German bank IT integration could be a challenge


German bank IT integration could be a challenge

Karl Flinders

The integration of the IT operations of German banks, Commerzbank and Dresdner Bank, which announced a merger yesterday, will be a challenge because of each bank's extensive use of proprietary software.

Commerzbank, which is acquiring Dresndner Bank for £5bn, has established a joint integration team that will be responsible for merging their IT systems.

Bob McDowall, analyst at TowerGroup, said bringing together the IT infrastructures of the two companies will be a challenge because both use in-house built systems.

"The German banks have traditionally used proprietary systems and when you use these, rather than third-party systems, integration is more difficult. There will be some challenges rationalising proprietary systems."

He added that due to the use of in house built systems, German banks usually have big IT departments. "They will rationalise IT but it could take some time."

Banks that useoff-the-shelf systems can migrate their entire infrastructure to use the same systems during a merger. This is usually possible by negotiating with the suppliers, said McDowall.

According to Commerzbank, office jobs including IT will be cut as a total of 9000 jobs are shed.

About 70% of the 9000 redundancies will be in the back office, control and production units, as well as in investment banking. A total of 2500 will be outside Germany.

The combined workforce of the two banks is almost 67,000. Commerzbank employs a total of 1000 people in the UK with 400 of these in the back-office. Dresdner Bank employs 2000 people in the UK.

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