and brokerages in Bermuda as they seek to service international clients. Ahmed ElAmin reports On January 4, the day of the holiday declared by the PLP, staff at Bermuda's three banks and local investment brokerages will be working to keep international clients operating on the world's markets.

Not only will the major trading markets all be open for business, but it's also the day when 11 European currencies become pegged to the Euro, a single currency which will begin trading on January 4 for the first time (see story below). The conversion will create the second largest trading currency in the world -- at least electronically.

The three banks have been gearing up their systems in preparation for the big day. While the Euro is being phased in over two years, and there is no compulsion to use it, many companies are already prepared to use the currency in their operations.

Bank of Bermuda president and chief executive officer Henry Smith said the company was currently trying to assess how much manpower would be needed on January 4.

The bank has originally told all staff they couldn't take any vacation time during the Christmas and New Year's holiday season to deal with any problems encountered in the change over to the Euro. Apparently the restriction has been relaxed as the bank feels its systems are "Euro compliant''.

Mr. Smith said the bank was used to having staff work during a local Bermuda holiday that was not a recognised international holiday.

"However, the January 4 holiday happens to coincide with the introduction of the Euro, an event that has broad implications for financial businesses, particularly those operating European subsidiaries,'' he said. "At this point, we are trying to assess our specific manpower requirements but, certainly, a significant amount of staff in treasury, systems, asset management and corporate trust will have to work on that day to service our international clients.'' The situation is the same at the Bank of N.T. Butterfield and Son Ltd., bank executive vice president and chief financial officer Richard Ferrett said.

"The Euro is a major event and we have been gearing up for it over the past year,'' he said. "We are ready to go live with the Euro.'' He estimated that the bank had "several $100 million'' of funds under administration which will become part of the Euro. There was another $25 million in deposit in the cash in currencies that convert to the Euro. It will all be up to the customer on how they handle the conversion.

He noted that some businesses in the UK have decided that they will do all billing in Euros next year, making the conversion now rather than later. The bank has modified its computer software to automatically convert currencies, bonds and equities to the Euro as necessary or as determined by the customer.

"If our customers want to make wire payments in Euros or drafts we will be able to do so for them,'' Mr. Ferrett said.

The bank's treasury, asset management, global custody, and trust areas will remain open for business on the holiday. The bank is not compelling staff to come in on the day, but has asked them to volunteer.

"Our staff in these areas appreciate the need to service clients,'' he said.

He said the advent of the Euro would also be significant for Bermuda's insurers and portfolio managers as it would give another option to hedge risk.

"It gives insurers more leeway to hedge their exposures in another major currency other than the US dollar,'' Mr. Ferrett said. "It gives the ability to spread risk. It's important for portfolio managers.'' The bank also planned on launching a Euro class in its triple-A rated money market fund this month as part of its plans to give customers the option, he said. It's able to do so ahead of time because of the existence of the European Currency Unit, the ECU, which converts on a one-to-one basis to the Euro.

Bermuda Commercial Bank managing director Peter Roberts said the bank would have reduced staff on hand during the holiday to service international clients.

Banks face January 4 Euro crunch The bank has sent out a memo to its staff and clients on the conversion to the Euro and is fully geared up to handle the new currency, Mr. Roberts said.

UBP Shadow Finance Minister Grant Gibbons has labelled the PLP declaration of the holiday in celebration of its election victory as a "costly exercise in vanity'' and estimated it would cost $10 million in staff overtime and lost productivity.