BANK of Scotland yesterday announced it was hiving off its substantial information technology operations into a joint venture company owned by itself and FI Group, the business technology services provider.

The pair ultimately plan to sell systems they develop to other financial services groups and possibly companies in other sectors.

Chris Brobbel, general manager of the bank's information technology division, claimed the alliance was the first link-up of its kind in the UK.

The publicly-quoted FI Group, based in Hertfordshire, will second 120 staff to the First Banking Systems joint venture company, with Bank of Scotland transferring 310 employees.

The bank is obliged contractually to give the joint venture company, in which it will have a 51% stake, at least #150m worth of work during the next five years.

With rates which it will charge the bank for work agreed beforehand, First Banking Systems will be able to make profits from improvements in its productivity. Bank of Scotland will be entitled to 51% of these, which will effectively amount to a partial rebate of its information technology expenditure.

Brobbel highlighted preparation for the European single currency and the creation of a corporate data ''warehouse'' as among the projects on the blocks for First Banking Systems.

The joint venture company, which will be chaired by Bank of Scotland treasurer Gavin Masterton, will also work on an overall systems framework suitable for Bank of Scotland's longer-term needs and on replacing and maintaining existing systems. It will be based for the time being at the bank's main computer centre at Sighthill in Edinburgh.

Brobbel said FI Group had been working for Bank of Scotland for about a year and both parties had realised they could work ''much more closely together''.

But he emphasised that the sale of products and services which were developed by First Banking Systems to outsiders was some way off.

''While we will look for opportunities more widely than the bank..., bearing in mind what we have to do for the bank in the next few years, that is a long-term focus.''

Information technology has played a key part in the development of Bank of Scotland, which has been forced by its lack of branches south of the Border to exploit alternative delivery systems.

Masterton said: ''Banking is a rapidly changing business and we are determined to position ourselves at the leading edge through the sophisticated use of existing and emerging technologies.''