ZKB and BCV to combine their IT and back-office systems

Zurich Cantonal Bank (ZKB) and Banque Cantonale Vaudoise (BCV) have decided to pool their IT and back-office activities and establish a new company for this purpose. Under the framework agreement signed on 19 April 2007, this company will take over full responsibility for the banks' IT and back-office operations in 2011.

The main objective of the new company is to provide ZKB and BCV with high-caliber IT and back-office services at a lower cost. This will be achieved by extending ZKB's IT platform to BCV and routing transactions through a common processing system-made possible by the close similarity of the two banks’ products and business procedures.

The new company is expected to generate cost synergies of around 20%, improving cost/income ratios over the long run and freeing up resources for additional IT investment by both parties. As a result, ZKB and BCV will be able to focus even more closely on their core businesses.

Around 1,300 people will be employed by the new company, which is expected to deliver revenues of some CHF 350m per year. The head office will be in Zurich (1,050 employees) and there will be a satellite office in Lausanne (250 employees). The company will be set up as a joint venture with 65% of the capital owned by ZKB and 35% by BCV. It will be incorporated as a société anonyme with special provisions to protect the minority shareholder, including unanimous voting on strategic decisions. Furthermore, the two banks will have equal representation on the Board of Directors.

This joint venture offers several advantages for both parties. Following the migration, which will cost an estimated CHF 120-150m, BCV will then reap the benefits of a state-of- the-art platform in which ZKB has invested significantly in recent years. BCV stands to save several hundreds of millions of francs while reducing annual overhead expenses by CHF 30m. ZKB will gain from lower costs due to economies of scale and from additional leverage on investment in its IT platform.

ZKB and BCV's business model also provides for the inclusion of other banks in the IT and back-office hub at a later stage.

Enquiries:

Christian Jacot-Descombes BCV Press Officer Phone.: +41 (0) 79 816 99 30 email: christian.jacot-descombes@bcv.ch

Wilhelm Blaeuer BCV Investor Relations Phone: +41(0) 21 212 20 71 email: wilhelm.blaeuer@bcv.ch

Zurich Cantonal Bank Press Service Phone: +41 (0) 44 292 29 79 Fax +41 (0) 44 292 38 23 email: medien@zkb.ch

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