Last Steps for SEPA?

In the final session at the sixth annual EBAday, panellists from across the European transaction banking industry argued that the end was in sight for the single euro payments area (SEPA) project. Björn Flismark, senior vice president, SEB, led the charge by saying that the industry is now taking the ‘last steps’ in SEPA migration.

Kirstine Nilsson, SEPA and Payment Services Directive (PSD) co-ordinator at Swedbank, agreed, adding that the industry could see the light at the end of the tunnel, referring to the greater surety of end date legislation for legacy payment instruments. “We have done the boring stuff in order to pave the way [for SEPA], and now it is time to harvest the fruit,” she said.

In the opening session, Soledad Núñez, general director of the treasury and financial policy, Treasury of Spain, set the tone of the Marid conference and focused her speech on Spain’s adherence to the raft of financial regulations being rolled out by Brussels, with an emphasis on SEPA, effectively steering clear of any discussion of Spain’s economic woes. Núñez said that currently 23% of payments were now SEPA-compliant, from a 1% start in 2008. She proudly stated that the central government was setting a good example to other public payers by making 100% of its payments as SEPA Credit Transfers (SCTs).

Yet after nine long years of discussion and debate, it is quite difficult to believe that the end is nigh. In Flismark’s earlier session, entitled ‘Towards a SEPA Migration End Date’, the panel was less sure.

Michael Thom, retail issues, consumer policy and payment systems, European Commission (EC), said that the end date “is coming”. The permanent representatives of EU Member States have approved the text of the EC’s draft migration regulation – which promotes two end dates of February 2013 for SCTs and February 2014 for SEPA Direct Debits (SDDs) – and the draft has now moved to the European Parliament for negotiation. Thom believes that an agreement should be reached by the autumn.

However, the European Parliament is angling for one end date. Simon Newstead, head of financial institution (FI) market and business strategy, global transaction services, RBS, also agreed that one end date was better than two. Although Newstead believed that SEPA is now close to “crystallising”, he listed a number of items on his wishlist, including:

  • Removing the ambiguity for corporate clients as to whether they will be obliged to use XML standards.
  • A fuller recognition of the difference between corporates and consumers, in terms of corporate opt-out schemes.
  • Improved corporate/consumer direct debit checking measures.
  • A complete audit, country by country, of domestic niche payment products that will survive after the end date(s).

Some believe that the industry is so keen on putting SEPA behind it that the debate has already moved on. Sean Fitzgerald, chief executive officer (CEO) and managing director, Sentenial, said: “The conversation has moved on before we have solved the last problem. There is still a lot of work to do before SEPA is over and done with.”

In terms of new issues that the banking industry has to deal with, Basel III struck a chord with participants and discussions continually returned to this topic. In the opening roundtable, ‘The New Era of Transaction Banking: Strategies for Growth’, Alexander Caviezel, managing director, treasury and securities services, Europe, Middle East and Africa (EMEA) executive, JP Morgan, expressed concern over the unintended consequences of new regulations, particularly Basel III.

In the session entitled ‘Financial Supply Chain – Convergence of Trade Finance and Payments for Corporates?’, Martin Thomas, managing director, treasury services, also at JP Morgan, warned that Basel III, as it currently stands, will drive trade finance out of business, because of collateral requirement for working capital deposits. In this context, supply chain finance, or business-to-business (B2B) finance as it is termed by Enrico Camerinelli, senior analyst for corporate banking at Aite Group, will come into greater focus in the coming period.

The sixth annual EBAday attracted 650 participants and 37 exhibitors. In 2012, EBAday will be held in Edinburgh.

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