent and child) that incompetent, why weren't they forced out of offering financial services? "

RBS are the biggest bank in Europe, and are protected by two talismen: their vast lobbying influence, and their "too big to fail" status. And who would benefit? The behaviour of other banks is almost as reprehensible - they all got fined over PPI, for example, even the "ethical" Co-op bank had to put aside hundreds of millions of pounds for this.

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They should...

...use the same system that the Bank of England uses for clearing purposes.

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Egotist?

It was never going to be the same after I (or any other egotist like me) left NatWest IT. In fact, thinking about it, a small part of that fine would have kept me there:)

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Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

...again...

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Boffin

Re: Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

No: the financial system did not fail in 2008: it was bailed out. The difference is that if a bank runs into financial trouble you can fix the problem by throwing money at it, while if a bank runs into computer trouble you can't fix the problem by throwing computers at it.

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Re: Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

I had the same thought, then realised I was thinking of this 'again' http://www.theregister.co.uk/2013/12/05/rbs_meltdown/ - maybe 2014 will be the year they finally crack it.

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Re: Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

Just in case y'all missed the earlier heist/fraud/con/abiding vulnerability to ruthlessly continue to exploit ........ http://forums.theregister.co.uk/forum/1/2014/11/19/bank_cyber_attack_warning/#c_2364357

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Big Brother

Re: Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

might as well throw computers at it for all the good fining the company and not the board is likely to do

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Fingers Crossed

Natwest have a message on their site, when you log in, saying they're carrying out maintenance this coming weekend.

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Re: Fingers Crossed

"Natwest have a message on their site, when you log in, saying they're carrying out maintenance this coming weekend."

Maybe their web developers have finally learned a sorting algorithm, so that when I use their Bankline system, I can opt to have transactions sorted chronologically forwards by date, instead of backwards, and they're going to implement that.

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Re: Fingers Crossed

My bank sorts transactions forwards for recent items, and backwards for older ones.

WTF?

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Anonymous Coward

Tiny compared to the savings

Having spent a few months in that IT shop and seen it with the drains up following the 2012 event, I came to a firm decision never to have any of my accounts or investments with any of the institutions in that group of companies. At least not until it is seriously fixed.

There have been various other bollock-dropping incidents since the big one (e.g. card payments and online services going offline), all recovered through the extraordinary efforts and special, only-in-the-head knowledge of some grizzled old timers. One day it will happen again and all the fix-it heroes may have retired. Then what ? This is why its a race against time for them to replace the whole lot but of course that will be extremely expensive and painful....do they have the guts to do it, or will they cut off the budget ?

It would be worrying if they were going to simply re-create this gem of a system as part of splitting off branches into new banks, wouldn't it ?

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Re: Tiny compared to the savings

Is it better or worse than the other banks?

From the outside, Nationwide seems like the place to have your money. But I want a backup account somewhere else.

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Boffin

Re: Tiny compared to the savings

They are all as bad as each other. RBS was unlucky, but similar events will happen to other banks. A big bank IT problem will, in due course, cause a cascade failure of the banks.

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Re: Tiny compared to the savings

Not unlucky - incompetent

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Does anybody know..

What actually happened? None of the news stories carry any detail.. Any AC's want to provide a few details? We all know all these high tech jobs we're supposed to have in the UK, US et al went to india - but more specifically what the cock-up was?

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Re: Does anybody know..

Something along these lines: not long after operations were outsourced to India a DB2 database upgrade on a mainframe failed and the backup copy was corrupted/overwritten/deleted so several million financial transactions had to be dealt with manually, which is why it took several days of round the clock processing to catch up.

Meanwhile, back in blighty the UK management hear about it and demand the UK support team fix it as they have all the experience and know-how. Response is that sorry, as you requested we let the last of them go a couple of weeks ago...

I guess that with a £56m fine and another £70m paid out as compensation the choice to outsource a perfectly competent team of IT professionals was another great money saving idea.

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Anonymous Coward

Re: Does anybody know..

I thought the serious money at the time was on someone in an off-shore paradise kicked over the scheduling software by doing an upgrade/update, but screwed it up and then realized that there wasn't a backup?

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Anonymous Coward

Re: Does anybody know..

Nothing to do with DB2. An operator based off-shore accidentally deleted the schedule which had been prepared for that evening's batch run, whilst performing an upgrade to the CA7 scheduler software. This meant all end of day processing was stopped. I'm not sure how it cascaded from there. They were insistent that "no data was lost", and I guess that's why there were frantic managers standing over ageing techies demanding that they find the most important transactions amongst the VSAM files. The data was all there... if you knew how to find it. Helpful Banking.

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Time to put up...

Never mind that, the boss's of Icelandic Bank are now serving terms for the fiddling they did...When are we going to see anyone over here in clink?

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Coat

Re: Time to put up...

It's not possible: all the potential scape goats reside in India.

Not the coat, the parachute. Yeah, the golden one. Thanks!

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Anonymous Coward

If you sack the experienced IT...

...and outsource to offshore morons then this is what you get.

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Anonymous Coward

The people in charge then have all left...

...the survivors to pick up the pieces.

Fred Goodwin

Ron Teerlink

Mike Errington

were the gents in charge of the systems at that time and could be asked to explain the outsourcing decisions and process. Has the FCA been to have a cosy chat with them do you think?

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FAIL

Outsource to save money.........

HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA!

IDIOTS!

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