Thanks to a long holiday weekend, their own well-laid plans, and reduced trading volumes this week, major banks encountered few technical problems as they ushered the euro into world financial markets.
The race to complete software conversions began at the close of business on New Year's Eve. Thousands of bank and stock exchange employees worked around the clock to be ready to execute euro transactions Monday morning.
The weekend capped months of preparations, which for many institutions included several full dress rehearsals. When all was said and done, many had finished the job ahead of time and under budget.
"From the money-center banks to the clearing banks to the global custodian banks, they all prepared very well," said John Devereaux, partner in charge of PricewaterhouseCoopers' European Monetary Union initiative in the United States.
As expected, trading on major exchanges early in the week was slower than usual, until confidence in the conversion process could build. On Monday, Jan. 4, the London Stock Exchange reported 12,461 euro trades, worth 7.3 billion pounds.
"The smoothness and quietness of the market has been a pleasant surprise," said Susan Kirchhoff, a London-based vice president of J.P. Morgan & Co. "In general, people have been trading in euros and it's working."
Citigroup reported foreign exchange volumes that were 70% of normal volumes on the first business day of the year, and they have been building since then.
"We're feeling comfortable that we have moved from conversion to operating in Euroland," said Janet Allen, marketing and communications manager for the global corporate bank's European Monetary Union program in London.
Last weekend, Citigroup had 2,000 people at work on the project around the world. All software conversions were completed by midday Saturday, London time, Ms. Allen said. Lengthy product and general-ledger reconciliations and analyses were completed by 2 p.m. Sunday.
Communication was a critical component of the conversion. Citigroup used open conference-call facilities, posted issues to be resolved on an internal Web site, and recorded instant-replay messages on phone lines for staff in technology and operations and customer service. Citibank's EMU executive board of directors was on-site at the command center and account managers also were available over the weekend to answer customer questions.
Citigroup's command post in London is still in operation. "All the businesses have nerve centers that are continuing to keep an eye on how the markets are settling this first week," Ms. Allen said.
J.P. Morgan also emphasized communication, with managers around the world participating in conference calls every three hours over the weekend. Their two-minute updates were supplemented by status reports submitted regularly via a Lotus Notes system set up specifically for the event. The bank continues to hold two conference calls daily-at midday and 6 p.m. London time.
So far no problems have been reported, Ms. Kirchhoff said. The 800 people who worked around the clock last weekend finished the conversion seven hours ahead of schedule. The entire project came in 10% below budget, she said.
Northern Trust Corp. battled a weekend weather disaster in its headquarters city of Chicago and still managed to complete the conversion ahead of schedule. A fifth of the bank's 400 euro staff members could not get in to the office.
Contingency plans involved moving some reconciliation work to London, said Jean Sheridan, executive vice president of international services. "We still stayed ahead of schedule."
"I haven't heard that anyone failed, which shows that the securities industry got together and got it done," she said.
The world over, banks reported trouble-free conversions. At Allied Irish Bank the conversion, though paired with yearend processing, went "remarkably calmly and smoothly," said Caitriona Murphy, EMU planning unit manager in the capital markets division. The Dublin bank had 250 people in over the weekend, working in shifts.
At Chase Manhattan Bank, "conversion was very pleasing," said Anthony Davies, euro project manager. Things went even better than in the three earlier dress rehearsals, he said. The 1,800 people working in shifts over the weekend completed the project ahead of deadline.
At Deutsche Bank, with 2,000 people working worldwide, "we finalized everything by 10:30 a.m. central European time on Sunday, and it functioned perfectly," said press spokesman Detlev Rahmsdorf. By Dec. 31 bank statements with account balances in euros were ready for dispersal through automated teller machines, he said.
BankBoston reported completion of the project 15% under budget, saying it spent 0.75% of its total annual operating expense on the conversion. "We ended up finishing early because we used automated conversion programs," said Charles Mallis, managing director and euro business manager.
The safe launch of the euro is emboldening banks as they look ahead to the next big test-their year-2000 conversions.
Thomas Perna, senior executive vice president of Bank of New York, called the euro "somewhat of a test run for year-2000" as a "disciplined, coordinated process."
Ms. Kirchhoff of J.P. Morgan said that though the euro has helped the bank refine its year-2000 approach, there remain differences in the nature of the two projects.
"With year-2000 we'll be making technical changes ahead of time and waiting for things to go wrong," she said. "With the euro, banks orchestrated a huge conversion that had to happen in a short space of time."
People who worked on euro projects are set to be redeployed. At Bank of New York, 400 specialists will move to "other revenue-producing projects we want to get on to," Mr. Perna said.
BankAmerica has already begun assigning its 350 euro operations people to the year-2000 effort.
"Working through a change of this magnitude is always helpful," said Dan Riley, group executive vice president for global treasury services at Bank of America. "There was a lot of new code in all of our systems, so in effect it was a preliminary test for a year from now," he said.
Citigroup learned that "preparations and rehearsals were crucial," said Ms. Allen. Besides its seven rehearsals, the bank flowed payments through different countries' systems for two weeks before the weekend.
"We honed and honed the time line so that the weekend went smoothly and the interdependencies were well understood," she said.
All the work has "paid off on the Street and around the world," said Mr. Perna. "I haven't heard of anyone having major problems."
But just because the conversion is over doesn't mean it's over. BankBoston has begun educating tellers about retail euro issues, as customers planning trips to Europe are already coming into branches for advice.
"We're telling them to take euro travelers checks or their credit cards with them," Mr. Mallis said.