Swift's CEO Headed for New Connection
The chief executive of Swift, the international bank messaging network, has announced that he will leave to become head of a European telephone company.
The resignation of Bessel Kok comes as the Brussels-based bank consortium readies a new foreign exchange settlement service that will compete with FXNet, a service already offered by another joint venture of international banks.
Mr. Kok, CEO since 1984, said last week that he had accepted "in principle" an offer to be chief executive of Belgacom, the recently deregulated Belgian national telecommunications company.
A Gradual Departure
Mr. Kok, 49, will remain at Swift through the end of the year and will continue to advise Swift for another year. His successor is to be chosen at a board meeting in September. Mr. Kok has been at Swift since its inception in 1973.
Mr. Kok has seen Swift through major technological changes. Over the past two years, Swift has been engaged in a major upgrade of its network that will allow it to offer a broad range of new services, from electronic data interchange, to various types of trade settlement.
Two U.S.-based banks and two French banks are poised to test one of these new services, which will enables banks to settle foreign exchange, swaps, and options transactions with a lump sum payment at the end of the day.
One of the banks is Midland Bank U.S., but Swift officials declined to name the other three. The French banks will begin netting next week, and the U.S. banks will begin in two weeks.
The service will be commercially available to any member institution in September.
This method of settlement, called netting, has grown more popular as banks seek to reduce operating and credit risk. Typically, banks establish individual agreements with each one of their biggest trading partners.
Advocates of netting say the arrangements can reduce credit risk by between 40% and 90%, depending on the number of counterparties and the size of the business they represent.
The Swift service will compete with FXNet, a London-based consortium of 18 banks established for the purpose of netting foreign exchange transactions.
How It Works
"We match the deal, net the position, and at the end of the day we tell the bank, |This is your net position,'" said Jean Daniel Dejonge, marketing director for Swift Service Partner, a subsidiary of Swift.
Mr. Dejonge said that Swift expects to have 15 customers for the netting service by the end of this year and 40 by the end of next year. FXNet currently does netting with 18 members in the United States, Europe, and Japan.
The Swift system differs from FXNet in several ways, Mr. Dejonge said. FXNet is solely a system for foreign exchange netting, while Swift will handle swaps and options in addition to foreign exchange. However, FXNet provides a legal framework for counterparties that specifies liability in the event of a dispute over a transaction.
Swift does not handle these agreements, and it tells each subscriber to the service that they must draw up their own agreements with counterparties.