NAB buy could create bigger IT shop

National Australia Bank this morning said it was in discussions to buy the local arm of Dutch investment bank ABN AMRO, in a move that could enlarge NAB's IT support operation, already one of the largest in Australia.

The plans are being undertaken as part of the Royal Bank of Scotland's acquisition of part of ABN AMRO's global operations.

The proposed deal covers ABN AMRO's investment and wholesale business, which would add 750 staff to NAB's ranks, as well as its retail joint venture businesses ABN AMRO Morgans and its New Zealand-based ABN AMRO Craigs, respectively adding 850 and 290 staff.

NAB has not disclosed what the implications of the deal would be for its technology support operations; however, they had the potential to be far-reaching, given the pair would have independent banking systems. Many financial services firms carry out technology integration projects after large mergers.

Analysts have consistently flagged upgrades or major changes to core transactional systems as among the more risky technological changes for large banks. NAB has spent more than a year evaluating suppliers for a major project to replace its core banking platform, with the bank's chief information officer Michelle Tredenick expected to announce winners of the contract in the near future.

Rival institution, the Commonwealth Bank of Australia in late April, announced it had contracted Oracle rival SAP and Accenture to replace its own systems, in a four-year, AU$580 million combined contract.

In February 2008, ABN AMRO Australia opted not to renew a five-year IT outsourcing contract held by EDS since 2002, which had been organised as part of ABN AMRO's global outsourcing arrangement.

All IT services have been in-sourced since 1 March, 2008, a spokesperson told ZDNet.com.au. In comparison, NAB is currently evaluating the potential to offshore a substantial number of staff with Indian suppliers Satyam and Infosys.

The acquisition is still subject to regulatory approval, with the NAB saying it had not been finalised yet.