21 November 2014

Santander blames IT integration issues for RBS branch network deal collapse

15 October 2012  |  8133 views  |  1 Santander logo web screen shot

Spanish banking giant Santander has pulled out of its deal to buy 316 UK branches from the Royal Bank of Scotland (RBS), blaming IT integration costs and complications.

RBS was ordered to sell off the branches by the European Commission as a condition of its multi-billion pound government bailout at the height of the financial crisis.

It agreed a deal to sell the branches, and offload their related customers, to Santander in August 2010. The transfer was initially slated to be completed by the end of 2011 but was forced back to the fourth quarter of this year.

Now, the Spanish group has pulled out completely, confirming in a statement that "it is now apparent that this revised target will not be achieved".

Ana Botin, CEO, Santander UK, says: "Our guiding principle throughout this transaction has been a seamless journey for customers - which requires the business to be delivered to Santander UK by RBS in a steady state. We have concluded that given delays it is not possible to complete this within a reasonable timeframe."

Steve Pateman, head of high street banking, told the Guardian that IT integration issues were to blame, with consultants from Accenture estimating that it would take until 2016 to complete the project.

However, RBS chairman Philip Hampton told the BBC that IT challenges could "always be overcome", and hinted at other reasons for Santander's decision.

Meanwhile, Richard Branson's Virgin Money has emerged as a possible buyer for the branches, confirming that it has made informal contact with RBS. Virgin was one of the initial bidders for the network but lost out to Santander and has since acquired the Northern Rock network.

Stephen Hester, chief executive, RBS, says: "Much of the heavy lifting associated with a transfer has already been completed, including separating data for 1.8 million customers and putting in place a standalone management team...RBS will commence a new process of disposal and will provide a further update on this in due course"

The recent bargain-basement acquisition of 632 Lloyds bank branches and 754 ATMs by the UK's Co-operative group includes a long-term technology services agreement between the two parties. As part of the deal, the combined bank will ultimately operate on a separated version of Lloyds' proven IT platform in an effort to avoid the risks of disruption to existing customers from a technology handover.

Comments: (1)

Michael Fuller - None - London | 22 October, 2012, 14:04

Since Santander seem unable to seamlessly transfer their own internet banking customers from their existing system to their new one without having to re-register any chance of them transferring customers from another Bank seamlessly was a non starter.

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