Comments regarding the Parliamentary Auditors' report on the privatisation of cash management

In connection with the publication of the Parliamentary Auditors' report "The privatisation of cash management", the Riksbank wishes to describe the motives behind, and developments in, this work.

Analyses made by the Riksbank during 1997-1998 showed that the cash management system in Sweden was less efficient than it could be. By offering a service to the banks at no charge, the Riksbank had contributed to the preservation of an outdated structure. The banks had no reason to rationalise a system which cost them nothing. The Riksbank therefore wanted to make the cost of cash management visible and allow the banks to carry it, which would give them a clear motive to make operations more efficient. It would also stimulate greater competition and product development. The Riksbank's office structure and method of working was also outdated and costly. The Riksbank wanted to focus on its core business and reduce its own costs for cash management by transferring the office network to the banks.

The company Pengar i Sverige AB (PSAB) was established in 1999, following a decision by the General Council of the Riksbank in 1998. During the company's first year of operation a number of measures were taken to improve the efficiency of the operations and clearly separate the company from the Riksbank. One step in this direction was to create a new IT system, which also increased security throughout the cash management chain. The development of this system, which was considered a necessary condition for transferring the company to the banks, took longer and cost more than calculated. The new system was not complete until winter 2002.

Commercial operations had been expanded in the meantime. There was then criticism from competitors, who claimed that the company could benefit from its close links to the Riksbank. This was a factor taken into account in the Riksbank's decision in April 2002 to divide PSAB into two companies: a parent company that covered the operations close to the Riksbank, SKAB, and a subsidiary covering the commercial operations, PSAB. This split was implemented in autumn 2002.

The costs of the split proved much greater than expected. Restructuring costs in connection with closing down premises, IT costs and reductions in staff were the main reasons for this. In addition, the transport operations had expanded rapidly, which led to losses. The development of PSAB, in particular the transport operations, delayed the planned sale of the company and led to the company's managing director leaving in November 2002.

In February 2003 the number of offices for inward and outward delivery of the Riksbank's stocks and the destruction of worn banknotes was reduced from eleven to four. At the same time, the pricing of these services was adjusted. This led to both a desirable rationalisation of cash management and to the banks taking over a large part of the costs.

During winter 2002 and spring 2003 the work was aimed at divesting the subsidiary PSAB. At the same time, a decision was taken within PSAB to concentrate operations more in order to cut costs further. The chairman of the parent company SKAB resigned.

The Riksbank's tasks include promoting a safe and efficient payment system. The work on cash management is part of this task and the responsibility for carrying out the work has lain primarily with the Executive Board of the Riksbank. Reports on the work have been made regularly to the General Council and the Governor of the Riksbank has given an account of these issues to the Riksdag Committee on Finance on a couple of occasions during spring 2003.