Euroconex

Infobox_Company
company_name = Euroconex
company_
company_type = Private
company_slogan = Superior Payment Solutions
foundation = Dublin, Ireland (200)
location = Dublin, Ireland
key_people = Billy Saunderson, CEO
num_employees = approximately 55,000 2006
industry = Finance and Insurance
products = Financial Services
homepage = [http://www.euroconex.com/ www.euroconex.com]

Euroconex was a financial services company, headquartered in Dublin, Ireland. Now known as Elavon.

History

Pre-2000

In the years before 2000, Nova Information Systems were looking for ways to expand beyond it's traditional North American marketplace, where it had already reached saturation. However European banking is an expensive and heavily regulated business.

At the same time, Maurice Keane, the Group Chief Executive (Executive Director) of Bank of Ireland Group, was seeking cost efficiencies and outsourcing deals with suitable partners. Keanne, only the second Bank 'insider' to hold that position, had an extensive background in many of the Banks operations, including corporate treasury, group financial & credit control, corporate finance and stockbroking. On top of that, he had exposure to multinational business at Harvard and whilst working in the Bank's international business section [http://archives.tcm.ie/irishexaminer/1999/05/15/bhead.htm Irish Business News, May 15, 1999 ] ] . He was noted as having determined that the bank would have to spend money, in order to make money and had a 'warchest' estimated at IRE£800 million, EUR1.4 billion.

2000

As of result of this converging of interests, Euroconex was founded in 2000 as a joint venture between Nova and Bank of Ireland, the deal being signed on June 23 2000 BOI Annual Report 2001] . Nova would initially host an acquiring system in the Bank of Ireland Computing Centre in Cabinteely, a suburb of Dublin, and develope the facilities outside Dublin to support the operation. The first objective of migrating the BoI acquiring functions within 6 months. In return, Bank of Ireland would provide access to the European banking systems as the 'Sponsor Bank', thus neatly circumventing associated difficulties that Nova would have had in accessing this market.

To this end, Nova localised and updated their US-centric acquiring system, adding support for multiple currencies & languages, support for BIN-based processing, LASER Debit cards, and American Express (as Bank of Ireland was then issuing AMEX cards under the 'Centurion' brand). At the same time, Euroconex availed of attractive incentives from the IDA Ireland to set up a facility in the depressed port-town of Arklow, consisting of a call-centre and server-room facilities [ [http://www.entemp.ie/press/2000/010800.htm DETE - Public Relations - Tánaiste Announces Major International Services Project for Arklow, Co. Wicklow Investment will Create 1080 New Jobs for Arklow and Loughlinstown – H... ] ] .

The flagship Euroconex product is Dynamic Currency Conversion, whereby a non-Irish card holder can elect to pay in their native currency, paying a reasonable rate of exchange (compared to that charged by the cardholders own bank). Euroconex received discounted daily rates directly from the Bank of Ireland currency trading desks every day. This discounting allows Euroconex to turn over a greater profit with a smaller markup.

Initially, the new company was staffed entirely by placements from Bank of Ireland and Nova. Within 9 months most staff had returned to their original posts in the parent companies, however the senior executive positions were still held by former BoI & Nova employees;

2001

"The transfer of the credit card merchant acquiring business to EuroConex means that the headline figure for non interest income is virtually unchanged from last year"

The 8th largest bank in the US, USBancorp, takes over Nova Information Systems. US Bancorp has limited non-US activities, and after some uncertainty, re-affirms it's commitment to the project as it's bridgehead in the attractive, but largely closed, European markets. Maurice Keane also goes to some length to reaffirm the Irish banks’ commitment, describing the venture as an "important strategic development".

In July, Euroconex makes it first acquisition, paying €1.5million for Flexicom, an Irish developer of card-acquiring solutions.

2002

Maurice Keane resigns as Group Chief Executive. His replacement, Michael Soden, has been headhunted from "National Australia Bank" with a mandate to boost profits. Rather than continuing to spend on new investments, Soden seeks to minimise expenditure by outsourcing large parts of the Bank, and immediately plans to outsource the IT department to HP. He publicly speaks of more plans such mergers with other banks, including Irish-based AIB and UK-based Abbey National. Both of these deals fell through [ [http://www.iboa.ie/examiner021019.htm IBOA - Irish Bank Officials Association ] ] , and his outsourcing efforts made him very unpopular with Bank staff. As part of this effort to maximise profits, Soden scaled back investment in Euroconex, at the same time as US Bancorp was planning on ramping up investment and aggressively pursuing mergers and acquisitions to aid growth.

Soden is much less committed to the Euroconex project than Keane, and the flow of funds from Bank of Ireland starts to dry up, even as USBancorp make available more funds to expand the business. The previously close relationship between Bank of Ireland and Nova/USBancorp starts to break down.

Conflict over TSYS

Friction comes to a head as Bank of Ireland invites proposals for the outsourcing of the credit-card issuing function. As Euroconex had already invested in systems capable of handling card-issuing, it is a serious blow to the relationship when Bank of Ireland signed letters of intent with TSYS [TSYS Annual Report 2002] , a major Nova competitor. TSYS are also expanding into the European marketplace, and have already signed Royal Bank of Scotland (owners of Ulster Bank etc.), and Dublin-based AIB, which is the largest bank in Ireland. Many US-based executives took this transfer of business to a competitor as a serious breach of trust and an act of folly, as Bank of Ireland are in a position to recoup 50% of any profits from any Euroconex card-issuing business. It is rumored at the time that the contract was awarded to TSYS as a result of personal acrimony on the part of some Bank of Ireland group executives towards the Euroconex CEO Billy Saunderson from his time at Head of Credit Card Services in Bank of Ireland.

2003

A sign of the lack of investment from Bank of Ireland is that the development of new facilities in Arklow are put on hold while Euroconex elect to enter discussions with the IDA on the subsidising the costs. This causes frustration within USBancorp.

The first public sign of conflict between US Bancorp and Bank of Ireland came in late 2003, when Keith Dignam resigned from Euroconex due to conflicts with USBancorp executives, specifically the valuations of the company and erosion of his involvement in Mergers and Acquisitions by Stuart Harvey Jr, a US Bancorp nominated and employed executive. Euroconex split his functions between two roles;

David Flynn, formerly Financial Controller, became Head of Finance, responsible for the day to day financial administration of the company.

Stuart C Harvey, formerly of Piper Jaffreys (an entity of US Bancorp) and nominally working for Nova Information Systems, in practice assumed responsibility for Mergers and Acquisitions.

2004

Throughout the first half of the year, Euroconex focused on the upcoming Chip & PIN implementation, and on July 22, 2004 first CHIP transaction in Ireland occurred on a Euroconex terminal.

The first major acquisition under Harvey occurs in April 2004, when Nova announces that Euroconex is to buy Polish process “CardPoint” from “Bank Zachodni WBK “, owned by AIB [ [http://findarticles.com/p/articles/mi_m0EIN/is_2004_April_23/ai_n5996227 NOVA to Acquire CardPoint of Poland from Bank Zachodni WBK | Business Wire | Find Articles at BNET ] ] , netting AIB approximately €17million in profit [AIB Annual Report 2004] . This move allows Bank Zachodni to ‘sponsor’ Euroconex’s operations in Poland.

Just one week later, Bank of Ireland announces that it is to sell it’s stake in Euroconex to USBancorp for €40million, valuing the company at €80million. Presumably this was known to Euroconex before the CardPoint deal was announced, and quite possibly the timing was quite deliberate to prevent AIB asking for more money from the now sole-owners of Euroconex (AIB probably having a very good idea of the state of Bank of Ireland’s finances, would have had a good idea how much Bank of Ireland would be willing to offer).

Immediately, Nova announces deals with Spanish Banco Santander, and the UK-based Alliance & Leicester, with 27,000 merchant accounts [http://www.finextra.com/fullstory.asp?id=11740 Finextra: Nova to buy Alliance & Leicester's merchant acquiring business ] ] . Immediate investments are made in upgrading key infrastructure to deal with the anticipated 600% increase in traffic from Alliance & Leicester, while in Arklow the recruitment of Spanish-speaking customer services staff is started.

As part of each deal, Euroconex would receive access to foreign exchange facilities, and receive discounted daily rates from each Bank for use by that Bank's merchant base.

"We can seamlessly manage the transition of a merchant processing portfolio. Alliance & Leicester's merchant customers will continue to benefit from advanced processing services, and will have access to a full portfolio of solutions fitting the needs of a variety of vertical markets." Billy Saunderson, CEO Euroconex

USBancorp starts a concerted effort to bring Euroconex under tight control, sidelining key Irish managers and appointing USBancorp or Nova employees into Irish-based positions. The most important technical teams are put under US-based (Acquiring) or US-appointed (Clearing, Datawarehousing) management. The rational for this move is that Irish managers are duplicating an existing function, in reality the Irish systems are much advanced and technically complicated than the older US versions. The US systems, for example, have no concept of multi-currency transactions or settlements (although multi-currency functionality would be ported to the US in 2004) and do not process transactions based on Card BINs.

USBancorp also appoints Stuart C Harvey to the board of Euroconex, giving him authority over all the Irish executive officers.

2005

After installation of a second host in Park West, Dublin, Euroconex complete the Alliance & Leicester migration without significant problems.

USBancorp cancels the Employee Share Ownership scheme, and forces all employees with shares to sell them back to USBancorp. The price offered by USBancorp is based on a valuation of €80 million from USBancorp owned (and Stuart Harvey affiliated) Piper Jaffray. This is the same value as in 2004 when Bank of Ireland exited, despite significant capital investment and acquisitions in the intervening period. Piper Jaffray was fined €25m in 2002 for providing biased advice on stock.

In November, Euroconex announces the largest acquisition to date – Citibank Card Acceptance, with the transfer of 160 staff from Citibank to Euroconex.

Meawhile the USBancorp continues to extend it’s control of Euroconex. The CIO of USBancorp assumes responsibility for Euroconex. Euroconex CIO - and long-time Nova employee - Grant Putre is put in charge of development projects, but resigns within months, and subsequently forms a new company with Joe Cohane, former Euroconex COO, and Ed Gredzinski, former Chairman and CEO of Nova. Willie Byrne, head of Sales and Marketing, takes leave of absence for a year.

Immediately afterwards, Nova announces redundancies at Euroconex due to “fiscal pressures”. This is widely seen by Euroconex employees as a pretext for ousting the former Bank of Ireland executive still at Euroconex, and Billy Saunderson resigns as CEO soon after. Roger K Alexander, a London-based Citibank executive, immediately replaces him, presumably on the recommendation of Stuart Harvey, now President of Euroconex.

2006

Euroconex is re-branded “Elavon”

Billy Saunderson and Willie Byrne set up Worldnet TPS [http://www.worldnettps.com] .