Allied Irish Banks (AIB) and Bank of Ireland have scrapped plans to create a joint venture technology company after the European Commission extended a probe into the proposed tie-up.
The two Irish banks say they have jointly withdrawn their application to the European Commission for competition clearance following an indication from the EC that the joint venture would be subjected to further detailed investigation.
In a statement, AIB and Bank of Ireland said that such an extended process would create great uncertainty and would be unduly costly. "It could also have an adverse impact on customer service and would be de-stabilising for staff," they added.
The banks announced their plans in June to create a company to take on day-to day management of their internal computer networks and help desks as well as providing backup. The new company was expected to employ up to 700 staff.
The banks say they are disappointed at the Commission's decision, as the joint venture would have slashed processing costs and improved efficiency and customer service.
In their joint statement, the banks say the joint venture "generated strong interest in the banking and technology sectors internationally and had the potential to outsource its services to organisations with volume processing requirements in Ireland and elsewhere".