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Daily briefing - 14 February 2019

The lack of urgency in the Irish government as a no-deal Brexit deadline looms suggests one thing: it is content to suffer in some areas — such as the huge beef and agricultural export sector into the UK — as long as replacements appear. Those include Bank of America, headed by the Irish-American duo of chief executive John Moynihan and vice-chair Anne Finucane. At a conference in Dublin on Monday, she spoke about the bank's re-location to Dublin from London, noting that Bank of America spent $400 million moving its London operations to Dublin. She said the bank would not reverse the decision even if the UK decides to renounce Brexit and stated that many other banks are spending or will spend similar amounts. "Dublin is our headquarters for our European bank now full stop," she said. "There isn't a return. That bridge has been pulled up. From a trading perspective, likewise Paris would be the European trading arm." It now dawning in the UK now that these decisions are irrevocable, with many banks and payments businesses have long since decided on their options, Brexit or no Brexit. The trust factor has been fatally damaged, and that's not a good starting point for post-Brexit negotiations. Astonishingly, though, many in Brexit process on both sides have hidden detail from the public, or at least kept schtum about the fact that a no-deal could easily happen. Both sides had flagged this as a virtual impossibility, yet British banks were yesterday complaining about a lack of response from the UK government on Brexit issues. "We have had next to no engagement which we think is odd given the critical situation we're in," one senior banker tells Reuters. "We have not had detailed discussion on the business support side. We need an understanding of what package the government has put together — stimulus or otherwise ... It's critical politics but it does seem there's no capacity to do it." Too late for that now. Raypd is a new player, around since 2017, that has attracted recent investment as it puts together a network-like offering. It's different from the classic fintech model to date, which is a focus on one product. "Today, in order to build worldwide solutions in finance, you need to 6 or 7 suppliers in every country and link up with them in order to conduct operations such as collecting money from customers, paying out the money, verifying identities and the like," says Rapyd chief executive Arik Shtilman. "We have succeeded in creating a situation in which we have one solution with one interface and which provides this solution to customers in all the countries that they want to work, and with one contract. We let them build payment applications that fit their needs through one API." Rapyd, which serves e-commerce players and digital platforms, recently raised $40 million through a Series B financing round. Stripe shows up among the investors. "We have also defined a new way of working in the world of fintech, which derives from the software sector and is similar to SaaS, and it is in effect a fintech-as-a-service platform, with our customers paying for the service and not for the technology." Bank of Valetta under cyberattackBank mergers continue in the Middle East, this time in Qatar Starling raises another round of funding, thought likely to apply for EU licence in Dublin

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Daily briefing - 13 February 2019

Through our Brexit Council, Lafferty News keeps current with the mystifying developments otherwise known as Britain Exiting the European Union. Those of you on the conference circuit won't have failed to notice the ubiquitous presence of the Lithuanian Central Bank, which appears to have taken on a competitive mandate, as if it sensed that Britain's Brexit campaign would not end well. "'We expect to receive around 100 applications from fintech companies this year,' Marius Jurgilas, a member of the board at the central bank, told AFP. The Lithuanian fintech cluster already includes over 110 licensed companies, second only to Britain in the European Union, while another 61 applications are under review, according to central bank figures. The surge is driven by speedy processing and fears that British licences may lose rights to provide payment or e-money services to EU customers after Britain leaves the bloc as expected on March 29. 'Brexit is certainly encouraging those firms who need the EU market to seek locations and licences in EU states,' Jurgilas said." We've covered Lithuania's central bank quite often in recent months, from issuing a banking licence to Revolut to being progressive on the issue of digital assets. One to watch. P2P lender Zopa, now 14 years in business, has issued more than four billion pounds in loans since its inception, making it a veteran of the fintech world. "We've created a new asset class and redefined the experience people have come to expect from their financial provider," said chief executive Jaidev Janardana. "Passing £4bn shows that people ( fairer and simpler financial products), underlining our ambition to meet a broader set of UK customers' financial needs through the launch of our next-generation bank."Absa has gone vertical in its card division with a new card that switches the traditional aspect. Business Insider helpfully explains: "Cards originally had a 'landscape' orientation because that's how they were used in old card machines, which required the user to slide the card through a slot." We are still trying to understand what kind of machinery Business Insider works with. A click-clack machine? One of our correspondents is mystified at this trend, noting that Asian banks tried vertical cards ten years ago, and that the bigger opportunities and innovations lie in virtual cards and mobile wallets.

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Daily briefing - 12 February 2019

Morgan Stanley has acquired Solium, the stock plan manager. One commenter described the acquisition as a good plug-in for the existing business. Morgan Stanley is paying $900 million for the business, at a 43 percent premium to the closing price last Friday, and, in the words of one Canadian newspaper, "shrinking the field of billion dollar tech companies" in Canada. Solium Capital manages equity plans for employees and its clients include Stripe, Instacart and Spotify. The FT reports that Solium will add a million clients to Morgan Stanley's existing stock management business, which already has 1.5 million clients. "Morgan Stanley has grown into the third-biggest wealth manager in the world based on assets under management. The bank purchased Smith Barney from Citigroup in a hard fought 2012 deal that valued the wealth management unit at $13.5bn."Patrick Akinwuntan, Ecobank's MD in Nigeria, is a keen advocate of using digital technology to drive that "last mile" for financial inclusion. Mr Akinwuntan visited the International Market in Alaba to launch an Ecobank Pay zone. "According to Akinwuntan, the bank has designated Alaba market as an EcobankPay zone, meaning that patrons of the market, Ecobank and non-Ecobank account holders, have more easy, secure and convenient ways to pay when they visit the market," reports . He added that EcobankPay's unique offering is that anyone from any bank in Nigeria can pay with MasterPass, mVISA and mCASH with any phone by scanning QR code or using USSD." The Securities and Exchanges Commission is looking to release guidance around which securities laws will apply to cryptocurrency token sales according to SEC Commissioner Helen Pierce. During 2018, more than $7.8 billion was raised in ICO token sales, according figures compiled by, despite the lack of legal clarity around which tokens qualified as securities. "Peirce argued that the SEC sometimes can be 'impulsive' in dealing with crypto projects and offerings. 'We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences,' she said." Many countries and city states looking to offer clarity around cryptocurrencies, digital assets and tokens in order to attract developers and capital. Regulatory clarity in the US would be a big step forward. Can SME lending be automated? Absolutely, yes. Should it be? That is the real question, and the extent to which relationships drive SME business is greater than for consumer banking. The silk and cotton weavers of Tamil Nadu are famed for their textile making prowess, a tradition that has carried on for centuries and survives unbowed because of the quality of the materials and the skill of the workers. In this milieu, Bloomberg picks out an example of a smaller Indian bank that is thriving in the SME segment. ""Unlike larger lenders, City Union does more relationship-based lending, catering to the needs of the SME borrower, which can be quite volatile," analyst Pankaj Agarwal tells Bloomberg. "That's why they can charge a premium in this relatively untapped segment."

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