Introduction of a single European currency may force multinational banks to cut their fees for cross-border payments by as much as 50% by 2005, according to a Boston Consulting Group study.

Competitive pressure and customer expectations associated with the euro could cut the cost of a cross-border payment from $16 in 1995, the latest year for which full data are available, to $8 in 2005, the study said.

Though the volume of cross-border payments is projected to expand 11% a year through 2005, pricing pressures are expected to slow growth in revenue from this business to 2.8% compounded annually.

"We continue to predict a small but steady growth in revenues in total but a big drop in price per payment," said Nicholas Viner, a London-based vice president of Boston Consulting.

He added that European banks will feel the sting much more than their U.S. counterparts.

"It hits the absolute revenue very crudely for anybody playing in the European cross-border environment," he said.

Banks worldwide are also facing pricing squeezes in their domestic markets, the study said. A shift from paper to cheaper electronic processes is expected to drag down the price of a domestic transaction from $1.26 in 1995 to 80 cents in 2005, according to Boston Consulting.

No more than five global banks with strong treasury management systems will dominate cross-border payments, Mr. Viner predicted. U.S.-based money- center banking companies such as Citicorp, Chase Manhattan Corp., and BankAmerica Corp. are among the contenders, along with Hongkong and Shanghai Banking Corp., a subsidiary of HSBC Holdings PLC of London, and ABN Amro Holding of the Netherlands.

Competition is expected to heat up for the banking business of multinational corporations in Europe. Most of them, about 3,500, will consider consolidating their accounts with banks that have global capabilities, Boston Consulting said.

"We see some of the big U.S. banks investing heavily and putting a strong base down in Europe," Mr. Viner said.

Some U.S. banks are establishing alliances with European banks to share cash management services. For example, First Chicago NBD Corp. recently joined Inter-Bank Online System, a cash management consortium of U.S. and European banks that agree to serve one another's corporate customers.

Such agreements "will give regional banks in Europe access to the U.S. markets, and it will give U.S. regional banks access to the European markets," said JoAnne Glazer, senior vice president at Chase Manhattan.

Others are investigating relationships with the 15 private-sector clearing systems throughout Europe, each of which is vying to provide low- cost multilateral netting services.

In addition to Target-a payment system geared to the euro and developed by the European Monetary Union that is to become the equivalent of the Federal Reserve's Fed Wire funds transfer system-each country has a private clearing system for large- and small-value payments. One is the Paris-based European Banking Association, which hopes to model its role on that played by the New York Clearing House Interbank Payment System.

Others are Euro Access Frankfurt, a private system in Germany offering advanced settlement and finality capabilities, and EuroChaps, a London- based, real-time gross settlement system for large funds transfers.

"You have a lot of competition going on right now," Ms. Glazer said.

Chase has joined multiple European clearing systems, she said, and temporarily put on hold a decision to narrow its participation in them. "My expectation is that, over time, they will consolidate," she added. "The question is how."

All the major payment-clearing banks are joining these systems, said George Thomas, senior vice president at the New York Clearing House Association LLC. "They are all getting on different horses to see which one wins," he said.

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