International Business Machines Corp. on Thursday announced a deal valued at $500 million to manage computer systems and network resources for Toronto-Dominion Bank.
The seven-year contract calls for IBM to maintain the system of 40,000 desktop computers and the network that links them all together. About 1,200 of those computers are in branches of TD Canada Trust, the retail, small-business, and commercial banking unit. (Toronto-Dominion Bank and its subsidiaries are known as TD Bank Financial Group.)
IBM started managing the network on Sept. 29. "What it ultimately came down to was that we wanted to focus more directly on our core business," TD spokesman Neil Parmenter said in an interview. "IBM can probably do this better we can do ourselves."
IBM, of Armonk, N.Y., has agreements with several Canadian financial services companies. It made one earlier this year with National Bank Financial and two in 2002, with Sun Life Financial Inc. and Manulife Financial Corp. It also provides IT services to Bank of Nova Scotia and National Bank of Canada.
John Davies, a senior vice president and the chief information officer for enterprise technology solutions at TD, said in Thursday's announcement that "IBM's support will allow us to introduce new products and services for customers while realizing cost savings."
Mr. Parmenter said in the interview that TD considered other vendors but chose to further a three-decade history of working with IBM. It "has been a key vendor for us" and is "clearly a leader in this space," he said.
Garth Issett, a vice president for strategic outsourcing with IBM's global services Canada unit, said, "the things that brought TD and the other companies to us will be the same things that attract other banks to us."
IBM reported third-quarter earnings Wednesday. It said its profit of $1.79 billion, or $1.02 per share, was 37% higher than that of a year earlier and that revenue rose about 9%, to $21.52 billion.
Chairman and chief executive Samuel J. Palmisano said in the earnings announcement that IBM is "beginning to see signs that the economy has stabilized."
He added: "As we look to 2004, more customers are expected to increase their investments in information technology."
