AN ACTION by AIB against two related international companies, in which the bank alleged about €84 million spent by it on a new retail banking software system was “wasted expenditure”, has been settled at the Commercial Court.

Mr Justice Peter Kelly was told the settlement was reached following mediation and he struck out the proceedings.

AIB had brought the proceedings against Oracle Financial Services Software BV and Oracle Financial Services Software Ltd, related companies based in the Netherlands and Germany. OFSS BV was sued as alleged provider of the software and OFSS Ltd as alleged guarantor of the obligations of its related company.

AIB had claimed a Flexcube software product supplied to it was “beset with serious technical problems” from the outset in 2007, with just 3,000 customers out of an expected five million switched over to it in a three-year period.

In March 2010, work on implementing the Flexcube product ceased after which the bank decided to decommission the 3,000 accounts using it.

It claimed all costs and expenditure were “wasted” and claimed an estimated €84 million for that and for loss of profits and damage to goodwill, yet to be calculated.

The bank said it was advised by OFSS BV in March 2010 it had ceased development of Flexcube on IBM’s z/DB2 platform for western banks but would continue to work on the product for AIB.

That meant AIB would be the only western bank using that platform, a situation it could not contemplate .