TSB and parent Sabadell heavily criticised for IT crash that locked 2 million out of accounts

* Inadequate testing of data centres to blame for crisis -report

* Board failed to fully understand scope of project -report

* Former CEO blames IT arm of Spanish parent Sabadell

By Lawrence White and Iain Withers

LONDON, Nov 19 (Reuters) - An IT crash at Britain's TSB bank that locked out nearly 2 million customers and halved parent Sabadell's profits last year was caused by moving to a new banking platform before it had been properly tested, an investigation has found.

The report by law firm Slaughter & May found TSB's board failed "to fully understand the scope and complexity" of the new system prior to its failure, which forced out the then CEO Paul Pester after heavy criticism from customers and politicians.

The report also found Spanish bank Sabadell's IT arm Sabis had not been ready to operate the new platform and had failed to test one of two data centres it relied on prior to the launch.

A spokesman for Sabadell said it has fully supported TSB through the process.

TSB, which was bought by Sabadell in 2015, had to hire more than 2,100 staff last year after the botched migration of customer data to the new IT system run by its parent.

The failure led to weeks of customers being unable to access their money and a surge in fraud attacks.

The IT crash has cast a long shadow over the bank, as it tries to move on under new chief executive Debbie Crosbie, who is set to outline her strategy for the bank next week.

However, the bank has faced criticism for the long delay to publishing the Slaughter & May report it commissioned, and now faces a probe into the failures by Britain's financial regulators who have the power to levy an unlimited fine on TSB.

BLAME GAME

Pester - who gave up bonuses worth 2 million pounds ($2.59 million) - left in September last year after criticism from lawmakers over his handling of the crisis.

In a statement on Tuesday Pester criticised Slaughter & May's "scattergun approach" to its investigation and attempted to shift blame to Sabadell's IT arm Sabis for the failures.

"If these findings are right, Sabis rolled the dice by running tests on only one of TSB’s two new data centres and this decision was kept from me and the rest of the TSB board," he said.

TSB Chairman Richard Meddings told reporters ahead of the report's publication that the bank disagreed with the law firm's conclusions as to where overall blame should lie.

Slaughter and May in the report said that while TSB has sought to promote a narrow interpretation that technical issues were to blame, it identified wider problems in the board's decision=making process and communications with Sabadell. ($1 = 0.7721 pounds) (Reporting by Lawrence White and Iain Withers; Editing by Susan Fenton)