As heated discussions continue to surround the potential sale of sale of Visa Europe to Visa Inc., a distinct split between financial institutions in the United Kingdom and their counterparts in mainland Europe is emerging.
According to information given to Mark Kleinman at Sky News, UK banks (most notably Barclays) are trying to exercise an option that would force the sale of Visa Europe, whereas French and other European banks are trying to prevent such a move.
The recent push by UK banks to sell Visa Europe is based on new discussions with the Financial Policy Committee (FPC), which could result in British banks needing to raise £25 billion (US$38.1 billion) by the end of the year to raise their minimum cash reserves. As a result of the regulation, British banks are looking for ways to quickly boost their reserves and view the sale of Visa Europe as an efficient means of raising up to £7 billion pounds ($10.7 billion).
While the percentage of the proceeds of the sale of Visa Europe would be determined by the volume of business they conduct through the payment network, it is understood that in addition to Barclays, Lloyds, and to a lesser extent, the Royal Bank of Scotland and HSBC all hold a significant stake in Visa Europe. However, across the English Channel, European banks are trying to stop the sale in order to maintain their influence in the network’s operations. A third scenario, however, may be present. The Wall Street Journal reported last month some Visa Europe members are considering plans to create a payments system that would compete against Visa and MasterCard.
If the sale of Visa Europe to Visa proceeds, it will undoubtedly shake up the European market as banks on both sides of the English Channel lose influence in the network’s capabilities and operations. While the establishment of a new payment network may just be talk, (given the fact it would face an uphill struggle against Visa and MasterCard) it too could change the dynamics of the status quo.
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