Switzerland's two largest cantonal banks are to share their IT resources and back-office functions in order to cut costs. Banque Cantonale Vaudoise and Zurich Kantonalbank said they agreed to create a joint venture to provide IT and back-office services, starting in 2011. The venture will have nearly 1,300 employees and annual revenues of about SFr350 million. It will use ZKB's existing IT platform. The new company is expected to generate cost synergies of around 20 per cent, improving cost/income ratios over the long run and freeing up resources for additional IT investment by both parties. ZKB will own 65 per cent and BCV will own 35 per cent, although strategic decisions must be unanimous. The company will be based in Zurich with 1,050 employees, with a branch in Lausanne with 250 employees. BCV will incur costs of SFr120 to SFr150 million to migrate to ZKB's IT platform, but will save around SFr30 million a year in overhead costs. ZKB will be able to reduce costs through economies of scale. Separately, BCV is to transfer the activities of its in-house IT unit, Unicible, to IBM on 1 June. IBM will provide IT services to BCV for the next five years and take over Unicible's external contracts. The agreement is valued at $460 million over five years. IBM will establish an IT banking competence centre in Lausanne to offer services to other banks.