RBS targets purchasing in merger savings plan

23 March 2000
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23 March 2000 | Geraint John

Purchasing will be expected to deliver savings of at least £100 million a year following Royal Bank of Scotland's takeover of NatWest earlier this month, writes Geraint John.

Early work will focus on reducing the number of suppliers to the combined group and cherry-picking the best existing deals. A timetable for achieving the savings has yet to be agreed, but an insider told SM it would be "sooner rather than later".

In its offer document to shareholders, RBS pledged to cut annual costs by £1.2 billion within three years of a takeover. Although purchasing was not identified specifically, the bank said it expected half of the savings to come from eliminating duplication in areas such as technology, central functions and back-office processing. The rest would come from greater efficiency.

An announcement about who fills the top purchasing job, and their reporting lines within the company, had not been made as SM went to press. Peter Smith, who was group purchasing director at NatWest, and Lloyd Ketley, RBS's head of purchasing and contracts, are both thought to be in the running. RBS pledged to announce all senior jobs within 30 days of taking charge.

Details about possible job losses among purchasing staff are also to be confirmed. The source said teams from the two banks had been working together "in a friendly, co-operative way", despite being "in limbo" about their future in the organisation.


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