Commerzbank and several Spanish banks are exiting

Frankfurt, Madrid The European payment system EPI, which was launched with great hopes, will at best be launched as a slimmed-down version. More and more financial institutions have doubts about the project and do not want to provide the necessary funds. Commerzbank, which has long supported the prestigious project, is now officially canceling its participation.

As of now, the cooperative DZ Bank is not involved either, reports people familiar with the negotiations. This caused dissatisfaction with many other financial institutions, after all, the comrades make up around a third of the German banking sector. In addition, the remaining institutes are now faced with higher costs. The DZ Bank, the leading institute of the Volks- und Raiffeisenbanken, did not want to comment on the subject.

In Spain, where originally 15 institutions had signaled interest, according to financial circles, only the major bank Santander is sticking to the project. Many other financial institutions, on the other hand, have dropped out. According to the Spanish online newspaper ‘El Confidencial’, BBVA and Caixabank have serious doubts, Sabadell and Bankinter do not want to take part. None of the institutes wanted to comment on this.

In 2020, several major banks founded the European Payments Initiative (EPI). The aim was to set up its own payment system in order to become more independent of powerful US corporations such as Mastercard, Visa and PayPal. By 2026, those involved are calculating investments of around 1.5 billion euros. Several governments and central banks support the project because they believe it is important for strengthening the European financial market.

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31 banks and two payment service providers were involved in the EPI interim company. However, many of the institutes have since turned their backs on it. At a meeting shortly before Christmas, according to financial circles, only ten institutes backed the project, eight said no. The rest didn’t want to be definitive yet.

Can DZ Bank still change its mind?

At the end of January or beginning of February, the final decision should be made as to who will be involved in EPI – and whether the whole project will be implemented at all. Until then, there will be many more intensive talks, said a person familiar with the negotiations.

However, Commerzbank will only follow this debate from the sidelines. A spokesman for Germany’s second-largest private bank told the Handelsblatt that EPI is the right idea to promote European payment transactions. However, numerous institutes from various European countries have already declared their withdrawal.

“The remaining range and relatively high initial investments are no longer consistent – so the essential prerequisites for a strategic investment are not met,” said the Commerzbank spokesman. “That’s why we will not participate in EPI at the moment.” However, the institute will evaluate new options at EPI and constructively support the further development.

According to financial circles, DZ Bank canceled its participation not only because of the reduced range, but also because the new federal government has not yet made any binding commitments for public funding. Supporters of EPI, however, hope to change the mind of DZ Bank, after all, the institute could easily afford the investments, unlike Commerzbank.

In the Federal Republic, the savings banks still stand by EPI. Deutsche Bank has also been saying for a long time that it considers an independent European payment system to be important and supports the efforts. According to insiders, the same applies to the French financial institutions and the Dutch ING, which initially only wants to participate with its Belgian subsidiary. Those involved can well imagine that EPI will start with this slimmed-down field of participants – and they hope that this nucleus will grow into a larger project over time.

Spanish banks flashed off with advance

The Spanish financial institutions have long been considered wobbly candidates within the framework of the EPI shareholders. According to financial circles, many of them shy away from the investments – according to “El Confidencial” 200 to 300 million euros – especially since it is unclear whether they will ever yield a return.

In addition, many Spanish banks have an international presence, especially in countries that do not participate in EPI, such as Caixabank in Portugal or Sabadell in the UK. Santander, on the other hand, is active in several European markets – in addition to Germany, including France, Italy and Poland.

In addition, the Spanish banks have already spent a lot of money in the past to set up Bizum – a mobile-to-mobile payment system with around 18 million users. They are technologically ahead of institutes in other countries. The Spaniards would have liked to integrate Bizum into EPI in order to save costs, but according to insiders, this move was turned down.

However, several Spanish banks, which do not want to participate in EPI at the beginning, are keeping open to joining at a later date and refer to the example of ING. The Dutch institute was not one of the founding members of Bizum in Spain because it had its own system, Twyp.

However, when Bizum established itself and was successful, ING later joined. However, the bank now has to pay a higher price for using the technology than the founding members, who once invested in expanding the system.

More: Seven EU countries support banks push for European payment system

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