Alliance & Leicester fears euro conversion costs

Alliance & Leicester fears euro conversion costs

Alliance & Leicester says that the cost of converting its systems for the possible introduction of the euro in the UK will be more expensive than dealing with the Year 2000 millennium computer bug.

The UK government has set a June deadline on deciding whether to hold a referendum on ditching the pound in favour of the single European currency.

In its results statement, A&L says the switchover to the euro will be a complex task, which may affect the bank's performance through 2003.

Richard Pym A&L group CEO states: "If the government is given a euro mandate by the UK electorate, it is vital that the UK banks and the government itself be given sufficient time to convert all the complex systems that constitute the UK’s financial and economic backbone."

The bank, which commands a 2.9% market share of the gross UK mortgage market, posted an 18% rise in 2002 pre-tax profit to £468 million thanks in part to the booming UK housing market. The value of mortgage applications through A&L's branch, telephone and Internet channels increased by over 50%.

Over £750m of applications for mortgages and unsecured loans were received directly from personal customers via the Internet in 2002. The bank also succeeded in shifting two-thirds of applications from mortgage intermediaries to its new online intermediary system Isis.

A&L also launched a new Internet banking package for current and savings account customers in July 2002 following a three-year redevelopment of its systems infrastructure. "The new package uses middleware technology and is proving extremely successful, having already attracted over 100,000 registrations with no significant marketing of the service," says the bank. "We are planning to further enhance this service in 2003."

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