by Leo King

Royal Bank of Scotland sets out £6bn IT spending plans

Oct 05, 2009
Financial Services IndustryIT LeadershipIT Strategy

The Royal Bank of Scotland will spend £6 billion mainly on IT in the next five years as comes close to completing the integration of ABN Amro.

Stephen Hester, chief executive at the bank, said the bank had paid too much attention to acquiring other businesses and neglected technology in the process.

In 2007, RBS led a consortium of banks in the £48 billion takeover of ABN Amro, the largest acquisition in European banking history.

“RBS was built as an acquisition machine and as a consequence, some of the quality, which it drives businesses and enables businesses to grow organically, was neglected through a series of distracting business integrations,” Hester told a Bank of America Merrill Lynch conference last week.

As a result, he said, forward-looking technology had been “neglected” as RBS grappled with “lots of different systems inherited from past acquisitions”.

In May, as RBS announced 700 IT job cuts, the bank said it would move to an undisclosed common technology platform, as part of a drive to cut costs. Other investments making up the £6 billion investment include datacentre consolidation, new insurance management information systems, cutting operational costs, and improving online services.

RBS, now 70 percent owned by the taxpayer, is taking aggressive steps to cut £2.5 billion of costs in the next three years, a process that Hester said was ahead of schedule with £600 million saved in the first half of the year.

Hester said RBS was “nearly there” with the integration of ABN Amro, with technical separation delivered in the Netherlands, and systems de-duplicated globally.