IBM buys Dexia IT services arm

IBM has taken a controlling share in the IT services arm of banking group Dexia, increasing its outsourcing power with European financial market firms.

The agreement will see IBM establish a new business, named Innovative Solutions for Finance (ISSF), after taking over Associated Dexia Technology Services (ADTS) and gaining $1.3 billion worth of existing outsourcing business.

ADTS currently provides services to a number of, predominantly Belgian, financial clients, including Belfius Bank, International Wealth Insurers (IWI), Banque Internationale à Luxembourg (BIL), and Dexia itself.

Following the deal IBM will put in place a private cloud infrastructure to overhaul the services offered to existing clients, and to help attract new customers. The private cloud environment is aimed at enhancing risk management, improving service delivery levels and reducing operating cost, IBM said, and will help address increased demand for outsourcing in Europe.

The announcement comes after IBM recently announced a deal to deliver outsourced services to Italian bank UniCredit, in an agreement which also saw it set up a joint services company to operate in the region.

According to TechMarketView financial services analyst Peter Roe, the deal is part of a wider drive among financial firms towards outsourcing their IT through the cloud delivery models, with recent deal between Hewlett Packard and Yorkshire Building Society to provide services to other UK companies just one example of this.

"Throughout the UK and Europe, large financial institutions are looking to reduce costs and to increase focus on their core activities of banking, trading and insurance," said Roe.

"A clear option for them is to hand over control of some or all of their IT function to a scale-advantaged, well-resourced specialist.

"Such a move could guarantee an immediate reduction of cost, a clear route to a more modern architecture and a better use of capital and cash. In return the vendor boosts his order book and scale, accessing a potentially lucrative long-term relationship."

He added: "Expect more deals like this in the New Year."

Copyright © 2013 IDG Communications, Inc.

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