European bank regulators have been patting themselves on the back after finally implementing the bail-in of Banco Popular in Spain. The Madrid government had been imploring one of the country's big banks to take over the failing lender, but the firms preferred to wait until Popular was on its last legs, with Santander's Anna Botín making the move at the right moment to secure the bank for a nominal payment. But the bondbuyers are not at all happy with these machinations, and have hired law firm Quinn Emanuel to look at ways of getting some of their money back. "The bondholder group, which includes Pimco, Anchorage, Algebris and Ronit Capital, make up a 'material percentage' of holders of the bank's junior debt, which was wiped out by regulators in early June, when Santander acquired the bank for the symbolic sum of €1," writes the Financial Times. The paper notes that investors questioned why Popular did not raise capital when it was offered by a consortium of lenders led by Deutsche Bank in the weeks leading up to its demise. Santander has put an unspecified amount aside for potential litigation.
Sandeep Lal is head of digital banking for DBS of Singapore, widely regarded as one of the first banks to take on a wholesale transformation into a digitally savvy bank. So Mr Lal should be looking over his shoulder in satisfaction as DBS pulls away from its peers. However, it's not other banks that Mr Lal is worried about. "We view the 'Big Techs' with large platforms as the ones we should be more concerned with," he told Bloomberg in a fascinating piece. In China, Jack Ma's Alipay, along with Tencent's WeChat Pay, took over 90 percent of the country's $5.5 trillion mobile payments market in four years. And these digital businesses are moving fast by linking up with physical retailers and services: Ant Financial and Alipay will work with the 7-Eleven chain while DBS is linking up with cash-heavy businesses such as taxi services.
On Monday we'll be holding a webinar to present the findings of the 2017 Lafferty Global Bank Quality Benchmarking Study. Around half of the world's top banks perform poorly in the new study of 100 banks across 32 countries, scoring less than 40 percent on the criteria Lafferty uses to assess bank quality. Seven banks out of 100 scored a four- or five-star rating, again a significant drop in the overall quality ratings since 2016 — and a warning to many big international banks that their quality is waning. "Half of the world's bigger banks have a long way to go to restore themselves to sustainable health," said Michael Lafferty, chairman of the London-based Lafferty Group. "You could say that we are interpreting what the banks are saying about themselves using a standard template. Financial ratios are important in judging bank quality, but so are matters such as strategy, culture, customer satisfaction, and management education and expertise." The ratings of individual banks are only available to Lafferty clients. For the first webinar at 10am, register here; for the 1.30pm webinar (both BST), register here.
Barclaycard has released research suggesting that SME owners are more worried about cybercrime than the uncertainty surrounding Brexit. The findings also suggest that small businesses are shifting "from hiring experts in 'traditional' fields to taking on specialists for the digital world". These 'next generation' payment experts, says the research, would advise on new forms of commerce including 'conversational commerce' and 'invisible payments' (presumably à la Uber). Barclaycard has taken its own advice on this matter, producing its research from "futurologist David Price [who] predicts that British businesses will face even more challenges and will subsequently need a wide range of experts over the next decade. These include:
- Social purpose consultants who will work alongside SMEs to ensure they respond to growing demands from millennial customers for a service driven by ethical practices
- 'Tech overload' therapists to support employees who have become overwhelmed by being part of an 'always on' society
- Online experience designers, responsible for improving user experience by incorporating virtual and augmented reality technology into online interactions"
In fairness, Mr Price describes himself as a futurist rather than a futurologist, but there's certainly a danger of Ray Kurzweil-levels of fantasy in this area.
Mastercard: Five things banks need to do to meet the demand for digital
Are robots taking over the world's banking jobs?
PSD2: European Commission and EBA clash on access to account arrangements
US: new sanctions on Chinese banks
Quotes of the Week
A selection of quotes that have caught our eye of late at Lafferty News.
- "Now that Klarna so many customers, a shiny new bank licence and, soon, direct access to accounts when PSD2 takes effect, they're perfectly primed to become a preferred credit provider."
Daniel Döderlein, entrepreneur, quoted by Business Insider on 20 June. The next week Visa bought a stake in the Swedish firm.
- "This is bringing banking union to the graveyard."
Markus Ferber MEP, quoted by Reuters, on Italy bank rescue
- "Two decades ago China did not have a single supercomputer — and now it has the world's most powerful."
- "If you look at British banks that fail and European banks that are in crisis, all of them had state guarantees behind them but they still failed."
Michael Lafferty, Interview with BizNews.com
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