Union Bank to set up independent computer system - The system will cost an estimated $40-50 million and take three years to install

Sources inform "Globes" that Union Bank of Israel (TASE: UNON) is on the verge of deciding to set up its own computer system that will replace the computer services it currently receives from Bank Leumi (TASE: LUMI). Indian companies i-Flex Solutions Ltd. (BSE: 532466) and Tata Consultancy Services Ltd. (BSE: 532540) are competing in the tender.

The system will cost an estimated $40-50 million and take three years to develop and install. Although payment will be spread out over several years, it will shave several percent off Union Bank's net profit. The bank's pretax profit from regular operations is around $30 million a year, and its return on equity from regular operations is a low 6-7 percent.

The bank currently spends NIS 51 million a year for computer services, most of which is paid to Bank Leumi.