RBS faces challenge to split IT systems of ABN Amro

The Royal Bank of Scotland-led consortium that is acquiring ABN Amro faces major technology challenges as it seeks to split the company following the biggest-ever banking acquisition.

The Royal Bank of Scotland-led consortium that is acquiring ABN Amro faces major technology challenges as it seeks to split the company following the biggest-ever banking acquisition.

The consortium, which also includes Banco Santander of Spain and Belgian-Dutch Fortis, won the race to acquire the Dutch bank for £49bn last week, following Barclays' exit from the seven-month battle.

Ralph Silva, senior analyst at analyst firm Towergroup, said that dividing the bank between the three consortium members will be a major challenge because some of the systems are common over the divisions being split.

"ABN Amro has spent considerable time to develop systems that cross lines of business, so this is where the challenges will occur. When the bank is divided up, this technology is also going to have to be divided," he said.

ABN Amro's operations set-up is one of the premier IT shops in the financial services sector in Europe, and the acquirers will have to consider whether to adopt its technology over their own, said Silva.

RBS will have to decide quickly on its IT strategy following its acquisition of ABN Amro's UK investment and private banking businesses, he said.

"Amro's capital markets business in the UK is not insignificant, and RBS will have to integrate quickly to take advantage of economies of scale," said Silva.

According to Robert Morgan, consultant and former chief executive at outsourcing advisory Morgan Chambers, IT savings will be less than what would be expected in banking mergers.

He said it will be difficult for RBS to integrate the ABM Amro business into its own systems because Amro's set-up is "quite bespoke".

"I do not think any of the acquirers have any major integration plans. It is more of a superficial integration," he said.




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