M&I Data Services Inc. announced it has signed a letter of intent to acquire the Reliance 2000 division of Software Alliance Corp.

The acquisition would end a 13-year arrangement between the largest bank-owned data processor and Software Alliance.

Software Alliance, based in Berkeley, Calif., was the exclusive distributor for M&I's Integrated Banking System, a core banking software package for mainframe systems.

"Software Alliance has been very good to us over the years, but we have outgrown the relationship," said Lyle Gray, vice president of M&I Data's software and customer services.

"We feel it is time to bring the technology in-house, and this acquisition gives us the opportunity to bring a suite of products to the table as we continue to expand our customer base."

Although many banks have been expanding the use of clientserver technology, Mr. Gray said that M&I Data is committed to the software -- though it will continue to expand its clientserver banking applications.

Joseph Duwan, an analyst at Keefe, Bruyette & Woods Inc., said the deal gives M&I Data control over distribution of the product and lets it pursue market share more aggressively.

The two companies are in the due diligence stage of the acquisition, and Mr. Gray said the purchase is expected to be completed early next year.

Software Alliance officials said their company plans to focus on development of its Radar division through a strategic partnership with Risk Management Technologies.

Radar is a decision-support tool banks use in the asset/liability management area to better forecast the impact of interest rate swings. Software Alliance acquired 35% of Risk Management this year.

The company recently introduced a new version of the system that had been modified to handle a variety of performance measurement activities at banks, including transfer pricing, business unit and product profitability modeling, strategic planning, derivatives credit exposure analysis, product design, and merger analysis.

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