RBS abandons IT project for hiving off 300+ bank branches
RBS has abandoned a project to create an IT platform to support the sell-off of more than 300 bank branches
The Royal Bank of Scotland (RBS) has abandoned a project to create a banking platform that would let it meet an EU-imposed condition on its UK government bailout by splitting off part of its business.
The EU insisted RBS would have to divest part of its business, creating a new standalone bank, after the bailout was agreed. This part of the organisation, which includes hundreds of RBS branches, is known as Williams & Glyn.
But in its latest financial results, which saw the bank reporting £2bn of losses for the last six months, RBS said the complex nature of separating the operation had led it to abandon the IT project.
“Due to the complexities of Williams & Glyn’s separation, while good progress has been made on the programme to create a cloned banking platform, the board concluded that the risks and costs inherent in the programme are such that it would not be prudent to continue with this programme,” it said in a statement.
Read more about IT projects to split banks
- Spanish bank Banco Santander has pulled out of its £1.7bn agreement to take over 316 RBS branches because of IT integration problems.
- Problems related to creating an IT platform for RBS’s planned divestment look set to cause delays.
- Spanish bank Sabadell is to move TSB IT systems to its own in-house core banking platform.
In April RBS warned that difficulties it was experiencing in creating an IT platform for the businesses meant it could miss the EU deadline for hiving off Williams & Glyn. The EU ruling states that RBS must sell its full holding in the Williams & Glyn business by the end of 2017.
In 2011, Spanish bank Santander pulled out of a £1.7bn agreement to take over 316 RBS branches because of IT integration problems.
Another bailed-out UK bank, Lloyds Banking Group, was also forced to split off part of its business, which it did with the creation of TSB under the codename Project Verde. Spanish bank Sabadell acquired TSB for £1.7bn, with Lloyds contributing £450m to the cost of integrating TSB and Sabadell IT. TSB’s systems are now run by Lloyds through a managed service, but Sabadell is moving TSB’s IT systems to its own in-house core banking platform.