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Home » Daily Briefing » Daily briefing - 24 April 2019

Daily briefing - 24 April 2019

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Australia gets a new SME-focused bank this month as Judo Bank picks up its licence and goes into business. The fintech was founded by former NAB staff who plan what's now a familiar offering: a banking relationship built for the digital world. A report by Judo claims that Australian SMEs face a funding gap of $80 billion. Also familiar is the problem that most banks want a family home as collateral. "So what will Judo's secret sauce be?" asks Jessica Ellern in Fintech Daily. "The human touch and bucket loads of capital to execute on their vision.Late last year the bank raised $140 million, which was claimed to be the largest pre-revenue funding round done to date in Australia. It's heady stuff, and SME's will be saying about time. To date the only other player in the SME banking space exclusively is Tyro, who's lending product is suited to small businesses who accept EFTPOS payments as their predominant revenue collection model.

We've all had a merciful break in Brexit negotiations for a few days over the Easter as politicians take a well-earned break. But the EU is not about to cut any slack to banks that are hoping to stay under the radar once the fateful day arrives on 31 October, so build some further uncertainty into the second half of the year. "Banks have so far moved around a trillion euros in stocks, bonds, derivatives contracts and other assets from London to their new EU hubs," writes Reuters. "Accounts of EU clients must also be moved to conduct business from these hubs, a process known as repapering. But there is still a long tail of small customers for whom repapering is a burdensome task of changing IT and controls systems, limiting how much business new hubs can take on despite regulatory pressure to move in to higher gear." The current pause and extension might give the impression of elasticity in the process, but there's little doubt that EU negotiators and regulators are ready to play hardball once negotiations resume in earnest.

Softbank will inject $900 million into Wirecard in the form of five-year convertible bonds, according to reports this morning from Bloomberg. In a statement Wirecard said that the Softbank investment and collaboration will allow the company to expand in Japan and South Korea. There is potential for technology-sharing "It could potentially be quite savvy for them to invest via a convertible structure because they protect their downside with the bond yet still have upside should the business perform well in the future," said Rob Chandra, a general partner at Avid Park Ventures and a lecturer at the Haas School of Business at the University of California at Berkeley, according to Bloomberg. "We are in the early innings of a massive global shift to electronic payment processing. If Wirecard's issues are behind them, then this could be a smart investment." Wirecard is the processor for Uber in parts of Asia. Softbank has a stake in Uber, along with stages in Alibaba. Wirecard and its supporters in Germany have taken an aggressive stance against an FT investigation, still running, about the company's accounting methods. Incidentally, Wirecard is a bank while Softbank is not.

Tencent, incidentally, has been a quiet but persistent investor in banks, having taken stakes in Germany challenger N26 and Brazil's Nubank. Now it's adding to its portfolio with an investment in Latin American lender Uala. Read more here.

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