ABN AMRO announced today that Deutsche Postbank AG had chosen it as a provider of CLS third party services.
The award was made after ABN AMRO’ s Global Transaction Services (GTS) business demonstrated its ability to deliver tested Continuous Linked Settlement (CLS) third party services across Deutsche Postbank’ s global operations, explains Heiko Fischer, Director of Deutsche Postbank. “International reach, reliability and trust were key criteria in our decision,” he says. “ABN AMRO is able to provide a comprehensive portfolio of tested CLS services for our developing FX business.”
The Deutsche Postbank mandate is the first CLS mandate the Durtch bank has secured in the German market. “This mandate is a ringing endorsement of ABN AMRO’ s commitment to the CLS project,” says John Gibbons, Global Head Cash, Payment & Custody Sales at ABN AMRO GTS. “As a result, we are immediately able to deliver the multiple benefits of CLS to a wide range of end users. Deutsche Postbank conducts business in every corner of the world and we are delighted to have been selected as their partner against some tough worldwide competition.”
ABN AMRO was a founding shareholder of the CLS initiative in 1997 and last month was approved as a first wave Settlement Member of CLS Bank, launched on 9 September following authorisation from the Board of Governors of the US Federal Reserve System. CLS Bank will commence third party processing later this year and ABN AMRO will be among the first of over 60 leading financial institutions supporting CLS, immediately able to offer an operational third party service.
ABN AMRO says it is the only Settlement Member of CLS Bank to offer free of charge testing facilities for third parties, that enable interested banks and trading communities to trial CLS. “To date, 7 leading FX providers have undergone trials and a further 40 financial institutions have signed up for the unique end-to- end testing programme,” says the bank.
In a separate development, Deutsche Postbank and JPMorgan Treasury Services have announced that they have achieved an unprecedented 99% straight through processing (STP) rate in the processing of pension payments. Deutsche Postbank, a long-standing customer of JPMorgan TS’ payment processing services, asked Morgan to develop the capability necessary to ensure payments reached pensioners’ accounts in the required currency within the deadlines specified by relevant government regulations. Many of the payments lacked critical data and required significant re-formatting in order to be correctly routed. Additionally, OFAC (Office of Foreign Assets Control) stringent security regulations have further complicated international payment processing. JPMorgan TS currently processes 30,000 of these pension payments through its UK and German payment centres each day.
Dr Susan von Gunten, International Relations and Payment Solutions, at Deutsche Postbank comments: “Our client’s pension payments are routed to locations across the world, in several different currencies and with different formatting requirements. Correctly formatting the payments to conform to government and OFAC regulations was particularly difficult. We were very impressed with the flexibility of JPMorgan TS’ solution and the ability of its technology and key people to achieve such remarkably high rates of STP in light of such challenges.”
John Hazlewood, Product Management Executive EMEA, JPMorgan TS adds, “JPMorgan TS’ hub infrastructure, which includes payment processing centres in key global locations, and meticulous approach to implementation ensures these critical payments are received by the pensioners on time. In our initial testing phases, 66% of the total list had OFAC violations, purely because of the nature of the countries where the payments needed to be disbursed. Similarly, 25% of the payments were missing critical details in several electronic payment fields. At the start of the project these payments were only reaching 27% STP rates. We brought that figure up to 99%. This is testimony to our implementation capabilities, technology and global presence. We also had outstanding co-operation and support from the Deutsche Postbank team, which is at the heart of the relationship we enjoy with Deutsche Postbank and key to the success of this venture.”