Barclays Bank will move 10,800 jobs to India following a giant merger announced Monday with ABN Amro, part of an effort to generate billions of euros in annual savings.

The bank announced yesterday it planned to buy Dutch bank ABN Amro for about €67 billion (£45.4bn), creating a European banking giant with more than 47 million customers, including 1.4 million businesses.

The banks hope to boost their profits by slashing annual costs by an estimated €2.bn, or 10%, by 2010, mostly through job reductions, outsourcing and IT savings, they said.

More than half the savings, or 57%, will come from combining some of the banks' service operations and moving them to India and other low-cost locations, Barclays said.

That will mean a net reduction of 12,800 jobs, and 10,800 positions moved elsewhere, from a combined workforce of 217,000. The cuts will be made over three years through redundancies and attrition, Barclays said. It acknowledged the "difficult consequences" for affected workers and said it will need to negotiate the layoffs with local unions and regulators.

Savings from telecoms and IT will amount to about 29% of the total, or €812 million, including hardware, software and development, the banks said. They plan to consolidate their data centres and IT support networks and use ABN Amro's trade and payments back office system.

Both companies use financial software from SAP, according to SAP's website, which could make the integration process less complicated.

The companies will have to spend first in order to achieve the savings: They expect pre-tax integration costs of €3.6bn between now and 2010 to achieve the "synergy benefits" of the deal, they said.

It's the latest of several outsourcing projects by European banks. ABN Amro had already announced in 2005 that it would cut 1,500 jobs and outsource its IT operations through deals worth €1.8 billion over five years. Most of the business went to IBM, with smaller deals for Accenture and the Indian companies Infosys, Tata Consultancy Services and Patni Computer Systems.

As part of the deal, ABN Amro will sell its Chicago-based LaSalle Bank to Bank or America for $21bn (£10.5bn), the companies said. The combined company will be called Barclays and have headquarters in Amsterdam. The deal must be approved by ABN Amro shareholders and is expected to close in the fourth quarter, the companies said.