Belgians invest in meeting the deadline

Date: 28/11/1996

“WE DO not talk about that,” is Belgium's biggest bank's response to the idea that the country might not be among the first group of EU member states to form a single currency zone.

After spending around 50 million ecu on updating its computer systems, earmarking some 3.25 million ecu for telling business and individual clients what the euro means, and retraining most of its staff, Generale Bank would be more than put out if Belgium missed the 1 January 1999 party.

Generale Bank's preparations for the big day began nearly three years ago when it set up a reflection group to look into the problems posed by the single currency. The group's findings have made their way into the bank's core strategy, which now includes the search for German banks to buy and a readiness to expand within 400 kilometres of Brussels.

Managers are confident they will be ready to carry out all operations in euro, with time to spare, before 1999.

All the computer software changes needed to take the new currency on board will have been made by mid-1998, giving the bank six months to carry out tests. (One of the biggest problems for the computer boffins has been adding the extra two decimal places required by euro accounting.)

The result will be that all Generale Bank customers will be given the immediate option of changing their Belgian franc accounts to euro accounts in 1999. Those who stick to Belgian francs during the two-year period before national currencies disappear will receive bank statements with their balance in both francs and euros.

The year 2002, when Generale Bank and the rest of the Belgian establishment hope to see the Belgian franc relegated to history, will give banks a shorter, sharper shock as old money makes way for new.

Generale Bank expects some 10&percent; of its staff to be employed exchanging francs for euros in the first few months. That task will cost Belgium's financial sector around 75 million ecu, of which Generale Bank's share should be some 30 million ecu. It is estimated that 80 lorries a day for three months will be needed to collect up the 14,000 tonnes of Belgian coins in circulation.

On the profit and loss side of the euro change-over, Generale Bank is cautious about giving too much away.

Earnings from money-changing will fall in proportion to the number of countries taking part in the single currency - Belgium's immediate neighbours account for 65&percent; of its exchange operations.

On lucrative exchange operations, the bank is likely to lose out as the opportunity of playing key neighbouring markets evaporates.

But Generale Bank is actively looking to make up for these losses by expanding exchange operations with central and eastern Europe and emerging markets. The bank's current trading operations in Luxembourg, Paris, and Rotterdam are likely to be downgraded to satellites, while trading centres in New York and Hong Kong will give the bank the global perspective it needs.