French Bank to Bring Cross-Border Online Investing to Europe

Embattled French bank Paribas announced Friday that it will launch Europe’s first cross-border Internet brokerage by the end of the month and will team up with American online brokerage firm Ameritrade to sell European stocks to U.S. investors by year’s end.

The Paris-based bank, which is currently embroiled in a takeover bid by rival Banque Nationale de Paris, will launch the brokerage in eight European countries — France, the UK, Italy, the Netherlands, Germany, Austria, Spain and Finland.

Called “e-cortal,” the brokerage will sell to European investors by having them deposit funds in its bank subsidiaries in the eight countries, thus avoiding costly international transaction charges.

The bank will charge a flat fee of 15 euros ($15.89) for trades up to 5000 euros, which is less than most European brokerage firms charge. Paribas said that the new brokerage would also take phone orders.

While European trade and travel has been altered drastically since the signing of the Maastricht accord earlier this decade and the subsequent adoption of a single currency, cross-border transactions can still be cost-prohibitive. Paribas’ announcement will surely spur more competition in the months to come.

European Online Financial Services Heating Up

According to a report by Paris-based BlueSky International Marketing, the number of European financial institutions offering online banking services nearly doubled over the last six months, from 703 to 1,265.

That steep rise coincides with an online trading boom in Europe, which is seeing dramatic rises in accounts as more and more Europeans log on to the Internet. Some 36 million Europeans viewed the Internet last year, according to J.P. Morgan Securities. The firm predicts that the number will spike up to 127 million by 2002.

Of those users, J.P. Morgan predicts that 8.3 million will have online brokerage accounts, with Germany and the UK predicted to gather the lion’s share.

Paribas is not the only European financial institution with its eyes on cross-border transactions, but it did strike the first blow. That it did so while the subject of one of Europe’s most bitterly fought takeover battles is a testament to the French saying, “c’est la vie.”

Rival Banque Nationale de Paris is bidding to take over both Paribas and Societe Generale, another large French banking rival. Paribas and Societe Generale had planned to merge, but Banque Nationale de Paris wrested control of 65 percent of Paribas’ shares in the $37 billion takeover bid.

Paribas’ chairman resigned last month after the merger with Societe Generale failed.