Magazine article American Banker

BankAmerica Illinois Said to Forge Better Deal with IBM Services Unit

Magazine article American Banker

BankAmerica Illinois Said to Forge Better Deal with IBM Services Unit

Article excerpt

Under a renegotiated contract with BankAmerica Illinois, Integrated Systems Solutions Corp. will run the bank's technology and operations for seven more years.

The new contract is a restructuring of a 10-year, $500 million deal signed in late 1991 between ISSC, a unit of International Business Machines Corp., and the BankAmerica unit, which was formerly Continental Bank Corp. When Bank of America acquired Continental in 1994, it had one year in which to renegotiate the outsourcing deal to reflect the change in ownership, a bank spokesman said.

Terms of the new agreement were not disclosed, though a source close to the bank said the new terms were more favorable to Bank of America. Integrated Systems says it will continue to operate and manage a significant portion of Bank of America's Illinois operations, including mainframe operations, application development, desktop services, and business recovery services.

The IBM unit may also may take over some other processing tasks for Bank of America, the bank said.

"The agreement with ISSC, a leader in the technology outsourcing industry, provides the bank with a great opportunity to take advantage of the cost efficiencies associated with outsourcing of selected services," said Cheryl Kane, executive vice president of the bank's technology support services.

When Continental agreed to turn its technology over to IBM, it was the largest bank to outsource its operations at a time when there was much discussion in the industry about whether big banks should hand over the keys to their data centers to vendors.

At the time, the financially troubled Continental expected cost savings of at least $100 million, or 20% of its technology costs, over the life of the contract. …

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