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Daily briefing - 13 March 2019

A hard Brexit it will be, as things now stand. Lafferty's Brexit Council met in Westminster yesterday as the House of Commons was getting ready to vote on the latest but essentially unchanged offering from Theresa May, which the Commons promptly rejected by a margin of 145. This, remember, is the deal already negotiated between the UK and the EU. The Prime Minister had hoped to limit that loss to 100 seats. Today the Commons will vote on whether to prevent a no-deal, which will likely pass, and yet be completely powerless to actually prevent a no-deal, which is now a certainty failing a new initiative that the EU feels is a real proposal and not another variation that will keep the Conservative party in power. A general election before summer is now a real possibility. Despite the fervent opposition of the City, Jeremy Corbyn may become prime minister, mostly by sitting while May and the ERG have taken a wrecking ball to the Conservative party. Let's face it though — they won't be the only ones to take the blame. Former Irish ambassador Ray Bassett tweeted this morning: "The Backstop was the dumbest idea from the Irish Government since the Bank Guarantee. I said from day one, the original concept of the Backstop have zero chance of implementation."Two years ago digital news outlet Joe.co.uk perfected the art of superimposing talking heads into music videos, ads or whatever else needs cutting down to size. A clip of Jacob Rees-Mogg singing 'Common People' — which clearly mocked Rees-Mogg — was re-tweeted by Rees-Mogg himself. Yesterday morning Joe accurately nailed the moment with 'Still M.A.Y.' (aka Still D.R.E.) featuring Rees-Mogg as Snoop Mogg and Theresa May as Dr Dre. (By the way, that's the DUP's Arlene Foster in the back seat of Dre's lowrider.) Need cheering up? Try this.A study commissioned by the UK government suggests a way to increase competition with the big tech players by forcing them to open up their data to other competitors, much as Open Banking is forcing incumbents to allow competitors access to banking data, with user permission. The report, produced by a panel of experts led by Harvard professor Jason Furman, makes the case of a new competition regulator that may be known as the 'digital markets unit' which would force the opening up of data collected by big tech players. "It suggested Open Banking, which requires UK banks to share account data, as a blueprint," reports the FT. "Companies would be required to hand over personal data to competitors if customers requested to switch, preventing the customer's need to build up data and personalisation with a new social network. It also said that new entrants should have access to anonymous open data so they can build new products from scratch." Fascinating; there is a major battle looming now, and with the UK about to crash out of EU, this initiative may suddenly get legs. Currently, the big tech players, based in Dublin, operate under the aegis of the Data Protection Commissioner — something they may be keen to escape. African banks are finding South Africa to be an increasingly difficult market compared to the rest of the continent, with the big four of Standard Bank, First Rand, Absa and Nedbank reporting results that suggests targets are becomingly increasingly difficult to meet. "This is showing just how tough the South African environment has been), while their African operations are outperforming," said Patrice Rassou, the head of equity research at Sanlam Investment Management in Cape Town, according to Bloomberg. "It's a function of low top-line growth and rising costs." The problem: "All of them suffer in differing degrees from what is known in banking parlance as "negative jaws": when costs grow faster than income." Read the full story here.

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Daily briefing - 08 March 2019

The equivalent of belatedly shutting a country-sized barn door, banks in the Nordic countries have launched a massive recruitment drive to hire compliance professionals. As a compliance worker based in Copenhagen told Reuters: "We've become the new 'business rock stars'". The delusional compliance professional needs to up his game: DJ D-Sol over at Goldman knows that kids these days are into banging EDM, not dad rock. "He saw a 50 percent jump in wages the last time he changed job to almost 1.2 million Danish crowns ($182,000) per year and is regularly contacted by headhunters. "Money-laundering was the buzzword of the year last year, and I wouldn't be surprised if compliance officer became the buzzword this year," he said. Ironically, there was no lack of compliance professionals in the banks prior to the wave of money-laundering that swept through the Baltic and Nordic countries. There was no end to the ticking of boxes as billions of dollars in illicit money flowed out of Russia, yet few people called stop from inside the banks. Money-laundering controls in Denmark were "a joke", said Bill Browder, who continues to pursue justice for murdered Russian lawyer and whisteblower Sergei Magnitsky. There's been much written already this year about bitcoin and cryptocurrencies, from JPMorgan's announcement of a JPMCoin, to news last week that Facebook is looking to combine its various networks so it can offer payments across Messenger and WhatsApp. Despite their roles at the top of major social networks, there's a world of difference between Jack Dorsey at Twitter and Mark Zuckerberg at Facebook. Even Zuckerberg's deer-in-the-headlights mien is in contrast to Dorsey, who looks as though he has stepped off the set of Game of Thrones for a quick chat about digital assets and consumer finance. Facebook has been talking up its own book, but Dorsey has been stuck to his guns on bitcoin being the native currency of the internet. Dorsey said this week that he invests $10,000 a week into bitcoin, the most allowable from the Cash App. And Dorsey has form, launching Square not long after Twitter. "Dorsey added that there are currently no plans to add support for any other cryptocurrencies to the Cash App, which actively discourages its users from day trading bitcoin and bans the buying of bitcoin with credit cards due to the financial risks associated with bitcoin volatility."Irate seems to describe the reaction well: Bloomberg writes that the tax cuts offered by incoming president Donald Trump provided the US banking industry with the wherewithal to cut staff and slow lending. "Major U.S. banks shaved about $21 billion from their tax bills last year — almost double the IRS's annual budget — as the industry benefited more than many others from the Republican tax overhaul," writes Bloomberg. "By year-end, most of the nation's largest lenders met or exceeded their initial predictions for tax savings. On average, the banks saw their effective tax rates fall below 19 percent from the roughly 28 percent they paid in 2016. And while the breaks set off a gusher of payouts to shareholders, firms cut thousands of jobs and saw their lending growth slow." One Redditer noted that the banks saved more than the amount requested by NASA in 2019 for deep space exploration. Another was blunter: "Trickle down doesn't work. It never has and it never will. The Trump corporate tax cut was never meant to benefit the middle class, it was simply a giveaway to corporations and the wealthy."

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Daily briefing - 07 March 2019

Italexit? EU mandarins (yes, we jest) are feeling queasy this morning as Britain inches down the diving board and other bits of the EU suddenly look less secure. It's the great merchant princes of Italy that are often credited with inventing modern banking, flush with wealth from trading across the Silk Road that once ran from Venice to Xi'an in central China. Modern Italy has been a US protectorate, but like Greece and the other peripheral countries of the EU, it suffered badly during the financial crisis and has never fully recovered. So when Chinese officials and companies came calling with an offer to revive the historical trade associations, Italians decided to entertain them, despite the fact that the EU is trying to hang together as a bloc while Britain extricates itself from modern supply chains. The reaction of the United States is telling: "The Financial Times reported on Wednesday that the United States was irritated by the prospect of Italy joining the BRI, and had warned the project could significantly damage Rome's international image," writes Reuters. "We view BRI as a 'made by China, for China' initiative," the newspaper quoted Garrett Marquis, White House National Security Council spokesperson, as saying. But Italy can hardly say no. Greece has welcomed huge infrastructure investment in its ports in recent years as Chinese companies built up Piraeus and laid out thousands of kilometres of new and upgraded rail through the Balkans. Italy is already enormously popular with Chinese tourists. Building that Belt and Road Initiative on the ground is one thing, but China's independent players such as Huawei are now ironically being forced into acting as proxies. Chinese champion Huawei is not accepting the US ban lightly. "Guo Ping confirmed to reporters in Shenzhen on Thursday that the company had filed a lawsuit against the US government in the District Court for the Eastern District of Texas against the 'unconstitutional' restrictions, which were enacted last year as part of the annual US National Defense Authorisation Act (NDAA). 'In enacting the NDAA, Congress acted unconstitutionally as judge, jury and executioner,' said Guo Ping, one of Huawei's rotating chairmen." Huawei's VP Wanzhou Meng is currently under house arrest in Canada and is about to be extradited to the US to face charges that Huawie violated sanctions by trading with Iran.Raisin started as a novel but simple idea: offer Europeans the best savings account rates on offer across all of Europe. That idea has proven popular, with Raisin able to offer its service as a plug-in on other fintech and banking platforms such as Starling Bank and N26. Following in the footsteps of Klarna, Raisin is inverting itself and buying out its banking partner, Frankfurt-based MHB Bank. "We know the business models and challenges of both sides, fintech and bank," said MHB Bank Chairman Reiner Guthier. "Through this more extensive collaboration with Raisin we will be able to add to our technical expertise along with making important investments in our team. These changes enable MHB even better to support the digital business models of our current partners as well as new ones. This move thus allows us to take the strengths of our current position in credit fronting and expand them further into payments and 'banking as a service'." With its German banking license, MHB is governed by the German deposit guarantee scheme and supervised by BaFin.

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When Airbus announced last year that it would close down its UK operations, one Brit lamented on Twitter that the country was literally losing its wings: the UK plant manufactures wings for the planes. Now it's getting even trickier. Bombardier in Belfast is now whispering in the ear of the DUP, warning that it faces a similar disaster. The Canadian manufacturer took over Short Brothers, the Belfast-based aerospace group that along with famed shipbuilder Harland and Wolff...MORE

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Tuesday 5th March @ 10:16am

Revolut has much to live up to, with a name like that. If its online community board is anything to go by, Revolut's customer numbers will be falling this week. "This article completely changed my attitude towards Revolut," writes one user. "I will now look for an alternative service and cancel my Revolut account." The article in question, published last week in Wired magazine, describes a culture that sounds in thrall to the 'move fast and break...MORE

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Monday 4th March @ 12:21pm

China's online trends continues, with mobile wallets gaining ground as the form factor of choice. Four hundred million people used mobile payments to order food, a jump of 25 percent. "A total of 600 million people used online payment in 2018, up 13 percent year on year, said the statistical report from the CNNIC, published earlier this week," says Xinhua.net. "When people shopped offline, they also preferred to use mobile wallets. About 67.2 percent of...MORE

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Wednesday 27th February @ 10:23am

Say what? South Africa will launch one of the world's first 5G networks in September, with new South African network Rain as the provider of the last miles service. "Data-only network Rain has announced it's going to start offering 5G commercial services in South Africa in September 2019," writes stuff.co.za. "The company is partnering with hardware manufacturer Huawei, which will supply the devices necessary for consumers to enjoy the new, high-speed...MORE

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Tuesday 26th February @ 10:08am

At the best of times, moving banking assets, equipment and staff is a palaver. Under the "does-anyone-know-what's-happening" scenario playing out as the UK continues to Brexit, there are clear divisions. Either the deed is already done or it's flailing in the gloom that is the UK government standing a few feet from the cliff edge as the light dims. "The EU has granted banks some leeway on how quickly they need to build up staff in https...MORE

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Wednesday 20th February @ 10:04am

Lafferty News has written about Lithuania a lot in the last year, noting the pro-active approach of the country's central bankers, who are in attendance at many fintech events. It's what other central bankers disparagingly called a competitive central bank. Now a story about competitive central banks has jumped to the front page. Last week, the Lithuanian parliamentarian Stasy Jakeliunas suggested that Revolut is concealing secret links to the Kremlin. (Founder Nikolay...MORE

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