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Author: Katharina Grimme
24 November 2006
Hypovereinsbank (HVB), one of the largest retail banks in Germany, announced two outsourcing agreements this week. Firstly, the bank wants to outsource parts of its application development to IBM. Secondly, HVB will outsource its payment processing services to Postbank. The contracts, still subject to approval from financial regulators, are to commence on 1 January 2007 and will involve 365 and 390 staff transfers respectively. The values of the deals were not published.
Comment: Following the takeover by Italian Unicredito, German bank HVB has long announced its plans to cut around 600 of the total of 1,800 staff in its IT subsidiary HVB Information Services (HVB IS) in order to reduce IT costs by €165 million by 2008. Furthermore, costs of €90 million are to be cut in back-office operations. By March 2006 large parts of its securities processing services were outsourced to ITS, the joint venture between T-Systems and HSBC Trinkaus&Burkhardt (see EVD of 21 March 2006).
An attempt to outsource its datacenter operations failed in October 2006 because the offers received (from IBM and Atos Origin amongst others) were considered too expensive. HVB reports that IBM has now provided an 'extremely attractive offering' for parts of HVB's application development. IBM will be responsible for modernisation, standardisation and further development of loan applications for HVB. The 365 staff to be transferred - software developers, consultants and process specialists - will form part of a new group within IBM Global Business Services which will specialise in banking applications.
Postbank, the largest German retail bank, has become a key provider of payment processing services and serves most of the largest banks in Germany. HVB's subsidiary HVB Payments & Services (PAS), which processes around 1.1 billion transactions per annum with 390 staff, will be transferred to Postbank.
These deals illustrate that the German banking sector is consolidating and is under immense competitive pressure. As a result, the outsourcing of IT and back-office operations is becoming more common. The new ownership by Unicredito may have accelerated the decision to outsource at HVB, but we believe that there will be more of such deals in Germany as banks aim for 'leaner' production.
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