TSB boss Paul Pester will leave the bank with a payout of nearly £1.7 million despite standing down after a botched IT switch and ongoing technology failures.
Mr Pester, who has been placed on gardening leave, will get £1.2 million in severance pay and an extra bonus of £480,000 that is due from before TSB’s takeover by Sabadell in 2015.
All other performance-related pay has been frozen amid investigations into the recent IT failures.
Chairman RIchard Meddings insisted the decision for Mr Pester to leave was by “mutual agreement” and denied his departure was linked to the IT migration failure.
‘Marred by IT problems’
Mr Pester has held his position for seven years but has been marred by IT problems in April that left up to 1.9 million people using TSB’s digital and mobile banking locked out of their bank accounts.
TSB was forced to apologise again on Monday after many customers were left unable to access their accounts.
Mr Meddings will take on the role of executive chairman until a new chief executive is appointed.
Mr Meddings said: "Although there is more to do to achieve full stability for customers, the bank's IT systems and services are much improved since the IT migration.
"Paul and the board have therefore agreed that this is the right time to appoint a new chief executive for TSB."
Treasury Committee chairwoman Nicky Morgan welcomed news of his departure and said "it is right" that he should step down.
She said: "Since the IT problems at TSB began, Paul Pester set the tone for TSB's complacent and misleading public communications.
"The Treasury Committee, therefore, concluded that it lost confidence in Dr Pester's position as chief executive of TSB."