By Matt Scuffham
LONDON (Reuters) - British bank NatWest opened 1,200 of its branches on a Sunday for the first time in its history as it struggled to address massive disruption caused to millions of its customers by a computer systems failure earlier in the week.
The bank, owned by part-nationalized Royal Bank of Scotland
NatWest is battling to get on top of a huge backlog of failed payments after a software upgrade on Tuesday night went wrong, resulting in the bank being unable to process payments for its personal and business customers.
In a message to customers published on the bank's website, Chief Executive Stephen Hester apologized for the "enormous disruption and inconvenience for millions of our customers as well as for many customers of other banks."
"I am very sorry for the difficulties people are experiencing. Our customers rely on us day in and day out to get things right, and on this occasion we have let them down badly. This should not have happened." Hester said.
Although the software problem was fixed by Friday, NatWest has been unable to say how long it will take for all the outstanding customer issues to be rectified.
Hester said the bank's staff were "working around the clock" to resolve the problems and said affected customers would not lose out financially, raising the possibility that RBS could face hefty compensation claims.
"I want to be clear that where our customers are facing hardship or difficulty we can and will help them. I also want to reassure customers that no one will be left permanently out of pocket as a result of this and they should contact us directly about this," he said.
RBS, 82 percent owned by the government, is already facing a bill of over 1 billion pounds ($1.6 million) to compensate customers for the mis-selling of loan insurance.
The episode is a public relations disaster for NatWest, which could prompt customers to switch to other banks.
New entrants into Britain's retail banking sector, such as Metro Bank, Virgin Money and Aldermore, are looking to take disaffected customers from the biggest high street banks - RBS, Lloyds
Many Britons became disillusioned with the established banks following the financial crisis, angered by what they saw as excessive pay for executives and the stifling of credit while the country slid into a double-dip recession.
It is also a further embarrassment for Hester, who admitted in February he had considered resigning following a public outcry over a proposed 1 million pound bonus payment which he opted to waive after coming under pressure from politicians.
Labour finance spokeswoman Rachel Reeves called on the bank to "get a grip on this situation."
"It's causing real hardship at the moment, and to say 'we'll put it all right in the end' isn't really good enough," she told Sky News.
($1 = 0.6427 British pounds)
(Reporting by Matt Scuffham; Editing by Catherine Evans and Jane Merriman)
