Unisys Corp. announced Tuesday its first bank outsourcing contract, a 10-year, $56 million deal to run California Republic Bank's computers and check-processing equipment.
As part of the contract, Blue Bell, Pa.-based Unisys took over California Republic's data center in Bakersfield, Calif., and moved 84 bank employees to its payroll. Unisys will also sell outsourcing services to other West Coast banks and nonfinancial companies.
Thomas H. Shaffer, California Republic's chief executive, said the deal would stabilize a computer budget that had been rising 15% to 20% annually over the past few years.
|A Win-Win Situation'
"It was really a win-win situation for both companies," Mr. Shaffer said. "They needed a presence here and we wanted out."
Mr. Shaffer said California Republic, with assets of $590 million, spent $6 million last year on computer and check-processing operations, out of total operating expenses of $32 million.
During the first five years, California Republic will pay Unisys $5.3 million a year for these services. Payments will average $5.9 million in the last five years.
Mr. Shaffer said that Unisys bought the bank's computers, software, and check-processing equipment for $1 million, and signed a 10-year lease to occupy the data-center building California Republic built in the early 1980s and continues to own.
Mr. Shaffer said that California Republic has been a Unisys customer for nearly a decade, and uses the vendor's computers and software for all core data and check-processing operations.
Mr. Shaffer explained that cost cutting has been a high priority since he moved to chief executive from chief operating officer in June.
To that end, he has trimmed payrolls to 365 from 500 staffers, including the 84 employees moved to Unisys on Monday.
Mr. Shaffer said the outsourcing arrangement would help the bank improve its operating efficiency.
Unisys beat out Systematics Information Services Inc., Little Rock, Ark.; Marshall & Ilsley Corp., Milwaukee; and Electronic Data Systems Corp., Plano, Tex., for the outsourcing contract, Mr. Shaffer said.
While the Unisys bid was in the middle of the pack price-wise, Mr. Schaeffer said the computer company got the nod by agreeing to take on all of the bank's data-processing staffers and to occupy its existing data center building.
Unisys landed its first commercial outsourcing contract in 1990, a company spokesman said, although the technology company has sold data-processing services to government agencies for 30 years.