The bank's chief operating officer, Hermann-Josef Lamberti, said: "Deutsche Bank expects to save around €1bn (£640m) over 10 years, largely converting what until now have been the fixed costs of operating our own computer centres into usage-based, variable costs."
Deutsche Bank's systems assets and 900 of its employees will move over to IBM in the first quarter of 2003.
Data centres and smaller server sites in Germany, Belgium, Italy, Luxembourg, Poland, Portugal, Spain and Switzerland will move to the outsourcer, which will also set up a state-of-the-art data centre in Germany.
The core of the contract is built around the use of IBM´s e-business on-demand technology.
IBM said it would boost Deutsche Bank's flexibility by integrating core business processes and systems; providing hardware, software and services in an open computing environment: and consolidating, centralising and virtualising servers.
It also promised to deploy its self-managing and self-healing computing capability.
There has been a flurry of activity in financial services IT outsourcing. Last week IBM rival EDS signed a 10-year, £2.85bn deal to provide managed network and IT services with Bank of America, the third-largest bank in the US.
EDS also hoped to sign a £1bn IT outsourcing deal with ABN Amro, Holland's largest bank, by the end of the year.