IBM venture targets banks in Japan

Aiming to bolster its outsourcing business in Asia, Big Blue's Japan unit plans to create a new company to provide computer services for regional banks in that country.

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Aiming to bolster its outsourcing business in Asia, IBM Japan said Friday that it plans to create a new company to provide computer services targeting regional banks in Japan.

Big Blue's Japanese unit said the new company, dubbed Regional Bank Solution and Services (RBSS), will provide banks with a way to off-load a portion of their technology tasks such as operations management, planning, development and computer systems maintenance. RBSS, which will be established in Tokyo in December, is slated to open for business in early 2001.

RBSS will start off as a wholly owned subsidiary of IBM, but as regional banks tap RBSS to provide their technology services, they will also take equity stakes in it and thus create more of a joint venture. The new company will launch its operations with a staff of 50 consultants and aims to strengthen the staff to more than 150 employees by the end of next year.

The move follows a services contract, worth an estimated $15 billion, that IBM recently landed with Japanese telecom giant NTT. Earlier this year, IBM also signed a giant outsourcing deal with Japanese car maker Nissan. Revenue from IBM Global Services, the company's services and consulting arm, last quarter rose 4 percent to $8.2 billion on continued strength in the Asian market.

The company isn't the only player in the growing consulting and information technology sector that has been active in the Asia-Pacific markets. Rival Computer Sciences last quarter also said revenue increased, to $2.5 billion, driven largely by a number of contracts it had won in the region.

IBM said several regional banks, including Musashino Bank, Daishi Bank and Kanto Bank, already use IBM Japan for their computer services. Other regional banks such as Hachijuni Bank and Awa Bank are expected to make capital investments in RBSS.