American Express Bank has announced plans to enter into a major outsourcing agreement with Electronic Data Systems Corp.
While the contract has yet to be negotiated, American Express said the expected deal with the Plano, Tex., technology company could be worth up to $350 million over 10 years.
Officials at the bank, a subsidiary of American Express Co., said the decision to outsource reflects a need to move to a new technology platform and, over time, gain cost advantages.
Robert Sicina, the bank's managing director and chief financial officer, said data centers on New York's Long Island and in the United Kingdom would be closed during the first half of 1995. A third facility in Singapore is expected to be shuttered at a later date.
Mr. Sicina said the bulk of the back-office tasks performed in those locations would be moved to an EDS facility in the United Kingdom.
Under the envisioned deal, EDS would also develop new systems, while maintaining existing ones.
"We concluded we needed to get on a new technology platform," he said.
"We went through an analysis of our existing legacy systems and their capabilities and how they serve our major constituencies," said Mr. Sicina. That analysis showed the systems were too fragmented, he said.
Officials said deals like this typically take up to three months to negotiate.
Mr. Sicina said the bank expects the vast majority of the 220 affected employees would be offered employment with EDS.
But regarding the approximately 20 employees who work at the Long Island facility, he said, "We would expect that their employment would likely terminate."
The $14 billion-asset American Express Bank, based in New York, has an unusual charter that permits it to operate almost exclusively outside the United States. It operates in 81 locations in 37 countries.
The bank is in the midst of a five-year restructuring that has resulted in its abandoning some lines of business in recent years. Now, it is focused on managing assets for wealthy individuals and financial institutions. It offers correspondent banking and foreign exchange and treasury services.