UK retail bank Abbey is reviewing its three-year old mortgage processing joint venture with EDS amid speculation about a possible sale of the bank, according to confidential documents seen by UK computer news site The Register.
The joint venture was signed in May 2001 and valued at $390m. The ten-year contract gave EDS responsibilty for all back office mortage and lending processes and resulted in the transfer of 1500 Abbey staff.
According to The Register report, the document, from EDS and marked "confidential", says:
"Abbey sees the existing contract with EDS (specifically its inability to terminate for convenience) as a major barrier to fulfilling its strategic objectives - we believe these to include the sale of the Bank;
"Abbey perceives very poor value for money (incorrect) and poor delivery of the original Crystal transformation programme (some justification);
"Abbey wants EDS out altogether but is constrained by the existing contract."
The Register says EDS wants to save the contract by offering more flexibility and big cost savings by offshoring much of the work. If it goes ahead this will lead to the closure of vendor's Solent office and the loss of 500 jobs, reports the wire.
In a statement to The Register, EDS confirmed the review and said that offshoring of some operations was a consideration: "The review is looking at a range of options and Abbey and EDS are working closely together to find the best way to meet the needs and expectations of Abbey’s customers."
A spokesman for Abbey said: "We are reviewing our relationship with EDS and until conclusions are reached, and staff are informed, we have no other comment to make."