IBM could lose its $5 billion IT outsourcing contract with JP Morgan Chase after the bank completes its acquisition of Bank One Corporation, according to a report by Bloomberg.
The report, which cites un-named sources, says JP Morgan is reviewing the seven year contract due to opposition from Bank One chief executive Jamie Dimon, who is slated to become CEO of the merged bank in 2006.
During his four-year tenure at Bank One, Dimon cancelled similar contracts worth $2 billion with IBM and AT&T, citing high costs. He spent $500 million over two years integrating Bank One's computer systems in an attempt to cut operating costs. Bank One has hired 3000 IT workers in the past two years as it took over management of its computer systems.
Under the 2002 contract, IBM took on 4000 JP Morgan staff to operate the bank's computer system. According to sources some of those people may be re-hired by the bank if the contract is cancelled.
IBM officials have held meetings with Bank One chief information officer Austin Adams and JPMorgan's head of technology John Schmidlin in an attempt to save the deal, but it is thought a decision won't be made until mid-year, after the merger is completed.
JPMorgan Chase, Bank One and IBM all declined to comment on the rumours.