IT is pivotal to £40m Prudential savings plan after Egg takeover

Cost cuts expected when buy-back of bank is complete

Technology is expected to play a key role in the £40m annual cost savings that Prudential promises to make after taking full ownership of online banking subsidiary Egg.

The financial services group announced last week that it plans to acquire the 21.7 per cent of Egg it does not own, and aims to achieve the planned pre-tax cost savings by the end of 2007.

The cuts will be achieved through ‘closer collaboration’ in several areas of the business, including co-ordination of functions such as IT and marketing.

The plan will rationalise project and development spend and look for efficiencies in customer services and administration.

Neither Prudential nor Egg were able to comment on what shape these plans might take, saying it was still too early in the takeover process.

Prudential chief executive Mark Tucker says the combined companies will provide ‘significantly greater opportunities across the spectrum of personal financial services in the UK than is available to them in isolation’.

‘The acquisition will facilitate this process and the realisation of substantial cost savings, as well as providing opportunities for revenue synergies,’ Tucker said in a statement.

Prudential last month revealed plans to make annual cost savings of between £20m and £25m by integrating its global IT infrastructure across Prudential UK, Egg, and its fund management division M&G (Computing, 3 November).

In unrelated news, Egg has announced that its chief information officer, Gary Price, will be leaving the online bank at the end of the year.

Chief technology officer Pete Marsden will assume responsibility for the role from January.