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Bank of Scotland, IBM Sign $Billion IT Deal

[London, ENGLAND] Bank of Scotland and IBM announced Thursday an IT alliance worth over a billion dollars to the computer giant.

In what is thought to be one of the largest outsourcing deals ever made in Europe, IBM will take over the management of IT operational services for the Bank of Scotland Group from September 2000 for the next ten years.

As part of the deal, which includes many aspects of e-business, IBM will create a new Scottish Delivery Centre at Sighthill, Edinburgh, currently the site of Bank of Scotland's main data processing center.

The companies say there are no plans for any redundancies among existing staff.

Gavin Masterton, Bank of Scotland's treasurer and managing director, said the contract would complete the transformation in Bank of Scotland's approach to IT and create opportunities for growth. He said it made sound business sense on a number of fronts.

"It will allow Bank of Scotland greater flexibility to design new products and target new markets on a more cost-effective basis. As far as customers are concerned, they will be offered improved quality of service and have access to new products and services more quickly," said Masterton.

A major factor in Bank of Scotland's decision to opt for outsourcing has clearly been cost-savings. IBM estimates that the agreement could save the bank as much as $225 million in IT costs over the next 10 years.

Richard Atkins, vice president of Strategic Outsourcing Delivery for IBM Global Services, UK and Europe North, said IBM was experiencing substantial growth in Scotland. He said the agreement almost doubles IBM's presence in Scotland, outside the 5000-strong Greenock manufacturing base.

"The new center will provide new commercial opportunities which in turn will lead to greater career opportunities for both the 500 staff joining us and our existing 700 people," said Atkins.

Bank of Scotland was the first bank in the U.K. to go into online banking as long ago as 1985. It launched Europe's first end-to-end Internet mortgages in October 1999 and was also first with a WAP phone banking pilot in November 1999.

Bank of Scotland's communications network is managed by BT Syncordia Solutions.