AIB Credit Card Services has signed a five-year agreement with US company Total System Services to process its card accounts. The value of the deal was not given.

The bank will convert more than half a million retail and commercial credit card accounts in Ireland and Britain from its in-house system to the US company by June 2001.

The move would not lead to job losses at the bank and would involve a minimal redeployment of staff employed in AIB's in-house system, a spokesman said. While the bank did not state the number employed in-house, it is understood to be relatively small. Converting to Total System Services would allow AIB to increase efficiency and enhance customer service, the spokesman said.

The US company offers a range of acquiring and issuing business services, such as accepting electronic payments, credit applications and collections for credit, debit, commercial, stored value, retail and chip card accounts.

It has offices in the US, Europe, Mexico, Canada and Japan, and processes in 21 countries.

Earlier this year, it won the contracts to process the credit cards of Royal Bank of Scotland and its subsidiary, NatWest.

The spokesman was unable to confirm whether the venture between AIB and Total System Services would allow it to offer card processing facilities to other banking and financial services groups.

But Mr Bruce Bacon, managing director of the US firm, said: "The AIB selection of [this firm] represents an important strategic accomplishment for and further affirms the value of the significant preparation which we have initiated for the European marketplace."

In August, Bank of Ireland and US card payment processing specialist, Nova Corporation, formed a new company, Euro conex, to offer processing facilities to other financial services groups across Europe.

Bank of Ireland's entire credit card payment processing operation will be outsourced to Euroconex which will employ 880 people in Arklow. The bank had employed 100 people for this function at its credit card processing centre in Dublin. Most of these employees will move to the new company, the bank said.

Euroconex hopes to attract business from other major banking groups providing card payment services and to forge links with retailers and other service providers in Europe.