Banks press for more euro aid

Date: 25/09/1997

By Chris Johnstone

EUROPE'S banks are stepping up their flagging campaign to recoup more of the costs of introducing the euro in spite of their failure so far to win concessions from a single government.

The European Banking Federation is pressing its claim that banks be paid directly by member states for some of the tasks involved in the change-over - or be allowed to impose additional charges on customers to cover some of the costs - as an end-of-year deadline looms for a European Commission report on what action they can take.

The federation estimates that private banks face a total bill of 8-10 billion ecu for introducing the euro.

But consumer organisations have attacked the idea that banks should be given support or allowed to charge customers, arguing that they will be among the biggest long-term winners from the single currency.

So far, they appear to be winning the argument. The Belgian, French and Dutch governments have all rebuffed pleas for extra help from their national banking associations, and a Bonn finance ministry spokesman said this week that the government had “no plans to make any cash payments for this”.

The Belgian refusal in particular has punctured the sector's early hopes of a breakthrough, with Finance Minister Philippe Maystadt retreating from earlier promises to consider higher tax concessions to compensate banks for their extra costs.

“The administration eventually said it was impossible to work out what the extra costs were compared to the rest of the economy,” said a top Belgian banker, who added that Germany and France had taken a firm line against other European governments giving their banking sectors extra help because they wanted to fight off any domestic claims for assistance.

Paris has refused to respond to its banks' demands that a unique French tax related to the number of staff they employ be phased out as compensation for footing the bill for the euro, and the Association Française des Banques is now focusing its energies on backing the wider EU campaign.

Ironically, the German Banking Association is not seeking any extra support, acknowledging that the euro will bring long-term benefits to the sector.

The Commission has so far chosen to duck the issue, although an expert group is working on it. A communication from Economics Commissioner Yves-Thibault de Silguy due out next week on the practical aspects of the transition to the euro will make only a passing reference to the question.

“We are being very cautious,” said one official. “The chances of us doing anything at European level on this are zero. The chances of doing anything at national level are low. It would be like opening a Pandora's box if one country was allowed to give extra help.”

Banks are also impatient for news of the precise date when they will have to cope with putting millions of new notes and coins into circulation, as the debate continues over when the euro should replace national currencies in people's wallets.

The date of January 2002 was originally pencilled in by heads of state, but a battle is raging over whether that timetable should be kept to, brought forward to October 1991, or put back to February 2002. After hearings this week, the Commission indicated that it did not favour the autumn date.

European retail lobby group EuroCommerce has registered strong opposition to the January and October dates. It says that January would be the worst of all scenarios for retailers, coming at a time when they are recovering from the Christmas rush and preparing for January sales. October is also out of favour because it falls in the run-up to Christmas.