Harry Lorton CEO Creation of 3 rd Banking
Harry Lorton, CEO
Creation of 3 rd Banking Force z Complementarity of TSB & Irish Permanent z Distribution reach & product breadth z Exclusively Ireland & retail focus z Opportunity to offer alternative to BOI/AIB duopoly
A Powerful Competitive Force z Mortgages 23%+ z Savings 12% z Current Accounts 10% z New Car Finance 20% z Life & Pensions 20%+ Customer Base of over 1 million
Multi-Channel Mortgage Distribution Agents 7% Brokers 45% Life Salesforce 5% Branches 43%
Creating a New Bank - Challenges z Integration of I. T. platform z Pace & extent of HR change agenda z Compatibility of cultures z Customer retention & service Business as usual
Implementation Plan - Timeline To Launch Steady State z Degree of Change z Organisation changes z Infrastructure to support integration project z Rebranding z Branch Amalgamations PTSB z Centralisation of mortgage processing z Piloting selfservice banking z Back book conversion to Unibanks PTSB z Single product set z New Business conversion to Unibanks system IP Centralisation of broker business End Game PTSB z Self-service banking z Single view of customer TSB 2001 June 2002 Dec 2002 2003 and beyond
IT Integration - Timeline
Integration Programme - Governance Integration Steering Group Integration Executive Programme Management (Incl. Benefits Tracking & Communications) Branding Products Premises Transition Sales & Distribution IT Infrastructure Customer Services IT Applications Risk HR Transition Head Office Functions
I. T. Agenda z Single base platform - “Unibanks” Ø Ø Ø real time customer centric single customer view z “Layered” applications architecture Ø independent of platform Ø add applications / functionality z CRM strategy Ø single customer databases Ø work to be done on ‘cleansing’ data Ø incrementally add cross-channel CRM capability
H. R. Transition z Population of new management structures z Comprehensive training programme Ø products Ø systems z Reduction of over 500 staff z Harmonisation of T&Cs z Buoyancy of business offsetting “change fatigue”
Bancassurance - Structures CEO Bank Regional Managers CEO Life Head of Bancassurance Branch Managers Branch Staff Bancassurance Consultants
Bancassurance - Implementation z Building branch consultant salesforce Ø currently 65 Ø target 80 z Training of 800 branch staff Ø competency testing Ø licensing Ø co-ordinators
Bancassurance - Implementation z Integrated technology support Ø Siebel Ø open diary system for consultants Ø e. Po. S to follow Ø database (IL/ptsb) for marketing campaigns - consultants now branch staff to follow
Bancassurance Performance z Excellent 2001 outcome Ø sales up 95% in combined / network Ø despite major disruption & uncertainty z 2002 SSIA campaign - life product Ø 36% of bank sales (versus 15 -20% for market) z Target to double (2001) volumes by 2004
Mortgage Lending - Market z Strong fundamentals z Rebound from slowdown in H 2 2001 z Increased competition between domestic players z Margins stabilised z No deterioration in credit quality
Mortgage Lending z Key product segment Ø profitable Ø low risk Ø cross-selling opportunity z Multi-channel distribution Ø branches - leverage off Irish Permanent brand Ø intermediaries - centralised/dedicated channel z Targets Ø business as usual during integration Ø all branches up to I. P. level of productivity
Other Lending z Consumer Finance Ø new car sales biggest component Ø registrations down Ø adding to distribution z Business / commercial Ø targeting smaller end of SME sector Ø selective on commercial lending Ø increasing capability
Resources / Deposits z Building on strong TSB franchise z Benefit of inertia in low interest rate environment z Targeting increased share of customer accounts z Packaged offering to attract account transfers
Cost Agenda z Deliver merger synergies of € 27 m by 2003 z Target further cost reductions in 2004 Ø additional € 10 m in savings Ø keep costs at 2002 level z Continue to drive down costs towards target 50% ratio
Merger Cost Savings 2002 €m 2003 €m 2004 €m Staff 9 18 23 Overheads 5 9 9 (4) (5) 10 22 27 Depreciation on capital
Banking Cost Ratios Actual Estimated Target 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 z Residential mortgages - competitive z Retail deposits - will benefit from increase in rates z Consumer finance - steady z Treasury - lower contribution going forward
Summary z Tremendous progress on merger of two banks z On target to deliver synergies z Challenging cost agenda z Opportunities in banking and bancassurance A LOT DONE, MORE TO DO
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