City wakes up to EMU's true costs

With only two years to go until the first stage of European monetary union (EMU), the nature and cost of the systems and business process changes is beginning to dawn on financial institutions.

A spokesman for one investment bank said City firms were slowly realising that to survive, their entire business infrastructure would probably have to be rethought. 'It's like suddenly we are on a steam train hurtling down a hill, and it can't be stopped,' he said.

IT is the greatest cost of restructuring a business to deal with the single currency, at 54% of the total cost, according to European Banking Federation figures. The second biggest cost is marketing and public relations, at 15%, followed by staff training at 10%.

One City firm said that, despite promises from the Government and the IT community, it was probable that many City institutions will not meet the deadline.

As well as system costs, the loss of revenue from foreign exchange and the growing threat from non-traditional players is certain to have an impact on the profits of many City firms.