Bank of Scotland is to terminate a ten-year, £700 million IT outsourcing contract with IBM, some two years into the deal, according to a report in Computer Weekly.
The original agreement, struck with IBM in 2000, involved the transfer of some 500 staff and was expected to result in £150 million savings in IT costs over the duration of the contract.
The news follows the recent early termination of a similar agreement between Halifax and Xansa, which was attributed to a strategic review of IT requirements in the wake of its merger with Bank of Scotland to create HBOS.
An IBM spokesman quoted by Computer Weekly says the company tried to hold on to the contract, offering an insourced, managed service as an alternative. He confirmed that IBM would receive a one-off penalty payment from the bank, but did not disclose the amount.