Deutsche Bank added the most recent accession countries units to an existing desk it had in Frankfurt, which traded the Hungarian forint, the Polish zloty, the Czech koruna and the Slovak koruna. The bank said it expected opportunities to be created in these countries as currency pegs are removed.
HSBC has similarly reorganised its emerging markets desk in London to reflect the changing status of some accession currencies from emerging to mainstream. Derivatives in currencies such as the Czech koruna are now in the derivatives book in London, rather than the emerging markets desk.
Rabobank meanwhile has been focusing on building its teams for the new Europe at subsidiaries in the new states. For example, Rob van Zadelhoff, general manager at Rabobank Polska in Warsaw, said it is introducing structured finance and other products in Poland.
Bank of America said it is making changes to its foreign exchange desks in anticipation of the new Europe, although it is too early to discuss its plans. Citigroup, as it already has staff on the ground in these countries, said there would be little impact on its operations.
By joining the European Union, the 10 accession countries do not necessarily have to adopt the euro – of the 15 current EU members, the UK, Sweden and Denmark are still outside the single European currency. However, the EU says its members must “treat their exchange rate policy as a matter of common interest and pursue price stability".
Among the 10 new EU states, Lithuania and Slovenia are most likely to meet the convergence criteria soonest. Deutsche Bank timetables them to achieve economic and monetary union in 2007, while forecasting 2010 for Poland and the Czech Republic.