Banks demand EMU aid

Date: 12/12/1996

By Chris Johnstone

A GROWING number of banks are calling on EU governments to help ease the costly path towards a single currency.

Hopes have been raised across the Union by a promise from Belgian Finance Minister Philippe Maystadt to consider whether banks can write off some of the exceptional costs of introducing the euro against tax. His pledge is the first indication that governments may be willing to help the banking sector.

Nikolaus Boemcke, general secretary of the Banking Federation of the European Union, said there were provisions in the Maastricht Treaty “that some costs may be borne by central banks”. But he added that it was not yet clear how far they would go in helping banks meet the conversion costs.

Some have suggested that exchange transactions between national currencies which qualify for euro membership ahead of the final change-over in 2002 should be free, said Boemcke, adding: “We are opposed to that.”

A spokeswoman for the Association Française Des Banques said it had not yet been notified of its government's decision, adding that Paris might not give a response before 1998, when the burden of the euro on banks would become clearer.

The group has repeatedly highlighted the 1.63 billion ecu a year paid by the sector in special 'discriminatory' taxes, such as levies on salaried workers and general expenses.

Dutch banks too are clamouring for help. “We are hoping that the Dutch government will look at the problem,” said the Netherlands Bankers' Assoc-iation's managing director Leo Overmars, adding “It is, of course, nonsense to say 'let the banks pay all of these costs themselves'.”

A round table of banks, consumers and the Dutch government will discuss the issues in spring after recent articles in the press created uproar by mistakenly suggesting that banks would charge individuals for euro conversion costs.

Germany's banking association said it had not put in any bid for government help. “Some of the big private banks consider it as an investment in the future,” said a spokesman.