Commerzbank’s board of directors has cancelled its contract to shift its securities settlement business to HSBC. The arrangement was signed in 2017, although financial details were not disclosed.
“After careful consideration, we have taken the decision to stop the outsourcing project owing to the high implementation risks,” Jörg Hessenmüller, the bank’s chief operations officer, stated in a press release on 22 July.
A source told the Financial Times that “Commerzbank had been required to invest a significant amount of additional money into the project to rescue it. ‘We did not want to throw good money after bad,’ the person said.”
The bank’s statement said it would “continue to modernise its own system landscape” and that changes in the markets and “ongoing technological development are allowing us to continue securities settlement profitably.”
Commerzbank, in the midst of a massive turnaround plan, said its planned €200m write-off would not impact its capital ratio and the nixed contract would not impact customer operations.
HSBC has not commented.