Swiss Bank Corp. announced last week the culmination of a unique technology services agreement with Perot Systems Corp., whereby the bank has the option to acquire an equity stake in the systems outsourcing firm.
The "technology alliance" between Swiss Bank and Dallas-based Perot Systems - started in 1989 by Ross Perot, the founder of Electronic Data Systems Corp. - appears to be a new twist on traditional outsourcing arrangements whereby banks farm out their data processing activities.
Under the agreement, Perot will assume the management of all technology services for SBC Warburg, Swiss Bank's U.S. investment bank unit.
Perot will also provide consulting services to Swiss bank for what the firm's press release called the "continual upgrading and standardization of Swiss Bank's (companywide) information technology infrastructure."
This part of the agreement is estimated to be worth around $250 million a year, nearly doubling Perot Systems' annual revenues.
But where the agreement veers from previous bank systems outsourcing pacts is that Swiss Bank has acquired an option to acquire up to 10.5 million shares of privately held Perot Systems over time. If the bank were to exercise this option fully, it would hold about a 25% stake in the technology company.
In turn, Perot agreed to acquire a 40% stake in Systor AG, a European retail banking software concern that the bank acquired last year.
Swiss Bank officials said the cross-ownership structure is aimed at giving the bank cost efficiencies associated with outsourcing, while maintaining more control over its technology destiny.
"We wanted a partnership that offered the best of both worlds," chief financial officer Peter A. Wuffli said in a statement accompanying the announcement of the preliminary agreement last September. "Information technology is too important to be (just) outsourced."
About 550 members of SBC Warburg's technology staff have agreed to join Perot Systems, and up to 150 more may opt to switch companies by the end of this month, a Swiss Bank spokesman said.
The deal gives Perot a high-profile banking client that could give it a boost in an industry where it has met limited success so far.
Last year, NationsBank Corp. scaled back an outsourcing arrangement with Perot, taking back management of two data centers the outsourcing firm was running.
The former Swiss Bank employees will now be part of Perot Systems' financial services division, headed by vice president John King.