Deutsche Bank, Deutsche Postbank and ING today announced their principles for bilateral interbank Single Euro Payments Area (SEPA) clearing.

The objective of SEPA is to create a zone for the euro where mass payments can be processed regardless of country borders. This will be followed by the migration of the domestic Euro legacy schemes to the new SEPA instruments.

Following the initial roll-out of SEPA Credit Transfers (SCT) in January 2008 and SEPA Direct Debits (SDD), by 2009, local domestic SEPA volumes will ramp-up with domestic mass payments migrating to SEPA standards. At the beginning of SEPA interbank clearing, the focus will remain on the Pan-European Automated Clearing House (PE-ACH), of which banks will either be a direct or indirect member.  In view of an expected increase in market adoption, those financial institutions processing mass volumes of payments are seeking to exploit the efficiencies of direct file exchange between themselves for SCT and SDD in addition to the PE-ACH infrastructure.

The banks point out that for a successful SEPA migration highly cost efficient interbank processes are key. Bilateral clearing comes into play as soon as volumes increase. “Bilateral clearing should be seen as working like freeware. It is openly available in the market with no provider model involved and a direct exchange is set up between two given banks” says Robert Heisterborg, Global Head of Payments and Cash Management, ING.

To allow for an easy introduction of a bilateral channel, some of the leading payments banks - Deutsche Bank, Deutsche Postbank and ING - will apply principles and standards that are in line with PE-ACH clearing regarding file formats and communication means. A direct bilateral file exchange will be organized so that it will take place at least once a day and can be easily enhanced with higher frequencies according to the bank’s needs. The settlement is effected with a single payment for each file exchange. Mario Daberkow, Member of the Management Board, Deutsche Postbank highlights that “it will therefore not be necessary to integrate bilateral clearing into a clearing house as banks will process the settlement via the existing high-value mechanisms.”

As soon as SEPA clearing volume takes up, the banks will implement this alternative clearing channel and other like-minded banks are welcome to leverage the opportunities of these direct file exchanges. Werner Steinmüller, Head of Global Transaction Banking, Deutsche Bank, concludes that “it is now the right time to put in place similar principles for bilateral clearing so that banks can utilize the economic benefits when roll-out becomes viable through mass SEPA volumes. These efforts right now will result in future benefits for the entire market.”

Deutsche Bank
Deutsche Bank is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With 75,140 employees in 75 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.

Global Transaction Banking (GTB) comprises commercial banking products and services for corporate clients and financial institutions, including domestic and cross-border payments, professional risk mitigation for international trade, asset and liability management and the provision of trust, agency, depositary, custody and related services. Business units include Cash Management, Trade Finance, Trust & Securities Services and Capital Market Sales. We employ over 3,800 professionals in more than 35 countries.
www.db.com

Deutsche Postbank AG
With 14.6 million domestic customers and total assets of € 190 billion, Deutsche Postbank Group is one of Germany’s major financial service providers with a core focus on retail banking.

In its Transaction Banking division it performs back office services for other financial service providers. It is the German market leader in payment transactions, processing 7.2 billion transactions per year.

ING
ING Group is a global financial institution of Dutch origin offering banking, insurance and asset management to over 75 million private, corporate and institutional clients in over 50 countries. With a diverse workforce in excess of 120,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand.