The Royal Bank of Scotland has said it is “ahead of plan” with the complex integration of ABN Amro, as it set annual savings targets of £1.6 billion by 2010, which IT will play a part in.
Chief executive Sir Fred Goodwin told investors the bank has been “scaling the global banking and markets systems” to enable the migration of ABN Amro business on its platforms. “The books and business are already folded in, there has been a lot of scaling up of IT systems,” he said.
The integration of ABN Amro was running “smoothly”, he said, as he announced the company has also begun a datacentre consolidation process to reduce costs and increase efficiency. RBS has integration targets that it reviews performance against each month.
Some £57 million of cost savings were delivered in the six months to 30 June following £316 million in expenditure on integration, Goodwin said, explaining that the merger of the two companies would deliver “meaningful efficiency gains” as the bank moves towards its £1.6 billion target. But the news comes as RBS posted a record £691 million loss in the period, following credit market write-downs of £5.9 billion.
Since the bank led a consortium that bought ABN Amro last year, there has been much discussion over what savings IT could deliver.
There has been speculation that the three-way split of the ABN Amro business by its new owners - Royal Bank of Scotland, Santander and Fortis - could simplify the IT integration task. Analysts said that each new owner would be able to make its own plans for the units it acquired, instead of trying to find a common system that fit with all four parties involved.
IT services strategies are another major area likely to come into question. ABN has a £640m desktop outsourcing deal with EDS to cover its wholesale clients, as well as a £1.2bn multi-supplier infrastructure and application development outsourcing deal with Accenture, IBM, Infosys, Tata Consultancy Services and Patni. RBS has its own cheque processing deal with EDS.Related stories: