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Halifax HBOS Banking Systems Crash, Online and ATM Services Down

Companies / UK Banking Nov 14, 2009 - 05:48 AM GMT

By: Nadeem_Walayat


Best Financial Markets Analysis ArticleThe Halifax (HBOS), Britians biggest mortgage bank that has been bailed out by tax payers saw its banking systems crash several hours ago with no resolution to the problems so far. It looks like the bulk of the banks systems have crashed which include online banking and ATM machine services though branches are reported to be operating normally. ATM's are also down for the other big tax payer bailed out bank, Royal Bank of Scotland (RBS).

Customers attempting to log on to their Halifax online accounts are being met with the following message -

BBC News has just reported that the bank is blaming the system crash on a power failure.

The bank said an external power disruption at an IT centre in Yorkshire caused problems to a range of Halifax and Bank of Scotland services.

Power has now been restored, and the company says it is working to get services back to normal.

A spokesman said: "We apologise to customers for the disruption and inconvenience this is causing."

HBOS was taken over by Lloyds TSB in a forced shotgun wedding in September 2008 to prevent nationalisation. Unfortunately for Lloyds TSB (its share holders) the management of Lloyds TSB failed to perform competent due diligence before the take over which subsequently proceeded to bankrupt Lloyds TSB which demanded urgent Tax payer capital injections as the level of reckless behaviour of Halifax started to appear onto the new joint groups balance sheet in February 2009.

At the time of the merger, I warned that Lloyds TSB may come to regret its decision.

18 Sep 2008 - Lloyds TSB Takeover of HBOS for £12 billion, £2.32 per share

Apparently LLoyds TSB is getting a bargain, as one of Britain's strongest and conservative banks takeover a basically bankrupt HBOS at bargain basement prices. However do Lloyds realise that the housing bear market is far from over ? Lloyds own profits will slump but what of the HBOS's exploding mortgage book? It's too early to tell, but Lloyds TSB may come to regret its decision to takeover HBOS.

HBOS has subsequently continued to eat into Lloyds TSB which had up until the takeover of HBOS been one of britians strongest banks as well as demanding more tax payer cash and liability cover.

05 Aug 2009 - Halifax, HBOS Cancer Continues to Eat into Lloyds TSB, £4Billion Loss

Today Britains biggest tax payer bailed out bankrupt mortgage bank HBOS, contributed towards Lloyds TSB bottom line loss of £4 billion. The HBOS bad mortgage debt losses continue to eat into Lloyds TSB's balance sheet to the tune of another £10 billion, that's £20 billion to date of HBOS bad debt provisions of which the UK tax payers have a 50% stake in and given more capital injections will soon rise to approx 70% of the group. So that there is no illusion A 70% GOVERNMENT STAKE MEANS DEFACTO NATIONALISATION

Also that the merger would result in loss of banking operations as the systems were merged and staff were cut which has been coming to pass.

22 Apr 2009 - Halifax HBOS Bank Deteriorating Banking Services, Low Savings Interest Rates

Following the UK tax payer funded bailout of HBOS by Lloyds TSB, as anticipated the quality of HBOS banking services continues to deteriorate for example of specific note are the introduced delays in the transfer of funds to bank accounts with other institutions, this appears to be an attempt to force customers to upgrade to the fee based accounts which do appear to offer a more competent transfer process in terms of time.

The Tax payer supported bank pays abysmal rates of interest on savings and credit balances whilst at the same time has embarked on a programme of squeezing as much money out of customers as possible as the recent changes to the banks fees structure illustrated that cut interest paid on banking accounts to zero whilst introducing rip off fees.

22 Oct 2009 - HBOS Halifax Taking Extra From Customers With Fee Structure Changes

The implications of this change is to hit those people that regularly go overdrawn for small amounts, where you can end up paying an extortionately high equivalent interest rate i.e. going overdrawn by £50 for 3 days a month would result in a fee of £36, against interest at 10% of less than £1.

Today's banking systems crash is not so surprising and represents just another step on the path towards the eventual disintegration of the bank as the government seeks to break up all of the tax payer bailed out banks that have been nationalised in all but name.

Source :

By Nadeem Walayat

Copyright © 2005-09 (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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14 Nov 09, 16:19


J A Morton
17 Nov 09, 11:47
HBoS banking systems failure

A spokeswoman said: "Due to external power disruption in Yorkshire, which has impacted one of our IT centres there, some Halifax and Bank of Scotland systems have been affected this morning.

"Power has now been restored to the centre via our back-up generators.

"We are currently in the process of getting services back to normal. “

The spokeswoman’s comment says little for HBOS’s business resilience if, as she implies, the entirety of its banking systems are reliant on the continuity of a single external power supply. The reality is that the Copley Data Centre, where the failure occurred, has a gigantic Energy Centre equipped with batteries and generators designed to ensure an uninterruptible power supply to all business systems in just such a contingency. In the event of catastrophic failure of the Copley Centre, a mirror site 20 miles away, connected by dual, independently-routed high-speed data lines, can instantly take over. The basic principle is to ensure all systems are fault-tolerant, fail-safe, and with no single point of failure, much the same as is employed in the design of large aircraft. This is just the responsible approach to be expected of a significant retail bank.

Why then did all this infrastructure, costing hundreds of millions, and subject to countless disaster recovery scenarios, apparently fail? It is asinine in the highest degree to imply, even if only for public consumption, that responsibility rests with an external electricity supplier.

The “process of getting services back to normal” will extend far beyond restoring availability of the banking systems. Branches spent much of a pre-Christmas Saturday manually recording transactions, which will retrospectively have to be input to the branch systems. According to Radio 4’s Moneybox, a £200 withdrawal limit was imposed, as branch staff could not check balances – they’re on the computer.

How long do you suppose it took for the fraudster community to cotton on to this – especially those with multiple stolen and/or cloned cards? If someone presents at the counter as Mr Joe or Mrs Jane Public, the staff can’t validate with a card swipe – that’s on the computer. They can’t ask security questions – they’re on the computer. They can’t validate his/her identity by requesting PIN entry – that’s on the computer. Hey, let’s present multiple cards at multiple branches at 200 quid a time – fantastic if you’re in London, with a high concentration of branches, and pretty damn good if you’re anywhere else.

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