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Home » Daily Briefing » Daily briefing - 13 May 2019

Daily briefing - 13 May 2019

HK Small
Hong Kong by night

Hong Kong issued a second batch of digital banking licences last Friday and this time the challengers are taking centre stage. "The latest four companies to receive a license are Ant SME Services (Hong Kong) Limited, Infinium Limited, Insight Fintech HK Limited and Ping An OneConnect Company Limited," Bloomberg reports. "Infinium Limited is a JV between Tencent, Industrial and Commercial Bank of China (Asia) — a unit of Chinese banking giant ICBC, Hong Kong Exchanges and Clearing — the operator of the Hong Kong stock exchange, private equity firm Hillhouse Capital, and Adrian Cheng, executive vice chairman of New World Development and executive director of Chow Tai Fook." These are the new heavyweights of Chinese commerce: Ant SME is a division of Ant Financial; Chinese smartphone maker Xaoimi is the main player in Insight Fintech, while Ping An OneConnect is a division of China's insurance giant Ping An. Tencent is notably partnering with the Chinese banking giant ICBC. As we reported last week, Singapore is watching these developments with interest as it looks to issue its own digital banking charters.

All kinds of signs coming out of the UAE signal trouble ahead, with Emirates Airlines last week reporting a drop in profits in the region of 70 percent for its 2018 results, and the wave of banking mergers continues. "Dubai Islamic Bank PJSC hired HSBC Holdings Plc to advise on its possible acquisition of smaller rival Noor Bank PJSC, according to people with knowledge of the matter," reports Bloomberg. A recent series of mergers in Abu Dhabi was made possible by cross-ownership of banks, and Dubai will see something similar. "Investment Corp. of Dubai, the emirate's main state-owned holding company, is the largest shareholder in Dubai Islamic Bank with a 28 percent stake. It's also one of the biggest investors in Noor Bank, a lender set up in 2008. Dubai Islamic Bank had assets of 227 billion dirhams at the end of March compared with Noor Bank's 51 billion dirhams in December, according to data compiled by Bloomberg." But the region's troubles may have some way to run with belligerence between the US and Iran brewing, and news coming out of the UAE this morning about a naval fleet headed to Fujairah, where reports are coming in of an attack on Saudi tankers.

Softbank's Vision Fund, largely backed by Saudi and UAE money, has rarely been out of the news, most lately as its investment in Uber took a step back following the uninspired IPO of the ridehailing business last Friday. But the Vision Fund is also taking a bet on business financing. "The SoftBank Vision Fund has invested $800m in a privately held finance company where former UK Prime Minister David Cameron has worked as an adviser since his departure from government," reports the FT. "The agreement to invest in UK-based Greensill, which operates in the niche business of supply chain finance, will double the company's valuation to about $3.5bn and give the Vision Fund a stake of 15-20 per cent, people close to the deal said." The investment bank is advised by former UK prime minister David Cameron and run by Lex Greensill. Supply chain finance may seem a lot less exciting than the Vision Fund's usual focus on robotics and AI, but bear in mind that the Vision Fund's other big investment in the UK is Oak North, the SME-focused lender that's mixing traditional business banking acumen with leading technologies. It's understood that Mr Cameron was also instrumental in bringing in major investment to Greensill from General Atlantic.

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