Because of European payments initiatives, non-European banks are incurring additional costs, totaling US$25 million for the industry.

Boston, MA, April 16, 2008 – A new report from Aite Group, LLC provides an overview of various European payments initiatives and takes an in-depth look at those that impact non-European banks. Based on qualitative interviews of 15 non-European banks, the report provides suggestions for ensuring compliance with these regulatory and business practice initiatives, and minimizing unnecessary changes, which could prove costly and time-consuming.

Since the introduction of the euro as a common currency for many European countries, there have been a number of initiatives leading up to the Single Euro Payments Area (SEPA). Regulators drive some activities while other activities focus on processing efficiency. In recent years, there has been a requirement for payments originators in the European Union and European Economic Area to provide an international bank account number (IBAN) and bank identifier code (BIC). Although the IBAN is not adopted broadly beyond Europe, some European banks are charging non-European banks repair fees, delaying payments settlement and returning payments unprocessed, which costs the banking industry approximately US$25 million.

"All banks must ensure they understand the fundamentals of the European payments initiatives and are communicating them to their clients," says Nancy Atkinson, senior analyst with Aite Group and author of this report. "Careful review of nostro/vostro account statements is essential to identify inappropriate charges. Banks need to be aggressive in negotiating for refunds of those charges, and may have to change correspondent banking relationships in order to avoid incurring erroneous charges."

This 21-page Impact Note contains 10 figures and two tables. Clients of Aite Group's Wholesale Banking service can download the report by clicking on the icon to the right.

Related Aite Group Research:

• Asia-Pacific Cash Management: A Survey of the Region's Largest Banks
• Canadian Cash Management: A Survey of the Country's Largest Banks
• The Primary Challenges and Trends in European Cash Management: The Drive Toward Cash Optimization

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