Johannesburg, 21 Apr 2005
Business software provider SAP has won a R350 million deal to convert all of Absa Bank`s business systems to the mySAP Business Suite.
The deal comes amid talks on a Barclays bid for a majority stake in Absa.
The software deal is a significant one, as this is the first instance of a bank outside of Europe choosing SAP`s banking regulation solution.
The deal includes the replacement of the Absa Vehicle and Asset Finance system with the SAP Asset Finance and Leasing module.
SAP says Absa will be only the second national bank in the world to implement its Bank Analyser module, which helps banks manage credit risk and regulatory obligations.
Johan Woest, Absa`s strategic programme manager for the SAP implementation project, says the bank sees the deal as a strategic enabler, helping it to meet the Basel II regulatory requirements by the 2006 deadline.
The second Basel Capital Accord, or Basel II, is a global regulatory framework to make banks more accountable for ensuring provision of capital to cover default and risk.
Woest says the deal will also improve corporate governance and reporting capabilities, enable the integration of processes and improve efficiency across the organisation.
Vested interest
He points out that Bank Analyser has been implemented in nine banks in Germany, adding that Absa is confident it will achieve the desired results.
"In addition, SAP will work very closely with us on installing and then adjusting it to whatever final changes the Basel committee and the local regulator make.
"SAP has a greater vested interest even than we do in making Bank Analyser work, because they see it as a huge contributor to their banking business."
The roll-out of the suite will be phased in over five years, beginning with an upgrade of the SAP Human Resources module that has been used at Absa for nine years.
SAP`s Greg McCue says the deal is a significant step for the global SAP banking division.
"It has visibility at SAP Africa as well as SAP AG board level, not only because it adds a very large bank to our client list, but also because, by using Bank Analyser and the Asset Finance and Leasing module, Absa is advancing the use of SAP functionality within the banking sector."
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