Bank of America is expected to retain many of the IT systems and
IT employees at Merrill Lynch following its emergency takeover of
the troubled investment bank this week.
The US bank
agreed a $50bn deal to buy Merrill Lynch which has around 8,000
employees in EMEA, including around 4,500 employees in UK, on
Monday.
Bank of America has targeted $7bn in savings by 2012 from the
take-over, and is expected to integrate overlapping technology.
However, Merrill Lynch's IT systems and IT specialists could
prove a strategic buy for the US bank.
According to industry observers, Merrill Lynch has a global
infrastructure that will allow Bank of America to build its
business outside the US.
Ralph Silva, analyst at Towergroup, said there was no reason why
both banks should keep all their IT systems running.
But the acquisition gives Bank of America access to new
technologies.
"Merrill Lynch operates in so many areas that it has many
applications that the Bank of America does not have," Silva
said.
Merrill Lynch spent $1.121bn on IT and comms in the six months
to June this year. It said in its most recent financial results
that one of its strategic priorities was to "continue to invest in
technology to enhance productivity and efficiency".
Robert Morgan, director at supplier outsourcing consultancy
Hamilton Bailey, said, "Bank of America will want to integrate as
many systems into its own infrastructure as soon as possible but it
will be acquiring some major IT systems that it does not currently
offer in its financial services portfolio, so conventional IT will
be assimilated and jobs lost, but for specialist IT services it
will need to retain the staff."
Financial turmoil to trigger IT consolidation >>