Lloyds TSB-HBOS integration could generate £1bn in savings

HBOS' branch network will be combined with Lloyds TSB's structure

Lloyds TSB expects to reap "significant" costs savings through consolidating IT systems across the group, following its proposed acquisition of rival HBOS.

The combination of the bank’s networks and back offices both in its retail and wholesale divisions, would allow it to cut costs dramatically, Victor Blank, chairman, Lloyds TSB said in a statement.

By 2011, the consolidated group should expect savings of around £790m, via the streamlining of IT in retail areas of the business such as distribution infrastructure including branch network, call centre operations, associated management and support functions.

The retail operation of the new group also expects to generate extra cash by streamlining branch based functions across operations, integrating the processing capabilities and platforms of both banks, as well as removing systems duplication.

Cost savings in wholesale and international banking are also expected to stem from further technology integration work. The bank estimates it can save around £430m over the next three years, through eliminating redundant systems in its wholesale and international banking divisions.

Chris Wiscarson, formerly a director of group IT and operations at Lloyds TSB will be appointed group integration director for the merged bank.