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Spain's Sabadell third-quarter net profit down 37.4 percent on charges due to TSB costs

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By Reuters

MADRID (Reuters) – Spain’s Banco Sabadell <SABE.MC> on Friday announced a 37.4 percent decline in third-quarter net profit to 127.2 million euros (113 million pounds) after extraordinary costs of 88 million euros related to an IT outage at its British unit TSB.

Analysts had expected a net profit of 123 million euros.

A botched migration of TSB computer systems in April locked thousands of users out of their accounts and caused a surge in attacks by fraudsters, prompting a regulatory investigation and criticism of its chief executive.

These costs come on top of an extraordinary charge of 203 million euros for the outage for the second quarter when TSB experienced a net loss of 16,641 current account customers in the second quarter of this year, data from Britain’s payments authority Pay.UK showed on Wednesday.

The extraordinary costs related to the TSB outage included an increase in interest rates on its premium account, impacted commissions and fraud losses, the bank said.

The bank’s handling of the crisis has tarnished its reputation just as it tried to win more market share in Britain and offset a squeeze in margins in its Spanish home market as a result of ultra low interest rates in the euro zone.

In September, the bank’s chief executive Paul Pester resigned after the botched IT project left thousands of the bank’s customers struggling to access their accounts or make payments.

(Reporting By Jesús Aguado; editing by Sonya Dowsett and David Evans)