Major Italian banks are members of the Euro Banking Association (EBA), which provides same-day transfer service in euros on a netted basis using the SWIFT (Society for Worldwide Interbank Financial Telecommunications) messaging network. The EBA operates an integrated pan-European Economic Area crossborder euro retail-payments system provided by Italy’s Societa Interbancaria di Automazione (SIA-SSB), the firm that operates the automated platforms for Italian payments systems. Major Italian banks participate. The system automates the processing of high-volume, low-value payments with an International Bank Account Number (IBAN). This system, called STEP 2, has since January 2008 offered credit transfers compliant with Single Euro Payment Area (SEPA) standards introduced on that date. The infrastructure is in place to offer SEPA direct debits. The target date for that is November 2009, the last date for transposing the European Payments Service Directive (2007/64) into national legislation. However, if the directive is implemented by one or several member states before that date, then EBA could move faster.Intesa Sanpaulo (ISP) is part of two banking alliances that facilitate cash management for banks without large international networks, and it is the only Italian bank in either network. One is the IBOS Association (formerly the Interbanking Online System and now using the tag line “International Banking–One Solution”); the other is the Unicash alliance. ISP belongs to both because it resulted from the merger of Intesa (a Unicash member) and Sanpaolo IMI (an IBOS member). There are 12 IBOS member-banks in total. Most of the banks are headquartered in Europe, but four are in North America. All IBOS banks can concentrate funds nightly into a pooling or zero-balance structure. In the euro area, it is possible to pool in euros across the whole region. Unicash has 26 members located in Europe (including Russia) and one in the US. Unicash has similar objectives to IBOS. It also offers one-stop account opening and cross-border cash pooling. Members have their roots in the co-operative banking movement, so they may not be ideal partners for large companies in some countries. On the other hand, some firms may find they are dealing with banks with partial roots in this movement without realising it, including ISP itself, Credit Agricole of France and Lloyds TSB of the UK.Transfers in euro can be made in real time domestically through the Bank of Italy’s Banca d’Italia-TARGET2 (known as Bi-Rel until May 1st 2008). This is also the entry point for cross-border euro transactions with countries participating in the Eurosystem’s TARGET2 platform. According to the central bank, five financial institutions accounted for more than 50% of the traffic in Bi-Rel in 2007, and three of these accounted for 40%. Of these, two are non-Italian specialists in custody and settlement.TARGET2, an upgrade of the TARGET RTGS system introduced for the euro when it was launched in 1999, was introduced by the participating countries between November 2007 and May 2008. TARGET2 is based on a single shared platform run jointly by the central banks of France, Germany and Italy rather than on a hub-and-spokes model. Services are available for euro transactions with the 15 euro-area member countries plus Denmark, Estonia, Latvia, Lithuania and Poland. Slovakia will become part of TARGET2 when it adopts the euro on January 1st 2009. The UK and Sweden, which were part of the original TARGET system, are not in TARGET2.Banca d’Italia-TARGET2 is the most expensive method of making a cross-border payment and is intended for interbank traffic, but many companies use it because of its sophistication and speed. The system incorporates multilateral netting for securities settlement via a delivery-versus-payment link, Express II.ISP and UniCredit are shareholders and settlement members of CLS Bank, which provides continuous linked settlement of foreign-currency transactions. A number of other Italian banks are third-party participants. CLS Bank provides global multi-currency settlement services for foreign-exchange transactions and some derivatives transactions, using a payment-versus-payment mechanism (that is, where one currency leg is settled if, and only if, the leg in the other currency is also settled). An interbank settlement process uses the RTGS systems of the central banks of the 17 participating currencies to create a real-time, five-hour funding, settlement and payment window. The currencies are the Australian, Canadian, Hong Kong, New Zealand, Singapore and US dollars; Israeli shekel; Korean won; Mexican peso; pound sterling; euro; yen; the South African rand; the Swiss franc; the Swedish krona; and the Danish and Norwegian krone. CLS is liquidity-hungry but reduces the need for forex exposure and speeds settlement. It handles some 55% of all forex transactions worldwide.Bank charges have historically been high in Italy, but competition, electronics and borderless screen-based trading have changed this for corporate customers.

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