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Judge orders RBS to cease use of trade software

Matthew Finnegan | May 14, 2014
Bank faces disruption as six-year licensing dispute comes to an end.

Royal Bank of Scotland has been ordered to stop using its loans processing software, following a six-year court battle with IT firm Complex Systems over licence fees.

A New York district judge ruled that RBS must stop using the software for new trade finance transactions within 60 days, and completely phase it out by the end of the year, according to theFinancial Times.

US software firm Complex Systems brought the case against RBS in 2007, in a row over the use of its BankTrade system.

The software is considered to be core to the functioning of RBS' trade finance unit, which generated £295 million for the firm last year. Ending the use of the software could cause significant disruption to the business.

The disagreement stems from RBS' acquisition of ABN Amro, which had previously used the software used for processing loans and credit services legitimately.

When ABN attempted to resist the takeover by RBS, it sold off its US subsidiary LaSalle, which owned a licence for use of the BankTrade software. After completing the buyout of ABN, RBS did not transfer the licence, but continued to use it.

New York district udge Katherine Forrest said that bank had committed "six years of uninterrupted infringement", and should not be allowed to continue using the software purely because of the disruption to its trade finance business.

A hearing over damages is due to take place on June 5.

ABN was bought by RBS as part of an acquisition by a consortium of banks, including Santander and Fortis. It resulted in complex technology integration challenges for RBS, which took over its wholesale banking operations and other parts of the business.

 

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