Bank of Ireland plans HP deal

The Bank of Ireland is in talks with Hewlett Packard (HP) to outsource its IT systems in a seven-year deal that will see around 450 staff transfer to the technology company.

The scope of the deal will not only cover the bank's Dublin-based IT Systems and Infrastructure Services unit but also its Bristol and West operations in the UK.

"We have now begun exclusive discussions with HP and, subject to successful negotiations and due diligence, will appoint them as the supplier of our IT services for a period of seven years," said Cyril Dunne, group chief information officer at Bank of Ireland, in a statement.

The Bank said a deal is likely to be concluded in the next four to six months. It follows two unsuccessful joint venture attempts.

Last year, talks with another Irish bank, AIB, to create a single IT services group for both banks collapsed after the European Commission indicated the deal would come under regulatory scrutiny. The joint venture would have created €19m savings a year for each bank.

A relationship with Perot Systems, which had been made with a view to an outsourcing or joint venture arrangement, was also scrapped last year.

A spokeswoman for Bank of Ireland would not comment on the value of any HP deal or proposed savings, and said it was "too early" to say if the companies would market the service to other banks in the future.

The bank still faces the possibility of opposition from staff union the Irish Bank Officials' Association, which intends to ballot members on the proposal later this month.

Despite Barclays Bank shelving plans for a £100m-a-year outsourcing deal with IBM last week, analysts said the Bank of Ireland contract is evidence of the continued use of outsourcing in financial services.

"There is opportunity there," said Anthony Miller, research manager at Ovum Holway.

Miller added that he was surprised at the bank choosing HP to run its IBM mainframe systems, because it was unusual to see a vendor running a rival's mainframe.