Info-tech

TCS close to buying Deutsche Bank’s IT arm

Venkatesh Ganesh Mumbai October 22 | Updated on October 22, 2020 Published on October 22, 2020

Tata Consultancy Services is in talks to acquire Deutsche Bank’s IT services unit based in Bonn.

Multiple sources BusinessLine spoke to confirmed that the talks were at an advanced stage and it involves a complete takeover of the business and 1,400 employees of Postbank Systems, the IT services unit of the retail banking division of Deutsche Bank. The expected deal size is still not clear.

“The talks centre around re-badging Postbank employees into the TCS fold,” said a source in the know. Another source said that talks accelerated after the onset of Covid-19 and centre around possible cost savings out of the deal, which will be bundled with a new long-term deal involving various business areas of Deutsche Bank.

According to a Bloomberg report, talks are expected to result in a deal by the end of the year. When contacted, TCS declined to comment.

Deutsche Bank is predominantly an investment bank that entered retail banking by acquiring Postbank. However, it has been struggling since then and Deutsche Bank CEO Christian Sewing had said last year that it would pull out of global equities sales and trading, scale back investment banking and slash thousands of jobs.

TCS also has a large deal with Deutsche Bank, which was signed in 2013, to replace the bank’s core banking solutions with TCS Bancs in 30 countries. Large companies such as TCS are eyeing opportunities arising out of Covid-19 as tech usage is seeing a surge globally. During the Great Financial Crisis, TCS completed the acquisition of Citigroup Inc’s interest in Citigroup Global Services Ltd for $512 million in cash.

“It’s a win-win for both service providers and clients (Deutsche Bank). Clients get immediate cash flow during crisis and their employees get better job prospects. For service providers it is assured business and better client relationship and client footprint,” said Pareekh Jain, founder and lead analyst of EIIRTrend and Pareekh Consulting.

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Published on October 22, 2020
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