Supplier negotiations net millions of future savings for Lloyds

25 February 2011
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Procurement 'key' to cost savings at Lloyds Banking Group

25 February 2011 | Lindsay Clark

Lloyds Banking Group expects to save more than £236 million annually in procurement from 2012 thanks to negotiations with suppliers carried out last year.

In its financial results for 2010, which revealed a profit of £2.2 billion, the financial services firm said vendor negotiations resulted in more than 90 per cent of its expenditure being consolidated with the bank’s top 1,000 vendors, following the integration of rival bank HBOS, which it acquired in 2008.

A spokesman said savings from the consolidation of supplier contracts were part of a three-year programme following the merger. He added the group expected to increase the level of future savings from negotiation, which will kick in from 2012, this year.

The cost of running the procurement department in 2010 fell by £1 million, 2 per cent compared with the previous year, to £56 million in 2010.

Eric Daniels, chief executive at Lloyds, said in a statement: “We continued to make good progress on the integration of Lloyds TSB and HBOS, one of the largest and most complex programmes undertaken in the UK, exiting the year with cost synergies of £1.4 billion, as expected. We achieved savings across a wide range of group activities, including implementing improved processes which are now being used on a harmonised basis across the group, and driving savings in property and procurement.”

The group has already surpassed its target of £1 billion year-on-year savings from the merger, which it set in 2008.

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