France’s Largest Bank BNP Paribas Loses $80 Million Due to Trader’s Pre-Vacation Snafu

According to multiple sources, BNP SA, known by many as the largest bank in France, reportedly made a loss of $80 million in derivative trades connected to the United States.

The sources confirmed that Antoine Lours, the Head of U.S index trading at BNP, is yet to return to his position at the bank. Lours has been away on vacation since Christmas when he initiated trades on the S&P 500 Index.

Increasing tensions between the United States and China over tariffs and trade disputes caused U.S stock prices to slump over the holiday. Although the stocks did regain their ground, the high volatility concerned many traders and investors, causing massive stock selloffs.

U.S. Trading Desk Shutdown

It hasn’t been the perfect start of 2019 for BNP Paribas. In addition to the $80 million lost over trades gone awry, the bank will close down its U.S. commodities derivatives desk. The commodities division consisted of 16 traders who traded commodities such as agricultural products, metals, and energy. The decision to close is in line with an earlier decision made by the bank to cease financing oil sands and shale projects.

According to an unnamed source, the decision indicates a series of adjustments made by the bank, aiming at protecting its profitability.

Jean Pierre Lambert, Analyst at London-based Keffe, Bruyette & Woods, said:

“The bank seems to be adopting enhanced discipline on costs and profitability at its markets activities.”

Opera Trading Desk

The bank will also be shutting down Opera Trading Capital, its proprietary trading division. The division, which makes risky bets with BNP’s capital, is being shut down after last year’s market volatility saw it struggle to make profits. The business is reportedly funded with over $600 million. The bank is reportedly closing it so its resources can be reallocated to client-focused businesses.

Major Banks Call Grim Results

BNP’s key trading business saw a 10% drop in revenue over three-quarters of 2018, while Citigroup Inc. also reported a 21% drop in trading fixed income, commodities and currency on Monday. JPMorgan Chase &Co. followed on Tuesday, claiming that its trading business was greatly affected by “challenging market conditions.”


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Author: Melanie Kramer
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Santander Outperforming Competition Thanks To Ripple

The banking giant Santander has said that its Ripple powered payments app OnePay FX is providing its customers with the possibility to send cross-border transactions at much faster speeds than the competition.

Back at the Santander International Banking Conference in Spain, the executive chairman Ana Botin highlighted the performance of the new mobile payments app which will run on Ripple’s blockchain software solution xCurrent.

“You can do FX transfers, real-time, between the UK and continental Europe. And you can actually do Poland, Brazil and Chile – through Santander – for the same cost as Transferwise… and that is the reason why we need to really think about what is real reciprocity. The devil is in the details and the timing.”

In contrast, the instant payments that are processed by TransferWise are only delivered within the UK through the instant FPS payment system. According to a representative from the company, the payment delivery in other places around Europe and around the world isn’t as fast. Both Santander and TransferWise are playing a key role in transforming the classic pace of worldwide payments which have long taken two to three days to complete through conventional cross-border channels.

It was back in April when OnePay FX was launched by Santander which gave millions of customers in Europe access to real-time cross border payments. According to the Daily Hodl, Botin said that the technology is currently powering 50 percent of Santander Group’s FX payments.

“With this new initiative that is already in place, we’re actually covering 50% of all the FX payments that the Santander Group does annually. and it works really well, because the rails that we’re using – which, as you say, we’ve collaborated with Ripple – we’ve been testing those for two years, actually with our own employees. And it works. It’s safe. It’s fully compliant, and obviously, we’ve made sure we comply with all local regulations. So you’re in safe hands.”

In the end, though, the chairman has said that the banking giant is looking to stretch out the companies operations including OnePay FX and providing the choice for the non-banking customers to use the app to send money across the globe.


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Author: Robert Johnson
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Details of the TokenPay Partnership with WEG Bank AG in Germany

Deal Officially Closed, Shares Transferred, Timing in line with Whitepaper Roadmap Projections

Today we are announcing that we have officially closed a deal with WEG Bank AG, located in Germany. WEG Bank has also made an announcement of the partnership on its website. Share certificates representing 9.9% of the equity interest in WEG Bank AG have been transferred to TokenPay Swiss AG, along with options to acquire an additional 80.1% of the bank upon customary regulatory approval. The proceeds of this transaction were derived from our December 2017 token sale. As outlined in our Whitepaper roadmap we have completed this partnership during Q2 2018, in line with our November 2017 projections.


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As discussed on April 8th in one of our bank deal updates, it is important to understand the history of this deal. We were approached by WEG Bank in December 2017. The bank has an interest in offering FinTech solutions that will align itself with the new economy, while at the same time continuing to service its existing real estate client base in a traditional fashion. Our leading technology complex is what ultimately afforded us the opportunity to be selected by the bank for this partnership. We feel that the selection of TokenPay is a strong testament to our advanced knowledge and the amazing team that powers our platform.

Lichtenstein Bank Partnership

Furthermore, we have recently been approached by a bank in Lichtenstein offering a similar proposition. Our products and services are in high demand and we intend to fully capitalize on the strong secular tailwind afforded to us by the rapidly growing FinTech industry. We plan to meet with this bank in June and hope to be able to form a similar partnership to the one we have formed today with WEG Bank.

Unique Market Opportunity

The details of the transaction with WEG Bank were included in our April 15th Ecosystem Report. As noted, this deal has now been completed. TokenPay Swiss AG has strong legal and financial advocacy, owing to the leadership of Prof. Dr. iur. Jörg E. Wilhelm. As the head of the TokenPay Supervisory Board, Dr. Wilhelm is a highly regarded German and Swiss attorney, professor and businessman with an accomplished background highlighted by decades of financial compliance and corporate governance experience.

Potential FinTech Partner

Additionally, we are also announcing today that we have entered into a non-binding verbal commitment with a potential partner to bring its world renowned technology expertise to the partnership. The details of the deal are covered under the secrecy provisions NDA. However, we expect this deal to close by the end of the month. With the addition of this potential partner and all of its blockchain experience and know-how, we believe that TokenPay can become one of the leading FinTech companies in Europe.

Pre-Register for Early Access

We invite enthusiasts to pre-register for early access to the crypto-friendly FinTech platform we are building. The intention is to offer a full suite of products and services that cater to the new digital economy. Stay informed of new developments as they unfold and be one of the first to have access to our modern FinTech solutions.



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20% of Financial Institutions Examining Starting Cryptocurrency Trading Soon

The cryptocurrency trading market is about to receive an influx of more big banks, hedge funds and other financial institutions within the next few months to a year. A new survey shows that while most are keeping quiet in public about their crypto plans, many are preparing to enter the field.

Big Players Prepare to Charge

Toronto-headquartered multinational information firm Thomson Reuters Corporation (NYSE: TRI), published a survey on Tuesday revealing that 20% of financial institutions are studying the possibility of entering the cryptocurrency trading space within the next 12 months period. Furthermore, 70% of those considering starting trading cryptocurrencies are planning to do so in the next three to six months, according to the survey.

The company says that the survey covered more than 400 of its clients across Thomson Reuters platforms including large asset managers, hedge funds and trading desks at the biggest banks. Over 300,000 financial professionals working in asset management, hedge funds and other institutions get access to cryptocurrency data (including price quotes for BTC, BCH and ETH) via the Thomson Reuters Eikon platform.

“Historically, the banking sector has been notoriously dismissive of the crypto movement. Cryptocurrency has variously been called a bubble, an asset for criminals, and worthless. But today’s survey demonstrates that while financial institutions are saying one thing, they’re doing quite another,” commented Kevin Murcko, CEO of cryptocurrency exchange Coinmetro. “We’re witnessing a gradual institutionalization of the market, and this is sure to drive mainstream adoption. The move to accommodate digital currencies is also a symbolic one; it’s a sign of growing maturity in the market, and represents just how far cryptocurrency has come since its days of relative obscurity,” he added.


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Goldman Setting the Stage

The most talked about major bank as widely considered to be in the process of entering the field is Goldman Sachs, although its CEO has denied in the past the rumors they are setting up a bitcoin trading desk. On Monday it was revealed that the company has recently hired Justin Schmidt, a former quantitative trader, to be the first head of digital asset markets in the company’s securities division.

“In response to client interest in various digital products, we are exploring how best to serve them in the space,” Goldman Sachs spokeswoman Tiffany Galvin-Cohen confirmed in a statement. “At this point, we have not reached a conclusion on the scope of our digital asset offering,” she added.

The bank should be more than aware of the huge demand hedge funds and other big investors have for cryptocurrency trading services. Circle, which is backed by Goldman Sachs, has recently doubled minimum ticket size on OTC bitcoin trades to $500,000 with an average of $1 million. And Chief executive Jeremy Allaire has told Business Insider that some transactions are now larger than $100 million and “That watermark will continue to rise.”


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PayPal Makes a Move Toward Traditional Banking

Company partners with small banks to offer debit cards, direct deposit and other services

PayPal PYPL 1.80% Holdings Inc. is nudging its customers closer to mainstream banking services.

The San Jose, Calif.-based payments company has been reaching out to groups of customers in recent months with an offer to add basic banking features to their PayPal digital wallet. The features include Federal Deposit Insurance Corp. insurance for balances up to government-set limits, a debit card that can be used to withdraw cash at ATMs and the ability to add funds to accounts by taking a photo of a paper check or by having employers direct-deposit earnings there.

PayPal users already served by traditional banks may not be tempted to ditch their existing checking accounts. The company isn’t paying interest on balances and is charging a fee of 1% on any check a customer deposits via a photo, in addition to fees for taking money out from ATMs other than the 25,000 inside PayPal’s network, said Bill Ready, PayPal’s chief operating officer.

But it could be a better option for certain consumers with smaller balances who are largely ignored by banks and have to rely on check-cashing centers and other alternative providers of financial services. PayPal isn’t charging a monthly fee and isn’t requiring customers to keep a minimum balance.

In contrast, Bank of America Corp. earlier this year discontinued a free checking account popular with lower-income customers, switching them into one that charges a $12 monthly fee unless certain conditions are met.

Mr. Ready said the company’s goal was to give those excluded from the banking system access to the digital economy. “If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb,” Mr. Ready said.

PayPal has been adding other financial functions to its website and smartphone apps that go beyond its original business of offering a checkout button that enabled shoppers to buy goods and services online. Through a series of partnerships and acquisitions, PayPal now offers consumer loans, cross-border remittances and automated savings and investment services.

A number of other technology firms with large user bases are looking at providing banking functions. Square Inc. gives out bank cards to users of its Cash App who want one, and Amazon.com Inc. has been in discussions to build a checking-account-like product for its customers.

There is a catch, though: PayPal and other tech firms don’t have a U.S. banking license. The FDIC doesn’t backstop funds stored at non-banks, and Visa Inc. and MasterCard Inc. only permit cards that run on their network to be issued by banks.

In PayPal’s case, the company turned to a hodgepodge of small banks that stay anonymous and behind the scenes. It cut deals with a Delaware bank to issue debit cards, a Georgia bank to deposit checks instantly after users take a photo of them and banks in Utah to make loans to consumers and small businesses.

“It’s mostly just a question of stringing together the supply chain,” said Thomas Brown, a partner in the global banking and payment systems group at law firm Paul Hastings LLP. “You can use technology to create the appearance of integration across accounts at different financial institutions.”

Mr. Ready said that working with several different banks allows PayPal to get products out to consumers faster and that the company has no intention of becoming a bank. He added that if its users already have bank accounts they are using within PayPal, “this isn’t an account for you.”

PayPal launched a prepaid card that offered some banking features in 2012 but charged users fees when they opened an account and when they loaded funds to it.

 


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Author: Peter Rudegeair 
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Deutsche Bank, With New CEO, Signals a Humbler Future

Christian Sewing succeeds John Cryan atop German bank; Marcus Schenck to leave lender

Deutsche Bank AG replaced its British chief executive, John Cryan, with the senior German head of its retail bank, a switch that signals a less ambitious future after years of grim financial results and sputtering attempts to regain a spot among global investment-banking powerhouses.

Germany’s biggest bank, struggling after a string of money-losing years, named Mr. Cryan’s replacement, an executive steeped in auditing, risk control and retail banking. Mr. Cryan will leave at the end of this month, Deutsche Bank said.

New CEO Christian Sewing has spent more than 25 of his 47 years at the Frankfurt-based lender, starting as an apprentice banker and rising to the management board three years ago. He has held senior risk and audit roles in London, Tokyo and Toronto but has a low profile outside of Germany.

The departure of Mr. Cryan, a former investment banker, and the elevation of Mr. Sewing struck investors and executives at other banks as moving Deutsche Bank closer to a potential merger with another European bank, possibly in Germany. Such a possibility has long been discussed. A smaller, more regionally focused Deutsche Bank could make a match-up more pragmatic, bankers and investors said. Deutsche Bank didn’t immediately comment.

 

The CEO change, which is effective immediately and came after a Sunday evening conference call of the bank’s supervisory board, also presages a lower-profile Deutsche Bank, say people close to the firm. The bank has been one of the few remaining in Europe with ambitions to compete globally against the U.S.’s trading and investment-banking powerhouses.

It has vast global trading operations and a huge presence in complex derivatives and fixed-income securities. But regulators at the European Central Bank, as well as in the U.S., have become wary of its size and its weakened financial position. The ECB declined to comment.

Investors and current and former employees expect Deutsche Bank to further curtail its trading operations, once the cash cow of the investment bank, in moves described by people close to the lender as driven partially by pressure from European and U.S. banking regulators.

While investment banks broadly have struggled since the financial crisis from a mix of tighter regulation and muted client activity, the German bank has slumped worse than its counterparts. European banks including Deutsche Bank were slower than U.S. peers to repair their balance sheets in the years right after the 2008 meltdown. That hurt Deutsche Bank later when it had to dial back risk and raise capital. Also, Deutsche Bank still has a greater share of its revenue tied to volatile investment-bank and trading businesses than its peers.

 

Regulators have heard concerns about Deutsche Bank from other big banks that trade with it, according to people familiar with the matter. Among concerns voiced, the people say, is that although Deutsche Bank’s capital cushion is stable after it raised billions of dollars in a share sale last year, a big market shock, unexpected legal fines or other crisis could set market confidence in Deutsche Bank back to where it was in late 2016 when counter-parties pulled away, fearing a capital crisis.

Other European banks, lagging behind stronger U.S. rivals in profitability and share performance, also feel pressures. But Deutsche Bank has had an outsize share of internal turmoil, exacerbated by a prolonged restructuring and an executive suite divided over matters including bonuses and technology spending.

Tensions were bad enough in recent weeks that supervisory-board members have been bracing for the possibility of multiple executive departures, according to people familiar with private board deliberations.

Since January 2016, Mr. Sewing has overseen Deutsche Bank’s private and commercial-banking division, which includes the lender’s network of German retail branches.

Mr. Cryan had been an investment banker and a finance chief at the Swiss bank UBS AG . His high-profile predecessor, Anshu Jain, was a consummate banker who rose to power during Deutsche Bank’s pre-crisis years of high-leverage trading and huge profits.

Last year, Mr. Sewing was named one of two co-presidents reporting to the CEO he now replaces. The other co-president, Marcus Schenck, is leaving the bank.

Mr. Cryan, a Briton brought into the CEO role in mid-2015, has two years remaining on his contract. He said two weeks ago in a memo to employees that he was “absolutely committed” to serving the bank. That was in response to media reports that Deutsche Bank’s chairman, Paul Achleitner, was shopping outside the bank for replacement CEO candidates.

As recently as last week, both of Deutsche Bank’s investment-banking co-heads were in discussions with the bank about potentially leaving, the Journal previously reported. One has decided to: Mr. Schenck, until recently considered a potential candidate to one day become CEO, is departing effective next month. He told the supervisory board before Easter that he intended to leave, Deutsche Bank said in its statement.

The other, Garth Ritchie, will now oversee the investment bank as its sole chief, Deutsche Bank said Sunday evening. He and another executive, Karl von Rohr, were named presidents, replacing Messrs. Sewing and Schenck in those positions.

Deutsche Bank has sent mixed messages to investors and employees over the past few months. Mr. Achleitner has faced unrest among big investors he courted who have become alarmed at Deutsche Bank’s share-price declines, people close to the bank and investors say.

Mr. Achleitner said in a statement that Mr. Cryan played “a critical role” at the bank, but that “following a comprehensive analysis we came to the conclusion that we need a new execution dynamic in the leadership of our bank.” He said the supervisory board views Mr. Sewing as “a strong and disciplined leader,” adding, “We trust in the great ability of this bank and its many talents.”

Deutsche Bank stock is at €11.35 ($13.94), down 29% this year. The shares have lost more than half their value in less than three years.

Some of the people said Mr. Achleitner told investors and others, including some outside executives he approached to discuss the CEO role, that Deutsche Bank has the right strategy but hasn’t executed it well enough. Mr. Achleitner has told financial executives that the market misunderstands Deutsche Bank, which he said mainly needs new energy in its executive ranks.

The message wasn’t persuasive, said one person close to a major investor and other people Mr. Achleitner spoke with.

Some investors said they are aghast at how tumultuous the past few weeks have been, with tales of Deutsche Bank infighting and private CEO discussions spilling into the open. A lot of that focus has fallen on Mr. Achleitner.

“Mr. Achleitner will have to explain this decision much more fully, because [Mr. Cryan] is his hand-picked CEO,” said Hans-Christoph Hirt, head of Hermes EOS, which advises shareholders holding just over 0.5% of Deutsche Bank shares.

 

Last week, banking analysts publicly disagreed with Mr. Achleitner’s notion that Deutsche Bank’s strategy is on track.

JPMorgan Chase & Co. analysts called for Deutsche Bank to shed U.S. corporate clients and shrink its trading business there. They said the lender had little hope of making enough money to justify its U.S. investment-banking ambitions.

Another analyst expressed frustration that Deutsche Bank wasn’t accepting that its costs are too high compared to profits, with no easy way to fix the problem. “To get really excited about Deutsche shares we need to see a full strategic overhaul, rather than tinkering,” wrote Stuart Graham of Autonomous Research, calling for “radical action.”

 


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Author: Jenny Strasburg
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