IT job cuts are inevitable as the Royal Bank of Scotland (RBS) integrates its wholesale banking division and the UK operations of ABN Amro which it acquired last year, say industry analysts.
RBS headed a consortium which bought ABN Amro for £49bn last year. RBS acquired its global wholesale and international retail businesses.
RBS warned there will be job cuts as it merges its own and ABN Amro's wholesale banking arms in the UK. It said there could be more than expected because of the economic downturn.
An RBS spokesperson said, "Since the acquisition of ABN Amro, we have consistently said that, as we brought our two wholesale banking businesses together, there would be job losses over the next two years.
"In light of current conditions in some parts of the global credit markets we are also looking at the appropriate size for our businesses affected by this downturn."
Phil Morris, managing director Europe at sourcing consultant Equaterra, said RBS will have to make IT job cuts but those with specialised IT skills will be least affected.
"There are bound to be some cuts and the biggest potential cuts are in areas that are not about IT skills but IT support functions such as procurement and service management," he said.
He added that ABN Wholesale outsources a significant part of its IT to EDS. "Many people at ABN Amro are involved in the EDS relationship," he said.
Ralph Silva, analyst at TowerGroup, said the merged company will have more business and a bigger workload but its IT department will be overstaffed. "The incremental increase in resources that the IT platform will require to serve the additional customers will not equal the total number of IT staff."
He said whether ABN Amro or RBS IT workers go will depend on which technology the bank goes forward with. "The big question for RBS is 'which of the two IT infrastructures is superior?'"
But he said the bank does not have long to dwell on this and will have to complete the IT integration process as quickly and at as low a cost as possible given current market conditions.
This could come at a cost, he added. "The best way to do this would not be to look at the platform in its entirety but each application which requires a lot of effort."
He said tens of thousands of applications are involved but if they do not look at them individually they will not get the best.