Category: Finance

RBFA 2023: Global Banking, Fintech Stakeholders To Converge In London

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World fintech and banking industry stakeholders will converge in London, United Kingdom (UK) for this year’s edition of the Global Reputation Forum (GRF)/Reputable Banks and Fintech Awards & Conferences (RBFA), bringing together experts from both the financial and technology sectors 8-9 December, 2023.

The quintessentially British London Marriott County Hall will be venue to the annual event which provides a platform for fintech startups and established banking institutions to showcase their latest innovations.

Participating institutions and personalities get to witness firsthand how technology is transforming traditional banking services, from digital payments and lending to robo-advisors and blockchain-based solutions.

Besides its objectives of showcase of innovation, regulatory insights, knowledge sharing, networking, market trends and predictions, GRF aims to foster collaborations between fintech startups and traditional banks in an increasingly developing industry trend.

The Reputable Banks and Fintech Awards/Conference is an initiative of Reputation Poll International (RPI), a leading global management firm known for listing the 100 Most Reputable People on Earth and Most Reputable Bank CEOs.

According to the organizers, RBFA will create an environment where these two worlds can meet and explore opportunities for collaboration, which can lead to mutually beneficial partnerships.

Beldina Auma, RBFA Co-Chair Screening Committee and former Chair African Society for the World Bank and IMF, said: “Attendees have the opportunity to learn from thought leaders, exchange ideas, and form valuable connections that can lead to collaborations and partnerships”.

“As fintech and banking industries are subject to ever-evolving regulations, GRF will include sessions dedicated to discussing compliance and regulatory changes. This is crucial for ensuring that innovative financial solutions remain in compliance with legal requirements”.

“GRF will offer a glimpse into current market trends and future predictions. Experts analyze market dynamics, consumer behavior, and emerging technologies, helping attendees make informed decisions and adapt their strategies accordingly”, Dr. Rex Idaminabo said.

Auma explained that Reputable Banks and Fintech Awards/Conference is designed to acknowledge rapid expansion, integration, accelerated growth and reforms of Africa’s banking and financial sector.

Some of the Speakers/Panelists for the 2023 edition include: Baroness Verma, Yvonne Thompson CBE, Lord JD Waverly and Franklin Amoo.

Baroness Verma is a Member of the House of Lords, UK. She was spokesperson for Cabinet Office International Development, Women and equalities and Business Innovation and Skills.

Lord JD Waverly is a Member of the House of Lords. He serves also as Co-chair: Trade and Investment All Party Parliament Group and the Founder and Chairman of the GoGlobal Trade.

Franklin Amoo is a member of the United States’ President’s Advisory Council on the East of Doing Business in Africa. He is also Managing Partner, Baylis Emerging Markets and Head, African Private Equity.

Yvonne Thompson CBE is the Founder/President of WinTrade Global Network and Deputy Lieutenant for Greater London.

Banks in UK assess China risks after being stung by Russia sanctions

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Big banks in Britain are preparing for any future escalation of Western sanctions on China and have shared their “scenario planning” with the British and U.S. governments, a senior banking official has told Reuters.

The project involves sharing lessons learned from other sanctions frameworks, including those on Russia, and discussions about the effect any measures imposed on China might have, Neil Whiley, director of sanctions at lobby group UK Finance, said.

After many companies were wrongfooted by the speed and breadth of prohibitions on Russia, banks are drawing up contingency plans in case geopolitical tensions between the West and China escalate, seven finance industry sources said. They did not expect any imminent changes to sanctions.

The work by UK Finance – which represents around 300 firms, including HSBC (HSBA.L), Barclays (BARC.L) and JPMorgan (JPM.N) – examines the transparency of asset ownership and control and how easily Chinese products can be traced, Whiley said.

It also focuses on the extent of commercial ties between the West and China across industries, including supply chains in high-risk sectors like technology, and attempts to highlight measures that might backfire if applied to China.

The work has been carried out against a backdrop of tensions between the West and China over the status of Taiwan, which Beijing claims, growing export controls, accusations of Chinese spying and a security crackdown by Beijing on companies.

UK Finance convened fortnightly meetings of big British and overseas banks over several months, Whiley said, before drawing up a draft document that runs to tens of thousands of words. Reuters was not able to review the document.

The draft was completed in August and shared with Western government contacts in recent weeks, he said.

The U.S. Treasury Department, which runs the Office of Financial Sanctions Implementation, Britain’s Foreign Office and Barclays did not respond to requests for comment. JPMorgan declined to comment.

TRACING RISKS

The preparations have been driven in part by the unprecedented sanctions slapped on Russia following its full-scale invasion of Ukraine, which left some companies struggling to get assets out of the country or exit positions.

One of the bankers said sanctions on Russia had “removed naivety” among businesses and prompted the industry to think more deeply about China risks.

Communications between officials from the United States and China have increased in recent months, thawing frosty relations somewhat ahead of a meeting between Chinese President Xi Jinping and U.S. President Joe Biden next month.

China, the world’s second-largest economy, remains central to Western supply chains. The European Union’s trade deficit with China, for example, widened to $276.6 billion in 2022 from $208.4 billion a year earlier, Chinese customs data show.

British finance also has close ties with China. Two of the country’s biggest banks – HSBC and Standard Chartered – make most of their profits in Asia, forcing them to straddle the geopolitical faultlines.

HSBC and Standard Chartered declined to comment.

SURGE IN CALLS

Whiley said the UK Finance project was designed to be part of industry-wide “horizon-scanning” to assess potential risks across multiple countries, in line with regulatory guidance, and did not reflect expectations or requests for more sanctions.

Nonetheless, financial firms are alive to the risks.

Another banker, who works for a lender with a presence in Asia, said the bank’s board was planning for more strains between China and Taiwan and likely consequences for financial markets, including currency and equity reactions.

Lloyd’s of London underwriters are among insurers that have raised rates and cut cover for risks involving Taiwan as concerns grow about possible military action by China, Reuters exclusively reported in August.

Against that background, four lawyers in London reported a surge in calls from financial clients seeking guidance on China, from sanctions compliance and risk assessment through to how to deal with any investigations or enforcement.

Demand for advice was so keen that one lawyer, who declined to be identified, said his firm last month held its first client-only seminar on Russia, China and how geopolitics were shaping sanctions and compliance.

“Companies will … want to make sure that for long-term engagements with Chinese entities, they have robust sanctions provisions in their contracts and agreements,” said Leigh Hansson, a London and Washington-based lawyer at Reed Smith.

Banks’ concerns are being driven partly by the robust U.S.-steered approach to the semi-conductor and technology industry and foreign policy discussions, lawyers said.

The Biden administration has curbed chip exports to China to deny Beijing access to advanced technology that could further military advancements or human rights abuses. China hit back with accusations of economic coercion.

One lawyer said he did not expect any repeat of the Russia response and for “commercial reality” to enter foreign policy decision-making in relation to China.

“(Any sanctions) will be very much targeted at specific companies, specific products and services,” the lawyer said.

Moody’s: Islamic Banking Industry Remains Underdeveloped In Africa

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Despite having around 28 per cent of the world’s Muslim population, Africa’s Shariah compliant banking assets make up only around two per cent of global Islamic banking assets, Moody’s Investors Service has said.

A report issued Thursday by the rating agency, stated that African Islamic banks face obstacles to growth, including high level of competition from conventional banks in some countries and a lack of product awareness in some other jurisdictions.

While the industry’s na- scent legal and regulatory landscape has been among the constraints, there is noticeable progress now being made in jurisdictions such as Morocco, Nigeria and across the West African Economic and Monetary Union (WAEMU), the report said.

“The Islamic banking industry remains underdeveloped in Africa as product awareness and sector competitiveness lag domestic conventional peers in some countries. However, legal, regulatory and tax frameworks are progressing well in some jurisdictions,’’ said Mik Kabeya, Vice President, Analyst at Moody’s.

Septimus ‘Bob’ Blake resigns as president of Jamaica Bankers Association

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The Jamaica Bankers Association (JBA) today announced the resignation of Septimus ‘Bob’ Blake as president of the association, with effect on Friday, September 29.

“Mr Blake has been a dedicated and visionary leader during his tenure and his departure marks the end of a chapter filled with formidable contributions to the development of the Jamaican banking sector,” the association said in a press release today.

“Under Mr Blake’s leadership, the JBA made significant strides in its advocacy for the interests of its member organisations and other stakeholders within the industry. His fostering of the ideals of transparency, collaboration, and innovation within the field of banking was instrumental in advancing the strategic goals and objectives of the association.”

JBA said it extends its gratitude to Blake for his unwavering resolve and tireless efforts to advance the principles of financial inclusion and stakeholder engagement across the financial services landscape. His passion for promoting responsible banking practices and driving national development has left an indelible mark on us all.

“As we bid farewell, we extend our best wishes for his continued success in his future endeavours,” said the JBA.

Why are British lender Metro Bank’s shares plunging?

News Editor

Mid-sized British lender Metro Bank (MTRO.L) saw its shares plunge more than 25% on Thursday following reports it is trying to raise as much as 600 million pounds ($729 million) to strengthen its capital levels.

It is another setback for the upstart lender, launched in 2010, which at one time looked like the best bet to shake up a banking market dominated by behemoths like Barclays (BARC.L), Lloyds Banking Group (LLOY.L) and NatWest (NWG.L).

WHY DOES METRO BANK NEED TO RAISE FUNDS?

Metro Bank has faced persistent struggles in recent years to convince regulators that it can use its own models when working out how much capital it needs.

The bank said in September its principal regulator had indicated more work would be needed before it could use those models in its residential mortgage business, in turn lowering capital requirements.

Sources told Reuters the bank may need 100 million pounds in additional equity.

Metro Bank also has 350 million pounds of debt maturing in 2025 which it needs to refinance soon, although the company has stressed it meets its minimum regulatory capital requirements.

Ratings agencies and analysts say any future fundraising could be expensive.

WHY IS METRO BANK DIFFERENT FROM OTHER BANKS?

Besides meeting its existing debt obligations, Metro Bank has an expensive business model to support. It is mainly funded by retail and business deposits at a time when sharply rising interest rates in the last year have pushed up deposit pricing as customers shop around for better rates.

Those pressures have raised questions about the sustainability of its high-cost, service-focused model, which includes a significant branch network.

WHO BANKS WITH METRO AND IS THEIR MONEY SAFE?

Metro Bank targets urban retail customers in British cities with outlets strategically placed in prime shopping areas.

It has also attracted business from wealthier customers through its provision of safe deposit boxes in branches, a traditional banking service that had fallen out of fashion among many rivals.

Retail depositors’ savings of up to 85,000 pounds are covered by a government guarantee in Britain, unlike the mainly business-originated deposits held by U.S. lender Silicon Valley Bank, which failed earlier this year.

HOW SIGNIFICANT IS METRO BANK IN THE UK?

With net assets of 21 billion pounds and customer deposits of 15.5 billion pounds as of June 30, Metro Bank remains a relative minnow in the UK banking market. Lloyds, for example, has more than 880 billion pounds in assets and 470 billion pounds in customer deposits.

With its network of 76 branches, which it calls stores, and ambitions to open 11 more across northern England in 2024 and 2025, Metro Bank aims to exert influence on the market beyond its size by highlighting its customer service.

It claims the longest opening hours of any high street bank, with stores typically open from 8:30 a.m. until 6:00 p.m., and from 11:00 a.m. until 5:00 p.m. at weekends, at a time when rivals have been slashing hours as well as axing branches.

ARE WE LIKELY TO SEE CONTAGION?

For now, Metro Bank’s issues are likely to be self-contained, since its idiosyncratic branch-focused, high-cost business model and issues with regulatory capital are not widely replicated across the sector.

Shares in other mid-sized British banks such as Virgin Money (VMUK.L) were flat on Thursday, indicating that investors do not see any contagion risks for now.

($1 = 0.8235 pounds)

Culled from Thomson Reuters

Natural resource-backed loans are a disaster for Africa, AfDB, IMF warn African countries

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The International Monetary Fund (IMF) has strongly supported a call by the African Development Bank Group urging countries in Africa to stop borrowing loans backed by their natural resources.

The IMF Managing Director Kristalina Georgieva met Thursday with the African Development Bank Group President, Akinwumi Adesina, in Abidjan, Cote D’Ivoire. It is the first time an IMF head has visited the bank’s headquarters since its establishment in 1964.

Welcoming Ms Georgieva, Mr Adesina said, “The natural resource-backed loans are non-transparent, expensive and make debt resolution difficult.” He warned that if the trend continues, “it will be a disaster for Africa.”

Ms Georgieva said the Fund’s senior management team will “carry out a thorough assessment. We will come with a strong voice to tell countries not to create avenues for predatory and enslaving loans.”

She said the issue would also be discussed at the Global Sovereign Debt Roundtable comprised of bilateral creditors, private creditors and borrowing countries. The roundtable is co-chaired by the IMF, World Bank and the presidency of the G20. The African Union joined the G20 in September as a permanent member.

Ms Georgieva is on her way to Marrakech, Morocco, for the World Bank Group and IMF Annual meetings which last held in Africa 50 years ago.

The IMF chief said she is visiting Africa at a time when the continent holds much promise for more dynamic growth in the world.

“We often focus on the challenges that the continent is facing because it is here the impact of climate change is much more severe, where macro-economic and financial instability and debt are amplified.”

“But we want to focus on opportunities in Africa for the simple fact that the capital is in the North and a young population is in the South, primarily here in Africa. Unless we build a bridge for capital to flow to where it is needed most, it could lead to a bigger problem.”

Mr Adesina praised bold efforts by the IMF chief and the US Secretary of Treasury Janet Yellen, at the height of the Covid-19 pandemic in 2021, to shore up the global economy by allocating $650 billion in Special Drawing Rights (SDRs).

Africa, with a population of more than 1.2 billion, received about $33 billion of SDRs, representing only 5 per cent of the total allocation, the smallest portion among the different regions of the world.

The African Development Bank continues to lead conversations and develop models allowing SDRs to be rechanneled through multilateral development banks. MDBs can leverage such resources three to four times their original values. Mr Adesina thanked the IMF for working with the African Development Bank’s team on an initiative that could allow SDRs to be channelled through MDBs.

“Together with the Inter-American Development Bank, we developed a model that meets the IMF’s reserve asset status. If you channel $5 billion through the Bank, we will use our leveraging power and that could easily become $20 billion of new financing for Africa,” said Mr Adesina.

The Bank chief said the initiative would provide much-needed support to countries in Africa where post-pandemic debt remains a big challenge. “It’s more serious for low-income countries who constitute the Bank’s concessional lending window, the African Development Fund. They are also the most vulnerable in the world to climate change.”

Ms Georgieva, who has publicly supported the Bank’s initiative on SDRs, said the two institutions will continue to work together to find ways for SDRs to be deployed as hybrid capital.

“I’m on record supporting the Bank’s effort and if this succeeds, there will be a significant expansion of financial capacity for countries even beyond our years in office,” she said.

The African Development Bank Group’s SDR proposal is supported by African leaders and UN Secretary-General António Guterres.

The IMF chief also commended the Bank’s initiative, in conjunction with the African Union, to establish an African Financial Safety Mechanism to cushion the continent against exogenous shocks such as the impact of COVID-19.

According to Mr Adesina, “Africa is the only region in the world that does not have a safety net against shocks. Europe has it. Asia has it. America has it. The Middle East has it.”

The African Union endorsed the African Development Bank Group’s proposal for the mechanism during its summit in February 2022.

Remove trade barriers to increase per capita income, IMF tells African leaders

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The IMF managing director said international cooperation is weakening at a time the world needs it most, adding that the bridges that connect countries are corroding as trade and investment barriers rise.

Georgieva gave advisory on Thursday, in Côte d’Ivoire, during a curtain raiser speech in preparation for the 2023 World Bank and IMF annual meetings scheduled for October 9 to 15, in Morocco.

Georgieva, speaking on trade barriers, said operating a free trade market will push up the per capita income of an African country by more than 10 percent.

Per capita income measures the amount of money earned per person in a nation. A low per capita income means a lower average income of people living in a country and a lower standard of living.

On Thursday, the World Bank reported that since 2015, per capita items in Africa have not increased.

The lender also said between 2015-2025, Africa’s per capita items will record a steep drop of 0.1 percent.

In her remarks, Georgieva said the full implementation of the African Continental Free Trade Area (AfCFTA) will transform Africa into the world’s largest free-trade area and improve the living standards of the continent.

“A fragmented world is especially challenging for emerging and developing countries, because of their greater reliance on trade and their more limited policy space,” she said.

“Compared with other regions, the African continent stands to suffer the biggest economic losses from severe fragmentation”.

Expressing her concern, Georgieva said a fragmented world is a challenge that must be confronted.

She said: “In no other area is the need for international cooperation as evident as in addressing the existential threat of climate change. The world has a responsibility to stand with vulnerable countries as they deal with shocks they have not caused.”

“This is why we at the IMF created the new $40 billion strong Resilience and Sustainability Trust (RST). It provides longer-term affordable financing to help lower-income and vulnerable emerging market economies to undertake climate reforms.

“We have already approved eleven programs, six of them in Africa, with many more to follow over the next year or two.”

Georgieva also made a case for countries dealing with debt challenges, saying there is a need to help them, as more than half of low-income nations remain at high risk of debt distress.

Turning The Tide: Kagiso Lerutla’s crusade for ethical finance in South Africa

Kudzai Mukuku

 

In the heart of South Africa’s ongoing struggle with poor public fund management, a crisis that has cast a shadow over the nation for years, emerges a leader – Kagiso Lerutla.

At the core of South Africa’s predicament lies the pervasive spectre of corruption, estimated to siphon off billions of dollars annually from the nation’s coffers. What’s particularly unsettling is that many of the culprits perpetrating these illicit activities are none other than public officials, leveraging their positions of trust to further their own nests at the public’s expense.

Moreover, the lack of accountability has been a critical driver of South Africa’s public fund mismanagement. Oversight of public funds is often scant, and those tasked with their stewardship routinely evade the repercussions of their actions.

Countless South Africans endure deprivation of essential amenities such as clean water, electricity, and healthcare, primarily due to insufficient funding—a direct consequence of corruption and fund mismanagement.

Yet, amid these trials, Mr Kagiso Lerutla, the Group Chief Financial Officer of the City of Ekurhuleni, South Africa, seeks to make a difference

Entrusted with the oversight of an annual budget exceeding R50 billion, Lerutla has rekindled the quest for ethical leadership within local government.

His unwavering stand against fraud and corruption calls upon local governments across South Africa to prioritise ethics and integrity.

By embracing Lerutla’s principled approach, these institutions can contribute to building a sustainable, inclusive, and prosperous society while simultaneously restoring public trust in the very foundations of governance.

Under his stewardship, Ekurhuleni has achieved a remarkable milestone – becoming the only Metro in Gauteng to obtain a clean audit for the 2021/2022 Financial Year, marking a third consecutive clean audit.

The Auditor General of South Africa declared that the city’s financial statements were free from material errors and found no significant issues with performance information and compliance with legislation.

“This is a significant achievement for the city,” Lerutla declared at the time. However, he also emphasized that there was no room for complacency; his determination was unwavering in ensuring the city’s continued pattern of success.

According to Lerutla, the clean audit outcome not only confirms the city’s commitment to clean financial governance but also provides its citizens with assurance that the systems established to enhance their lives are being utilised in alignment with all applicable regulations, effectively delivering on their mandate.

Workplace Romance Are An Increasingly Thorny Issue For Companies

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It was an ignominious end to a stellar career for BP’s Bernard Looney.

He joins the growing pile of chief executives felled because of their failure to disclose romantic relationships in the workplace.

It’s becoming an increasingly thorny issue for businesses. Aware of the reputational damage these kinds of relationships can do, they are grappling with how to best manage them.

It means employees, even below the executive level, are increasingly having to make personal disclosures to HR.

Although there are no laws that ban romantic relationships within the workplace – and for valid reasons – businesses are drawing up policies of their own.

It’s a balancing act because businesses must respect their employees’ right to a private life, while also recognising that the dynamics of romantic relationships in a workplace can be complicated – especially when it involves workers with different levels of seniority.

Some employers now require employees to sign “love contracts,” whereby they must disclose and confirm that they consent to a relationship with another member of staff.

Others are banning senior staff from engaging in these types of relationships altogether.

Matt Gingell, an employment lawyer at the law firm Lombards, said: “I think that employers have to protect the workforce.

“And, of course, employers have to make sure that the dynamics of teams are fair, and that there isn’t favouritism or perceived favouritism (as a result of a romantic relationship).

“Also, that there aren’t situations where there can be an abuse of power, where people in senior roles are effectively abusing their position and adversely affecting perhaps more junior staff.”

Alternative investment funds and innovative opportunities for investors

News Editor

Over the past few years, alternative investment funds (AIFs) have evolved as a popular investment vehicle. AIFs have become investor-friendly due to recent regulatory developments and evolving norms.

AIFs offer specialized opportunities and potential higher yields on investments. Yet, the ₹1 crore minimum investment requirement is an entry hurdle, attracting only sophisticated investors looking for a bespoke investment strategy. Over the previous seven years, the AIF category in India has increased tenfold, with assets under administration totalling ₹7 trillion, according to the Indian Association of Alternative Investment Funds (IAAIF). These investments often have a 10-year time horizon, necessitating financial advisors’ continuous engagement with investors to manage expectations.

Almost a decade ago, foreign institutional investors (FIIs) were financing India’s AIFs. However, there has been an ever-expanding pool of domestic investors that is now contributing to the industry’s growth. Compared to a decade ago, when overseas investors infused majority of the capital, almost 80-90% of funds raised today are from domestic investors. Current trends indicate that AIFs could become a huge industry in the future and get close to the size of India’s ₹46-trillion mutual fund industry.

AIFs offer specialized opportunities and potential higher yields on investments. (iStockphoto)

AIFs encompass a spectrum of categories, each offering distinctive investment opportunities. Interestingly, each category can further evolve and offer more specialized investment opportunities to investors with the help of innovation. Here is how.

Real estate funds: Real estate funds offer a gateway to property markets without direct ownership. In an era of digital transformation, these funds are capitalizing on property technology (PropTech) for property management, virtual property tours, and data-driven location analysis. With the help of this technology, real estate funds could channel more resources into sustainable, affordable housing and smart city projects.

Infrastructure funds: The innovation in this category is likely to come from green infrastructure initiatives. As environmental concerns guide investment choices, infrastructure funds are likely to finance various projects around climate change. They can be highly influential in shaping the energy systems of the future.

Venture capital funds: Venture capital funds are crucial in nurturing early-stage startups. VC funds are utilizing data and artificial intelligence (AI) to identify promising startups and predict market trends. As this ecosystem evolves, these funds could use technology in not only identifying investment opportunities, but also scouting talent to guide the startups through their early stages of business cycle.

Hedge funds: From long-short equity positions to derivatives trading, hedge funds leverage market inefficiencies. Hedge funds can adopt AI and machine learning algorithms for high-frequency trading and risk management. These funds are poised to navigate to a landscape where technology and ethical investment principles get intertwined.

Fund of Funds (FoFs): These are an emerging category. Through this, investor can get a diversified exposure to AIFs. As data-driven investment gains prominence, FoFs could adopt AI-algorithms to make real-time portfolio adjustments and optimize risk-return profile of the portfolio.

One key factor driving the growth of the AIF industry is the expanding pool of domestic capital, spilling over into India’s tier II and tier II towns. Their participation in the growth of the startup ecosystem has been critical and has led to a lot of wealth creation. Despite the AIF ecosystem’s enormous expansion, distribution in India still remains expensive and difficult. While regulations have enabled asset management companies to launch AIFs without any hassles, distribution fees need to moderate so as to encourage the industry to facilitate a fully technology-driven onboarding of investors.

 

Aditya Kanoria is founder and managing director of Credent Global Finance

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