The Royal Bank of Scotland (RBS) saw the collapse of a £1.7 billion deal to sell 316 domestic branches to Spanish bank Banco Santander over the weekend. The breakdown of the deal has been attributed to IT integration problems, as the migration of customer data from RBS to Santander proved problematic.
However, sources have dismissed the purported IT problems as a smokescreen for Santander to pull out of the deal.
Under orders from the European Commission, Santander agreed to take over 316 RBS branches and associated customers. The deal required migrating data from selected branches and their affiliated customers to Santander's core banking platform Partenon, a task that was set to be completed by the end of the final quarter of 2012.
The Partenon platform is an integral aspect of Santander’s implementation of UK acquisitions and incorporates an in-house software called Banksphere, an application that groups all of a customer's relationships with the bank into a single profile, ultimately allowing for cross-selling opportunities and improving operational performance.
Reports suggested that an IT breakdown led to the deadline not being met, with Steve Pateman, head of Santander’s UK high street banking operation, pointing to a report from consulting firm Accenture that warned the data transfer would not be complete before 2016 as a basis to abandon the deal.
“It is now apparent that this revised target will not be achieved. Santander UK confirms that it has therefore notified RBS that it does not believe the conditions to the transfer of the business from RBS to Santander UK will be satisfied by the agreed final deadline of February 2013, and that it is not willing to agree a further extension to that deadline," Santander said in a statement.
RBS group chief executive Stephen Hester denied that its migration process was to blame and insisted that much of the groundwork had been laid prior to the deals collapse.
"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 stand-alone management team," said Hester.
However, the extent to which this setback was strictly brought on by technical shortcomings is unclear. Chris Skinner, chairman of the Financial Services Club, said that the data Santander required was already separated and awaiting integration. “They could be making excuses not to go with the deal," said Skinner.
RBS is now in the process of looking for new buyers, with business personality Sir Richard Branson emerging as a possible suitor.