ABN Amro And Rabobank Respond To Changing Central Bank Roles By Forming Joint Cash Processing Company Called Gavea

Another European transactions bank was formed last week as two Dutch banks, Rabobank Nederland and ABN AMRO, agreed to launch a joint cash processing company named Gavea on 1 October 2006. The two banks says the decision to co operate

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Another European transactions bank was formed last week as two Dutch banks, Rabobank Nederland and ABN AMRO, agreed to launch a joint cash processing company named Gavea on 1 October 2006.

The two banks says the decision to co-operate will enhance quality assurance, control, stability and supervision. In addition, they say, the alliance will deliver cost savings in processing and information technology. Both banks are taking a 50% interest in the new company.

Gavea will provide employment for 225 employees (full time equivalents) who will all be from ABN AMRO. There will be no staff migration from Rabobank and no job losses as a result of the cooperation, because Rabobank does not employ any staff in these activities.

The two banks decided to cooperate in this field because the Dutch Central Bank will largely phase out its cash processing tasks from 1 January 2008. The daily counting and recirculation of euro notes and coins will then be transferred to recognized parties capable of meeting the highest quality standards, as set by the Central European Bank.

This means that responsibility for cash circulation and related activities will be transferred to the bank. Cash processing is a relatively cost-intensive activity owing to the substantial investments as well as additional costs for security and guaranteeing continuity. By joining forces, Rabobank Nederland and ABN AMRO aim to keep the long-term costs of cash processing under control.

“In setting up a joint venture, ABN AMRO and Rabobank Nederland are taking a logical step in their aspiration to cut costs and improve the quality control of cash services,” says Piet van Schijndel, member of the Executive Board of Rabobank Nederland. “That will ultimately benefit our banking customers.”

Ron Teerlink, a member of the Managing Board of ABN AMRO, says it was the fact that the two banks were able to meet the strict recirculation standards of the European Central Bank and the Dutch Central Bank since July last year that made the alliance possible. “This enables both banks to benefit optimally from the economies of scale resulting from joint cash processing,” he says. “It also gives us a chance to control upward pressure on costs.”

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