i-flex has hiccups in German bank project

BANGALORE: A subsidiary of HVB Group has halted a project of i-flex solutions ltd, but Germany's second-largest bank is open to using i-flex at other subsidiaries, a spokesman said on Monday.

"The (i-flex) project with Financial Markets Services (FMS) Bank has been stopped due to a change in HVB Group's general strategy in German transaction banking, where FMS Bank is one of the major players," informed Munich-based Knut Hansen of HVB Group.

FMS Bank was to have been the first HVB unit to use the i-flex product, with a launch date of end-2003.

i-flex announced last May it had signed a deal with HVB Group, to roll out its key banking software package Flexcube, in up to 50 subsidiaries of the bank in about five years.

"The basic agreement gives all HVB Group subsidiaries the possibility to purchase Flexcube at fixed conditions. Whether the independent units will do and in which time frame I cannot comment," Hansen said.

Financial terms were not disclosed but i-flex had said the order was 'significant' for it in value terms.

When contacted, an i-flex spokesman declined to provide any update on the company's contract with HVB Group.

i-flex earns the majority of its revenue from software product sales, unlike most Indian software companies that focus on relatively low-risk services billed by the hour.

The software company, 42 percent owned by Citigroup Inc's investment arm, counts Citibank and Japan's Shinsei Bank among its key customers.

Industry sources told Reuters two or three subsidiaries of HVB group were in talks with i-flex to finalise an order and said an announcement from one unit is expected in a few weeks.

© Reuters