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To: Sam who wrote (24682)	12/21/1998 4:06:00 PM
From: goldsnow	Respond to of 116931

Banks Prepare for Euro Switch Monday, 21 December 1998 B R U S S E L S , B E L G I U M (AP) THOUSANDS OF bank employees will be working round the clock over the long New Year's weekend getting ready to usher in the European Union's new single currency. They have to make sure computer networks, accounting rooms and trading systems are ready for the euro when financial markets re-open Jan. 4. "We'll have the pleasure of spending New Year's Eve, and the whole weekend, at the bank," said Jean-Francois Colin, euro-project coordinator for Banque Nationale de Paris. "There's an enormous pile of work to get through." The banks' frantic run-up to "E-day" will mark the culmination of years of preparation for the unprecedented monetary switch by 11 of the EU's 15 nations. Banks, more than most other businesses, will be in the vanguard of adopting - and adapting - to the new currency. Exchange rates at which the 11 member currencies will be absorbed into the euro will be fixed at European Union headquarters on Dec. 31, leaving the banks just four days to adapt software programs to convert stock shares, bonds, deposits and loans into euros before markets open the following Monday. The European Bankers Federation estimates the switchover will cost the sector almost $10 billion. Some euro-troubles await. Foreign exchange trading in the 11 currencies joining the euro - long a lucrative business - will end Dec. 31. Banks that long have had a cushy business in their home markets will face competition from rivals in neighboring countries. Bond issues denominated in local currencies will disappear. "To be a strong European bank now you have to be a strong bank everywhere," said Dennis Phillips, spokesman at Commerzbank in Frankfurt, Germany. "There'll be much fiercer competition among banks." Despite such worries, Europe's banks are eagerly awaiting the euro. They see it boosting the continent's economies, which will mean more business for banks. By forging a giant currency union stretching from Portugal to Finland, Ireland to Austria, the euro will tear down barriers to trade, eliminate the risk of doing business in different currencies and spawn a flurry of frontier-free business, supporters say. They also say the union will help ensure stability in the nations' economies and interest rates. Bankers say that spells more opportunities than risks. "The euro will reshuffle the cards, and banks that have prepared well can reap the profits," said Colin. "We see the euro as a chance to gain market share." Banks can trawl for clients in all 11 nations by offering standardized products across the euro zone such as faster, cheaper cross-border money transfers and loans in euros. Centralized accounts would, for example, allow a company operating in the Netherlands to streamline business by paying suppliers and employees from a single euro account. Banks will be able to use savings deposited in one country to make loans in another, without fear of currency fluctuations. Stock and bond markets will expand. Freed from the limitations of their national market base, European banks hope the euro will allow them to build up greater global reach, backed by a currency they expect to rival the dollar for strength and stability. Things, though, will not happen immediately. Starting Jan. 1, banks will offer customers the choice of holding savings and checking accounts denominated in euros, or national currencies. Commerzbank, in a recent survey, found just 2 percent of its business clients were strongly interested in switching to the euro on Day One. Smaller businesses, in particular, plan to hang on to national currencies longer into the three-year transition period before euro notes and coins emerge to replace national currencies. Consumers will be even slower adapting. Since they'll still be doing their shopping in Italian lire, Luxembourg francs and Spanish pesetas, the vast majority are expected to keep their bank accounts in their national currencies. Bank mergers could increase, too.