In another European custody realignment ahead of the introduction of the euro, Paribas and the Bank of Austria group have entered into an co-operation agreement for securities and custody services throughout 17 countries.

Like the recent Mellon-ABN AMRO tie up, when it was done on a joint venture basis, this initiative involves the provision of settlement clearing, custody and other services to international institutional investors. For Paribas customers, where the bank offers direct services in Belgium, France Germany, Greece, Italy, Luxembourg and Spain, the deal adds Austria, Poland Czech Republic, Croatia, Hungary, Romania, Slovenia, Slovakia, with Ukraine being added later this year. These last nine are the territories covered by Bank Austria and Bank Austria Creditanstalt International's subsidiaries. Turkey is available through Paribas's existing agreement with Ottoman Bank.

Both players regard the move as the first global European service to these additional new markets. Access to central and eastern Europe for major global custodians, broker/dealers and institutional investors will be significantly enhanced," say the banks. In addition to harmonising services and introducing new products, the agreement will see the banks adopting a common operations platform and joint business management.

The aim of the agreement is to respond to client demand, the two banks say, for regional security services for both the main and smaller markets in Europe, by providing centralised technology and standardised core services. "It creates the most comprehensive multi-direct securities service network offered by any bank," the banks claim.

Karl Bruck, head of custody division at Bank Austria in Vienna, says: "The economic and capital market developments in Central and Eastern Europe will result in further new issues and strong demand from in-vestors for quality custody services in these markets." This trend will be reinforced with some of these countries wanting to join the EU.

"This co-operation reflects the strong demand for a pan-European approach to securities services provided by European institutions," says Jaques-Phillippe Marson, head of Paribas Global securities services division in Paris. The combined service of the two banks will provide "seamless access".

Both banks will retain separate legal entities and remain as individual counterparties to their clients. On their relative strengths from a staff numbers viewpoint, the banks are similar, with Paribas employing 20,600 world wide while the Bank Austria has around 19,000. Fennell Betson"