Harry Lorton, CEO
Complementarity of TSB & Irish Permanent
Distribution reach & product breadth
Exclusively Ireland & retail focus
Opportunity to offer alternative to BOI/AIB duopoly
Creation of 3rd Banking Force
Mortgages 23%+
Savings 12%
Current Accounts 10%
New Car Finance 20%
Life & Pensions 20%+
Customer Base of over 1 million
A Powerful Competitive Force
Multi-Channel Mortgage Distribution
Branches 43%
Agents 7%
Brokers 45%
Life Salesforce
5%
Integration of I.T. platform
Pace & extent of HR change agenda
Compatibility of cultures
Customer retention & service
Creating a New Bank - Challenges
Business as usual
Implementation Plan - Timeline
IPIP TSBTSB
Self-service banking
Single view of customer
PTSBPTSB
PTSBPTSB
Deg
ree
of
Ch
ang
eD
egre
e o
f C
han
ge
20012001 June 2002June 2002
Organisation changes
Infrastructure to support integration project
Organisation changes
Infrastructure to support integration project
2003 and beyond2003 and beyond
To LaunchTo Launch
Rebranding
Branch Amalgamations
Steady StateSteady State
PTSBPTSB
End GameEnd Game
Dec 2002Dec 2002
Centralisation of broker business
Centralisation of mortgage processing
Piloting self-service banking
Back book conversion to Unibanks
Single product set
New Business conversion to Unibanks system
IT Integration - Timeline2001 2002
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Q2 Q3 Q4TASKS
Branch Technicalinfrastructure
Financial ‘Bridge’
Branch Rollout
Lending consolidationpre launch
Lending consolidation& conversion
Non lendingconsolidation
Training support
Head Office systemsconsolidated
Premises transition
Technical Infrastructure
Self Service Banking
CommentsDuration(mths)
5
5
6
10
6
9
2
8
7
6
18
Branch TI & Financial ’bridge’ nowlive
Branch rollout complete
Gap closure more complex thanoriginally envisaged, TABScontingency invoked
Delayed start as a result ofadditional gap closure issues
June conversion completed
Complete
GL, payroll and internet completed
Phase 1 and 2 completed
Complete
Pilot scheduled this year
Integration Programme - GovernanceIntegration Steering Group
Integration Executive
Programme Management
(Incl. Benefits Tracking & Communications)
Branding
Premises Transition
IT Infrastructure
IT Applications
HR Transition
Products
Sales & Distribution
Customer Services
Risk
Head Office Functions
I.T. Agenda
Single base platform - “Unibanks” real time customer centric single customer view
“Layered” applications architecture independent of platform add applications / functionality
CRM strategy single customer databases work to be done on ‘cleansing’ data incrementally add cross-channel CRM capability
H.R. Transition Population of new management structures
Comprehensive training programme products systems
Reduction of over 500 staff
Harmonisation of T&Cs
Buoyancy of business offsetting “change fatigue”
Bancassurance - Structures
CEO BankCEO Bank
Regional ManagersRegional Managers
CEO LifeCEO Life
Branch ManagersBranch Managers
Branch StaffBranch Staff
Head of BancassuranceHead of Bancassurance
BancassuranceConsultants
BancassuranceConsultants
Bancassurance - Implementation
Building branch consultant salesforce currently 65
target 80
Training of 800 branch staff competency testing
licensing co-ordinators
Bancassurance - Implementation
Integrated technology support Siebel - consultants now
- branch staff to follow
open diary system for consultants
ePoS to follow
database (IL/ptsb) for marketing campaigns
Bancassurance Performance
Excellent 2001 outcome sales up 95% in combined / network despite major disruption & uncertainty
2002 SSIA campaign - life product 36% of bank sales (versus 15-20% for market)
Target to double (2001) volumes by 2004
Mortgage Lending - Market
Strong fundamentals
Rebound from slowdown in H2 2001
Increased competition between domestic players
Margins stabilised
No deterioration in credit quality
Mortgage Lending Key product segment
profitable low risk cross-selling opportunity
Multi-channel distribution branches - leverage off Irish Permanent brand intermediaries - centralised/dedicated channel
Targets business as usual during integration all branches up to I.P. level of productivity
Other Lending
Consumer Finance new car sales biggest component
registrations down
adding to distribution
Business / commercial targeting smaller end of SME sector
selective on commercial lending
increasing capability
Resources / Deposits
Building on strong TSB franchise
Benefit of inertia in low interest rate environment
Targeting increased share of customer accounts
Packaged offering to attract account transfers
Cost Agenda
Deliver merger synergies of €27m by 2003
Target further cost reductions in 2004 additional €10m in savings keep costs at 2002 level
Continue to drive down costs towards target 50% ratio
Merger Cost Savings
2002 2003 2004€m €m €m
Staff 9 18 23
Overheads 5 9 9
Depreciation on capital (4) (5) (5)
10 22 27
Banking Cost Ratios
Actual EstimatedTarget
2001 2002 2004% % %
Cost*/Income
• Reported 65 65 55
• Incl. bancassurance VNB 60 58 49
Costs*/assets 1.3 1.2 1.0
* operating costs
Banking Margins
Residential mortgages - competitive
Retail deposits - will benefit from increase in rates
Consumer finance - steady
Treasury - lower contribution going forward
Summary
Tremendous progress on merger of two banks
On target to deliver synergies
Challenging cost agenda
Opportunities in banking and bancassurance
A LOT DONE, MORE TO DO
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