JPMorgan Chase signed the $5 billion, seven year, IT outsourcing contract with IBM in 2002.

From January 2005, approximately 4000 IBM employees and contractors currently supporting the JPMorgan Chase account will be transferred back to the bank.

The announcement follows speculation in March this year that JPMorgan was planning on terminating its outsourcing agreement with IBM after it merged with Bank One. At the time it was rumoured that JPMorgan was reviewing the IBM contract due to opposition from Bank One chief executive Jamie Dimon. During his four-year tenure at Bank One, Dimon canned similar contracts worth $2 billion with IBM and AT&T.

Austin Adams, JPMorgan Chase's CIO, says the merger with Bank One created a firm with significantly greater capacity to manage its own technology and infrastructure.

"We believe managing our own technology infrastructure is best for the long-term growth and success of our company as well as our shareholders. Our new capabilities will give us competitive advantages, accelerate innovation, and enable us to become more streamlined and efficient," says Adams.

JPMorgan Chase insists that IBM is still a key technology partner, providing services to a number of its major businesses.