Lloyds TSB's
takeover of HBOS will lead to massive cuts in the technology
infrastructure and IT workforce of both banks, it emerged
today.
IT, call centres and back office work in the retail banking
division will bare the brunt of the cuts,an announcement by
Lloydsreveals.
Lloyds TSB agreed to takeover HBOS in a deal worth £12.2bn. It
originally targeted £1bn savings through removing duplication in
the two organisations. It now expects savings of £1.5bn.
"Following this detailed review, Lloyds TSB believes that
through the implementation of cost synergies and other operational
efficiencies it will deliver total pre-tax annual cost savings
greater than £1.5bn," it said in a statement.
Most of the savings will come in the retail banking division,
where Lloyds TSB plans 21 initiatives to cut annual costs by £790m
by 2011.
Lloyds also plans to cut branches and call centres and the
underlyingIT that supports these functions. The merged bank will
integrate the processing capabilities and IT platforms, said a
Lloyds TSB statement.
Ralph Silva, analyst at TowerGroup, said the banks will make
massive savings
bynot having to run two separate core banking systems.
Both banks have invested heavily in IT infrastructures that can
take on increasing amounts of business. "Each of the banks could
probably deal with the entire customer base of the combined banks
because they were so over-built."
He predicted that two-thirds of staff and IT could disappear
from one of the banks.
"We expect them to keep one-third of the staff and IT of one of
the banks and add it to the other," said Silva.
Silva believes it is likely that the merged bank will use the
Lloyds TSB IT infrastructure. "Both have good IT systems, but
Lloyds TSB is more advanced," he said.