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14 The 2012 <strong>guide</strong> to GLOBAL RISK TRENDS ExECUTIvE SUMMARy: THE SEPA jOURNEy SO FAR SEPA is a politically driven European payments harmonization initiative designed to turn fragmented national markets into a borderless-payments zone in which there are no differences between national and intra-European euro payments. SEPA consists of 32 countries – all 27 EU member states (including 10 noneuro countries), the remaining countries of the European Economic Area (EEA), and Switzerland and Monaco. KEy DATES > 1999: Introduction of the euro > 2000: EU’s Financial Services Action Plan to create a single market for financial services (included the demand for a single payments market) > 2002: Launch of the SEPA initiative by the European banking sector > 2008: Launch of the SEPA credit transfer > 2009: Launch of SEPA direct debit > 2014: February 1, deadline for mandatory migration to SEPA credit transfer and SEPA direct debit ExECUTIvE SUMMARy: SEPA CREDIT TRANSFER AND SEPA DIRECT DEBIT Corporates must be using the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD), instead of existing non-urgent mass credit transfers and direct debits, by February 1, 2014. SCT enables payment service providers to offer a basic credit transfer service in euro throughout the eurozone whether for single or bulk payments. Users benefit in terms of functionality, cost effectiveness, ease of use and processing efficiency.
The 2012 <strong>guide</strong> to GLOBAL RISK TRENDS 15 The disease is spreading The failure of European leaders to stem the debt crisis is contributing to uncertainty, not only across the eurozone, but also in parts of central and eastern Europe and Latin America, where parent banks dominate the local financial scene. But, as Hungary and Argentina both illustrate, the rise in risk cannot be explained by bank stability indicators alone In the light of a possible break-up of the eurozone, ECR’s contributors have begun to question the relative strengths of central and eastern Europe, to such an extent that the region appears to be on a convergence path with Latin America, which had hitherto been considered a more risky alternative for corporate treasurers seeking safety. The eurozone debt crisis is invariably a big part of the story. The robustness of banking systems in some of the CEE region’s larger sovereigns – Ukraine, Hungary, Turkey etc – continues to be questioned, against the backdrop of weakening economies, the disintegration of cross-border ties fuelled by the crisis and interbank lending constraints. Supported by the liquidity boost from the ECB’s long-term refinancing operations (low interest rate funding to eurozone banks), there doesn’t appear to be any major credit crunch taking place, and fears of a mass withdrawal of parent banks from the CEE region have so far proved unfounded. Still, falling ECR scores highlight how the Greek crisis is making Cyprus and some of the Balkan states more vulnerable, and how spillovers from the eurozone may complicate treasury management. Operational risks must also be factored in, as bank guarantees may prove invalid, and bank accounts could be frozen or closed entirely, if the crisis spins out of control - a worst-case scenario, perhaps, but one which is worthy of attention. Yet the situation is far from uniform. Some countries are standing tall against the attenuation of risk. Bulgaria, Romania and Lithuania haven’t seen any further deterioration in their ECR scores this year, and the Czech Republic is still the safest CEE sovereign, ranking 22 on ECR’s global scale – with its banks considered stronger than any eurozone members, bar Finland and Luxembourg. As the Financial Times recently reported, the Czech Republic’s average non-performing loan ratio is very low at 5.9% (according to central bank data), compared to 16.3% for Romania and 20.4% for Serbia. And foreign currency “ … a potential shake-out of the Latin American banking sector, as stronger regional lenders attempt to gain market share from Spanish and Portuguese banks divesting assets
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