European clearing house LCH.Clearnet is to write off EUR47.8 million in capitalised technology costs as it pulls the plug on an "over-complex" IT integration project that has already claimed the jobs of a number of top executives.
The clearing house says it is ditching the 'generic clearing systems' (GCS) project, which was intended to integrate disparate clearing platforms within the company, because it is not "economically or technically viable".
The project was initiated following the merger between London Clearing House and Paris-based Clearnet in 2003, and would have resulted in the development of a single, integrated IT platform across all markets and securities, with consequent lower costs for customers.
Three years on from the merger, none of the projected savings have been achieved.
Concerns over the pace of the project resulted in a boardroom rift between former group CEO David Hardy and the company's directors and customers, which resulted in Hardy quitting his post earlier this month.
Last year LCH.Clearnet was forced to write off EUR20.1m in technology costs for the integration project. The company says further work completed in June 2006 concluded that the further development of GCS was not viable. An impairment charge of EUR47.8 million will be reported in the group's half year results.
Commenting on the decision, Chris Tupker, chairman of LCH.Clearnet, says: "It is very disappointing that the GCS project has not after all been able to deliver the solutions that had been anticipated. However, the nature of the GCS design resulted in an over-complex solution both in terms of on-going production support, operability and development.
"This is the right decision to take: our short term focus will now be on the development of our existing systems."
Tupker says new group CEO Roger Liddell is now preparing a long-term IT strategy for the company.