CLS

 

Media release date:

15 October 2001

 

Country release

Norwegian Krone extends global reach of CLS Bank

CLS to eliminate settlement risk in ten currencies

Ten currencies are now eligible for CLS Settlement through CLS Bank. The Norwegian Krone as well as the Swedish Krona and Danish Kroner are being added to seven other global currencies. Institutions using CLS Settlement remove the time risk when settling foreign exchange transactions. Banks will be able to  settle in a new real time five hour window which does not exist in today's markets, for the first time linking many of the globe's real time gross settlement systems and ultimately reducing the costs of cross-border transactions.

CLS today formally announced its intention to add the Norwegian Krone and the Danish Kroner and Swedish Krona to its list of Eligible Currencies as soon as the necessary arrangements can be put in place.

CLS Group enjoys the support of many of the world's largest commercial and investment banking organisations that collectively account for a substantial majority of cross-currency trading. The new currencies will join the Australian Dollar, Canadian Dollar, Euro, Japanese Yen, Pound Sterling, Swiss Franc and United States Dollar as CLS Eligible Currencies. With the addition of the Scandinavian currencies, CLS Bank will offer settlement facilities for currencies that are used in more than 82% of all global foreign exchange trades.

Currencies become eligible once the full CLS Bank approval process has been satisfied and the technical implementation is completed. The objective is for the three new currencies to become eligible within a year of CLS going live.

CLS Bank will provide a new global infrastructure for multi-currency payment clearing and settlement services. The process of continuous linked settlement (CLS™) will eliminate settlement ("temporal") risk in cross-currency payment instruction settlement through a payment versus payment process - making cross-currency settlement simultaneous for the first time. This new service provides information that will enable banks to track the settlement process in real time and reduce costly reconciliation errors.

CLS Bank will hold accounts with the Scandinavian central banks - the Norges Bank, the Danmarks Nationalbank and the Sveriges Riksbank - and will hence establish links to the national Real Time Gross Settlement (RTGS) systems. This will enable CLS to provide global settlement in these currencies with a similar degree of finality and certainty for CLS-settled instructions as is provided through a domestic RTGS.

Announcing the new currencies, Joseph De Feo, President and CEO of CLS Bank, said: "With the addition of the Scandinavian currencies, we will be able to provide FX settlement in 10 currencies. We are gaining momentum and this significant development endorses the strength of support for CLS Bank amongst the global banking community. Shareholder banks within this group are set to benefit from CLS Bank in terms of reduced risk and improved liquidity management."

In a joint statement, the three Scandinavian central banks - the Norges Bank, the Danmarks Nationalbank, and the Sveriges Riksbank -said: "CLS is a private sector initiative, which is actively supported by central banks around the world. The on-going international integration, combined with increased consolidation of the global banking industry, has made foreign exchange settlement risk one of the main risks facing our banking industry. CLS represents a method to significantly reduce the settlement risk facing each bank as well as the potential for systemic risk in the financial sector. The elimination of settlement risk will serve to strengthen the global financial system, and we welcome the addition of the three Scandinavian currencies to CLS."

Audun Bø, head of Den norske Bank Markets and deputy CEO, said: "Den norske Bank has supported CLS as a shareholder since 1998. The system is essential in our efforts to reduce risks for FX-transactions. For Den norske Bank as the largest financial institution in Norway, inclusion of Norwegian Krone is important both for risk reduction purposes and as a basis for further development of services to our customers."

 

Notes to Editors

About the Norwegian central bank

Norges Bank is the central bank of Norway. Further details are available at www.norges-bank.no.

About Den norske Bank

Den norske Bank (DnB) Group is the largest financial services group in Norway. The group has Norway's most extensive distribution network and 1.8 million active retail customers. It is the principal bank for more than 50% of Norway's 300 largest corporates, and handles more than 50% of the daily payments turnover in Norway. Pre-tax operating profits for the year 2000 were NOK 5,248 million and for first half of 2001 NOK 2,967 million.

About CLS

‘Continuous Linked Settlement' (CLSä ) is a process that enables two legs of a cross-currency transaction to be settled simultaneously. Representing a significant shift in the way cross border settlement has been done for centuries, it is a real-time, global settlement system that eliminates the settlement risk caused by delays arising from time-zone differences.

The continuous linked settlement service is offered by CLS Bank International (CLS Bank), a "bankers' bank" that will provide a new global infrastructure for multi-currency payment clearing and settlement services, initially in foreign exchange.

CLS Bank now has 67 shareholders. Together they account for a substantial majority of the cross-currency transactionsacross the globe and have invested more than $300 million to develop the settlement service.

CLS Bank is based in New York, regulated as a bank by the Federal Reserve Bank of New York, and is a wholly owned subsidiary of CLS Group Holdings, incorporated as CLS Services Ltd., a UK company based in London.

Further information on CLS, including shareholder details, can be obtained at: www.cls-services.com

CLSä is a trademark of CLS Group Holdings (incorporated as CLS Services Ltd.)

CLS eligible currencies are: Australian Dollar, Canadian Dollar, Danish Kroner, Euro, Japanese Yen, Norwegian Krone, Pound Sterling, Swedish Krona, Swiss Franc and United States Dollar.

 

Contact

For further information please contact:

Norges Bank (Norwegian central bank):

Jon Solheim, Executive Director +47 22 31 63 36

Den norske Bank

Oddbjørn Vevle +47 55 21 16 57

CLS Group:

Jeffrey Manton, Communications Director +44 20 7971 5700/09

Grandfield Public Relations:

Nick Moreno/Mani Venmans +44 20 7417 4170