HBOS ditches supplier

Last September's merger between Halifax and Bank of Scotland has put paid to a lucrative IT contract worth nearly £300m, the outgoing supplier Xansa has announced.

Xansa had supplied the bank systems, support and software since 1998. However, the newly merged HBOS said it needed a "decentralised" structure and the existing technology model didn't suit its future plans.

Xansa will receive £9m in compensation for the early termination of a contract that had already netted the company £187m and would have been worth a further £91m.

Hilary Cropper, executive chairman of Xansa described the decision as "disappointing".

Ian Kerr, director of group programmes, HBOS said in a statement: "The Bank of Scotland's centralised model has been replaced by a decentralised structure within HBOS which has caused us to examine the future of FBS. Despite a successful track record from FBS, we believe that the future needs of HBOS will be best served by aligning to the decentralised model."

The two companies will continue to work together during an 18-month notice period.