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Home » Daily Briefing » Daily Briefing - 06 November 2018

Daily Briefing - 06 November 2018

Barclays fared worst of the 48 European banks tested in the ECB's latest stress tests. The results of the test, according to Bloomberg, underscored the vulnerability of UK lenders to "weak growth, credit losses and Brexit", and won't help Jes Staley and his plans to boost returns to shareholders. "Staley has previously said he's wary of the risks lingering in consumer debt as the U.K. faces uncertainty over Brexit. He has also said he's concerned that disruption to supply chains and the economic repercussions from a hard Brexit could eventually hurt his business customers."

Barclays of course has shrunk its global footprint, severing links to its former African business which has returned to its previous name of Absa Group. Despite its woes, Barclays and Absa have been forward in pushing into mobile services. Absa recently claimed first place in the race to launch a WhatsApp-based banking service, and is partnering with MTN in Ghana to offer mobile payments at the POS. This will allow customers to enter a mobile phone number at the POS and receive notification by phone. Absa is among the major African banks and processors exploring wide partnerships with telcos, part of a major trend we observe in the collaboration of players from the financial and non-financial spaces to extend digital payments. Its attention to phone-based services across smartphone and feature phones are notable.

The publication of the headline results of the Lafferty Banking 500 was followed with a flurry of contacts from banks' corporate and social responsibility departments offering sustainability reports, CSR reports and any other number of PR documents, generally in the effort to deflect from a low benchmarking rating. It's part of a broad faith among some marketing and PR people that a sufficient quantity of shiny marketing material will overwhelm decent analysis — and it often works. In recent years, the number of journalists has dwindled while the numbers in PR have grown five-fold. On top of that disastrous development, since 2016 we note a growing atmosphere of danger for journalists, as establishment figures including the US president heap opprobrium on reporters and even call them "enemy of the people". In reality, good journalism can be a dangerous job in a way that PR is not.

It's in this context that we note the ECB revoking the licence of Pilatus Bank in Malta. Malta's regulators froze the bank's operations in March after the Pilatus chairman was arrested in the US and charged with evading trading sanctions on Iran. The Malta Financial Services Authority recommended withdrawal of the licence in March, and ECB regulators blamed the delay on legal hurdles. At the heart of the story though is the murder of Maltese journalist Daphne Caruana Galizia, who wrote that Pilatus was making corrupt payments for high-ranking Azerbajani clients. Galizia was killed in a car bomb one year ago. "At the time, I thought these allegations were crazy," the BBC's John Sweeney told a recent memorial ceremony in Valletta. "Daphne: I apologise. You were right." Reuters coverage of the backstory can be found here and here.

Finally, we can't recommend enough Michael Kimani's @pesa_africa Twitter feed, where he continues to publish acid observations from East Africa. Commenting recently on inward investment and financialisation, @pesa_africa observes: "Before you know it, They'll be packaging Africa's infrastructure debt owed to China into M-akiba mini-CDOs, peddle them to Africans via mobile phone and mobile money then call it Financial Inclusion."

LAFFERTY BENCHMARKING

Barclays scored three stars on the Lafferty Banking 500. The top score is five stars.

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