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Japanese bank sues IBM over 'difficult' system overhaul

11.1bn yen ought to make things easier

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A Japanese bank is suing IBM for $107m over a systems contract it abandoned because Big Blue's proposal was too difficult to carry out.

Suruga Bank, based in the Shizuoka Prefecture, filed the lawsuit in Tokyo District Court, seeking 11.1bn yen.

Suruga first announced it would replace most of its systems with IBM's "Next Evolution in Financial Services Systems" (NEFSS) in Oct. 2004. The IBM package included a Java-based banking application from Fidelity Information Services and various flavors of IBM database software that can run on mainframes, Unix systems and x86-based boxes.

At the time, IBM heralded the deal as the first NEFSS adoption in Japan, predicting full-scale operations ready for Suruga in the second half of 2007.

But when IBM gave its proposal, the bank turned up its nose at the changes.

"We are suing because we decided it would be difficult to implement the system they suggested," a spokesman for Suruga told Reuters.

Suruga now wants 11.1bn yen from IBM Japan based on fees paid and revenues lost from being unable to implement the new system.

"IBM has fulfilled its obligations to Suruga Bank and will vigorously defend itself in this matter," IBM said in a statement. As of publication, Big Blue was not available to specify what exactly made the deal go pear-shaped. ®

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