Digital lender are raising money fast. UK bank Tandem is ramping up its international expansion as Brexit approaches. Tandem's niche is savings and it offers lending through credit cards. This, according to the FT, "led to slower growth in user numbers, but faster revenue growth. It reported total revenues of £5.1m in 2017, compared to £1.8m at Monzo, which was valued at £1bn in its most recent fundraising. One of the people close to the bank said Tandem hit an annualised gross revenue rate of £23m by the end of last year." By the way, go and visit Tandem's website. It's bonkers.
On the US West Coast, Silicon Valley-based businesses are funnelling investment into Africa through phone-based digital lending. Branch has signed a partnership with Visa to issue digital debit cards, so borrowers can arrange a loan digitally and then withdraw it as cash through an ATM, which resonates with M-PESA borrowing. Branch is raising additional funds as investors gain faith in fintech applications in emerging markets. "Branch expects to lend about $350m this year, usually in small loans of $20-$40, which are primarily financed by its own borrowings," notes the FT. "The new venture round, which was led by Foundation Capital and Visa with participation from existing investors such as Andreessen Horowitz and Formation 8, will be used to develop new markets after recently expanding from Africa into India and Mexico." Problems exist. Reports from the ground indicate that many digital borrowers use the funds for gambling; interest rates are exorbitant, and borrowers may quickly find themselves shunted off the list of creditworthy borrowers. Incidentally, there's a lot of crossover going on here between Silicon Valley's social media investors and its finance investors, especially in emerging markets. Don't forget where this is all headed.
Warren Buffett, who controls the largest shareholding in Wells Fargo, is preparing to change tack on Wells Fargo as the bank seeks a new chief executive. In an interview with the Financial Times, Mr Buffett says he hopes to find an outsider to the bank's culture and to Wall Street. "They just have to come from someplace outside Wells and they shouldn't come from Wall Street," he said "They probably shouldn't come from JPMorgan or Goldman Sachs. There are plenty of good people to run it from the Wall Street banks, but they are automatically going to draw the ire of a significant percentage of the Senate and the US House of Representatives, and that's just not smart," Mr Buffett said. Analysts and investors have already floated names Excluding Wall Street bankers would eliminate many of the potential candidates floated by analysts and investors such as former Goldman Sachs executives Gary Cohn and Harvey Schwartz, ex-JPMorgan Chase banker Matt Zames and current JPMorgan chief financial officer Marianne Lake.
There's been non-stop merger news out of the UAE lately with more arriving already this week, according to Bloomberg. "Dubai Islamic Bank PJSC, the United Arab Emirates' biggest Islamic lender, is considering buying its smaller rival Noor Bank PJSC, people with knowledge of the talks said." This week will also see an IPO in London of Network International, which is partly owned by Emirates NBD. According to bookrunner Morgan Stanley, the price has narrowed to from 430 to 465 per share, settling at the upper end of the estimate.
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