Abbey National and Electronic Data Systems (EDS) are to create a joint venture company to provide outsourced mortgage processing services for European banks.
The new company will initially be responsible for the post-sales servicing of Abbey National's retail mortgages and personal loans. Abbey is the second largest mortgage provider in the UK with 1.5 million mortgage accounts and 13% share of the UK mortgage market.
The deal creates the UK's largest third party administrator for lenders. Abbey says it will invest up to £35 million in the new venture, over the first two years, to develop new processing and IT platforms.
Over 1700 people will move to the joint venture in May 2001 - the majority of whom are presently employed in customer service lending sites around the UK, including some IT and project support staff based at Milton Keynes, Bradford and London. There are no plans to make redundancies, says Abbey. The bank says it will achieve immediate cost savings of £9 million per annum as a result of the move.
The two companies say the new platform will aim to provide a wider range of flexible mortgage products, with daily interest calculations, and enable customers to manage their mortgages and loans via Internet and digital TV.
Andrew Pople, Abbey National's managing director of retail banking, says: "This innovative venture is good news for our customers because it will give them a better service and a wider range of products, and it's good news for Abbey National as we reduce our costs, improve our processes and have an opportunity to earn revenue from the future expansion of the joint venture business."
Peter Clough, president of EDS business process management for Europe, Africa and the Middle East, says: "EDS brings its technology and business process management expertise to the new venture and Abbey National brings its size, lending experience and excellent people."
In the medium term, the two companies say they will seek to insource business from other UK and European lenders, and have set their sights on becoming the leading specialist third party mortgage administrator in Europe.