The Royal Bank of Scotland, Santander and Fortis all look likely to be faced with key IT decisions about what to do with ABN Amro’s systems, after Barclays today fell out of the running for the Dutch bank following a long-running takeover battle.
Barclays' decision means the consortium, which RBS heads, should be able to announce victory next week in its bid for ABN.
But the complex nature of the RBS consortium’s bid will pose some difficult questions for the banks' IT departments.
Under the €71bn (£49bn) plan, RBS would take ownership of ABN’s wholesale and corporate banking, its Asian operations and certain European banking operations, while Fortis would own ABN’s Dutch retail banking, its global private clients and asset management businesses. This would leave Santander with ABN's current Latin American operations and Antonveneta in Italy.
Analysts have already suggested that RBS is likely to attempt to pare down ABN’s systems into a simpler structure.
Robert Morgan, former chief executive at sourcing advisory firm Morgan Chambers, said that if RBS succeeded it might aim for cost savings but not look for extra functionality in the short term: “RBS has a policy of the lowest common denominator when it comes to IT. This does not mean they use poor IT but that they prefer not to overspend, so long as the systems work properly.”
But RBS recently described itself as a major investor in IT, highlighting the role played by technology in helping drive profits.
Santander, meanwhile, has just set out plans for a global integration project to migrate the various payments systems it uses around the world onto a single IT infrastructure.
Another possible complication could emerge in the form of ABN’s £1.2bn multi-supplier outsourcing deal with Accenture, IBM, Infosys, Tata Consultancy Services and Patni, which it signed in 2005.
“There is no possibility for severance of ABN’s contract with IBM, EDS and the other suppliers. These vendors are tied up very closely with a huge responsibility for cutting costs, and there would be large penalties for cutting the contract,” said Morgan.
Chris Skinner, chief executive at financial services think-tank Balatro, suggested recently that a buyer of ABN would have to tread cautiously since there was “rarely an easy way to integrate IT systems after large financial services firms merge”.
“In general the acquirer tends to displace the systems and jobs of the acquired,” he added. “However, ABN is particularly strong in the field of Euro payments, and the acquirer might choose to keep this expertise and those systems.”
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