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Home » Daily Briefing » Daily briefing - 27 February 2019

Daily briefing - 27 February 2019

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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 mobile standard. While a number of South African operators have been conducting 5G trials, none of them have announced dates for the launch of commercial services. In the wake of this announcement, we expect that'll change soon. Rain says the plan makes South Africa "one of the first countries in the world to launch 5G". The company is building its 5G network using its 3.6GHz spectrum, and says in the first phase of rollout, it has deployed 20 new base stations in Johannesburg and Cape Town. Rain's chairman and co-founder is Michael Jordaan, the former head of retail at FNB, and who is soon to launch the digital bank BankZero. If this model works in South Africa, expect it to spread fast elsewhere. Not that BankZero will have the market to itself. TymeBank, backed by African Rainbow Capital, is eyeing a market of 21 million customers. The new bank will also push into SME banking. Chief executive Sabile Shabalala told Business Live that the bank planned to use new data sources to offer credit to SMEs. "It helps us also to price the risk without asking SMEs for things they don't have, like cash flows and financial statements," he said.

The UK's Metro Bank will raise an additional £350 million in capital after regulators found the bank had miscalculated its risk weighted assets. "Chief executive Craig Donaldson said at the time that the bank had several 'levers we can pull to support our capital position', and promised to give more details when it reports full-year results on Wednesday. The initial announcement of the RWA error prompted the worst one-day drop in a British bank stock since the financial crisis, a fall which was exacerbated by news the following week that the mistake had actually been discovered by the Bank of England's Prudential Regulation Authority, contrary to Metro's initial messaging." Shares initially dropped in Metro Bank but recovered late last week after Metro emerged as the winner of the biggest part of funds from the RBS competition funding.

Germany's banks are all a fluster after the recent news that Wirecard has soured its image after a whistleblower and subsequent Financial Times investigation into accounting practices. Along with N26, Wirecard represents the brave new face of Germany banking, hip Berlin rather than square Frankfurt, and even pushed Commerzbank off Germany's DAX index. US investment business Cerberus still holds a big chunk of shares in Commerzbank and Deutsche Bank, and there are plenty of people who still believe that merging these two dinosaurs veteran institutions together will result in a younger, healthier veteran institution. "Based on Tuesday's closing prices, a combination of Deutsche Bank and Commerzbank would have an equity market value of almost 25 billion euros. Deutsche Bank has more than 20 million personal and business customers, and Commerzbank around 18 million. Cerberus is among the largest shareholders in both banks after buying stakes in 2017. Since then, the shares of both lenders have fallen sharply."
But there's more going on here than meets the eye. Commerzbank in fact is majority owner of mBank, which rated consistently highly in Lafferty's bank benchmarking work. Some readers may recall word spreading last year that mBank's technology would back a new pan-European bank. Since that announcement, N26, Revolut et al have been welcoming millions of customers. Has Commerzbank missed the moment?

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