One event making waves in foreign banking circles is the Swiss Central Bank's decision to remove an arbitrary limit to the Swiss Franc (CHF), which saw it shoot up 20% virtually overnight last week.
Australian international payments company Ozforex Group Ltd (ASX: OFX) released an announcement to the market this morning to inform investors that the company has not been adversely affected by the change, with CHF payments making up less than 1% of total business.
Travellers watching their trip to pricy Switzerland suddenly become outrageously expensive might be aggravated, but OzForex shareholders can rest easy.
The second announcement of note from the company today concerns its relationship with Westpac Banking Corp (ASX: WBC), which will be ceasing its relationship with Ozforex later this year.
Quoting the announcement from Ozforex, 'is it understood that this decision does not reflect any concerns that Westpac has specifically with the OzForex business'.
Westpac and other banks in general are transitioning away from international payments in response to tightening controls on the sector. As the relevant regulators attempt to cut down on the risks of 'home-grown' financing of international terror and criminal groups.
While this makes it more difficult for payments businesses and legitimate residents sending funds back to families overseas, the change is not expected to materially impact OzForex.
OzForex uses Westpac to access wholesale foreign exchange ('forex') markets, and stores its Australian dollar cash balance at the bank.
Management informed the market that OzForex will use its international network of banking partners to 'replace the services that Westpac currently provide with minimal impact for our clients'.
Overall it looks to be a case of nothing to worry about for shareholders, but there is the possibility of some disruption or costs to do with transitioning to a new bank.
In addition, having been partnered with Westpac for several years, OzForex may suffer some temporary indirect penalties due to a loss of a relationship that made running the business easier.
Furthermore there is the potential for different processes and regulations both at a new bank and from corporate regulators to impact OzForex's business, but those changes are an 'if and when' thing and remain nebulous and uncertain at the present.
Ultimately I see no compelling reason for investors in OzForex to change their investing thesis as a result of today's announcements.
