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CBA, Bankwest tie IT knot in 2011

Bankwest's existing technology platform would continue to underpin its operations until the Commonwealth Bank has fully moved across to its new core banking system in 2011, the bigger bank revealed today as it detailed its takeover plans.
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Written by Liam Tung, Contributor on

Bankwest's existing technology platform would continue to underpin its operations until the Commonwealth Bank has fully moved across to its new core banking system in 2011, the bigger bank revealed today as it detailed its takeover plans.

CBA had said earlier today that it would merge the pair's IT platforms as part of its $2.1 billion acquisition of Bankwest, which will also deliver into its arms the fate of the Western Australian Bank's joint IT services venture with Unisys.

"We won't do that integration until we have completed the Commonwealth Bank's integration to the new platform and we see that being three years out. So Bankwest will continue to run on its systems until that time," CommBank CEO Ralph Norris said today at a media briefing, in response to a question by ZDNet.com.au.

The $2.1 billion acquisition has the potential to put CBA's core banking modernisation program, currently underway with SAP and Accenture, under pressure if it wants to achieve savings it has estimated to come from the acquisition.

The bank estimated the cost of integrating Bankwest, including technology, transition and restructuring, at $330 million, with $220 million a year to eventually be shaved off its annual costs, including technology spending.

Technology has been positioned as a key element of that cost-cutting plan since Norris today said staff cuts were not likely to occur as a result of the acquisition.

"We are looking to re-deploy staff rather than making redundancies," Norris said.

CBA chief financial officer David Craig said today that the merged entities would cut 20 to 25 per cent off the combined bank's costs.

"But that will take some years to kick in because we're running [Bankwest] as a free-standing entity. Some of those savings will come in due course as we move to our new core banking system, which we will roll out in three years time," Craig said.

Questions over the future of Unisys West still remain. The IT services joint venture between Unisys and Bankwest was formed primarily to meet Bankwest's outsourcing needs.

"The contract that's in force there will remain in force into the foreseeable future," said Norris.

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