City National Bank in Beverly Hills has added foreign currency exchange services to its Web site to bring in more high-net-worth and international trade and give itself more ammunition against bigger banks.

The $8.9 billion-asset started the exchange service last week. Users can immediately exchange dollars for other currencies, for investment purposes or to conduct business abroad.

City National has offered phone and fax foreign currency exchange for five years and is among the first midsize U.S. banks to offer it online, said Mark Mayers, senior vice president and manager of its international division. Fee income from foreign exchange already accounts for 60% of the division’s revenues, which were $14.9 million in 2000.

Technology consultant Avivah A. Litan called the addition “a perfect example of using the Internet to level the playing field with bigger banks” — such as Citi, Morgan Chase, Bank of America, and others that have Internet exchange services.

City National already had in place the back-office systems and correspondent banking relationships to obtain foreign currencies, so “all they had to do was put a front-end Internet face on it,” Ms. Litan said.

Mr. Mayers said his company is marketing the online exchange to its private banking customers — high-net-worth individuals who may want to invest in foreign currencies — and to its international trade business customers, who may need to buy foreign goods using the currency of another country. As part of the service, City National gives customers who hold letters of credit from the bank the option to obtain “forward contracts” — commitments from the bank to use a particular exchange rate quoted on the Internet for a later foreign trade transaction.

Since customers can obtain quotes and exchange currencies faster by using the Internet, there is less risk of losing money on account of exchange-rate fluctuations, Mr. Mayers said.

“The values of foreign currencies change every second,” he said. “If customers feel it’s the opportune time to lock in a price that would be profitable for them, they are able to seize the moment and do it immediately.”

But “the greatest benefits to the bank are greater efficiencies, particularly in the back office,” Mr. Mayers said. The Web service “frees up my foreign exchange officers from performing standardized transactions” so they can “sell more outside the office.”

This is the latest in a series of Internet additions at City National over the past year. In May 2000 it started inside@cnb, a private Web site that provides updates to select high-net-worth customers along with customized news and commentary, and the next month it started City National Securities, a discount brokerage with online services. In January it added cash management to the Web menu, in February it added an aggregation service called MyAccounts, and next month it expects to start offering online letters of credit for international trade customers.

Joseph K. Morford 3d, an analyst at Dain Rauscher Wessels in San Francisco, said City National has one of the best midsize-bank Web sites.

“They are building out a very competitive product offering to provide better service to their business and private banking customers,” he said. “It’s part of their overall strategy as they continue to compete against the larger banks.”

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