Denmark joins T2 and TIPS

The European Central Bank (ECB) and Danmarks Nationalbank have signed an agreement for Denmark to join the ECB’s T2 wholesale payment system and the TARGET Instant Payment Settlement (TIPS) service. This will facilitate the settlement of high-value payments in euro and Danish kroner in the T2 system and make the Danish krone the third currency available for settlement in TIPS after the Swedish krona was included earlier this year.

Danish financial market participants have started testing both systems in preparation for the launch in April 2025. Danmarks Nationalbank already uses the T2 system to settle payments in euro and has used the TARGET2-Securities (T2S) platform to settle securities in euro and kroner since October 2018. Including the Danish krone in the Eurosystem’s payment services will enable market participants in Denmark to use all three TARGET services to settle all payments and securities in their national currency and benefit from optimised liquidity management.

“We are delighted that Denmark will use the Eurosystem’s TARGET Services platform to settle wholesale and instant payments in Danish kroner,” said ECB President Christine Lagarde after signing the agreement. “This will reinforce the integration of Europe’s financial infrastructures beyond the euro area, bring economies of scale and lay the foundation for cross-currency payments, providing tangible benefits for people in the euro area and in Denmark.”

TARGET Services are developed and operated by the Eurosystem and rely on central bank money to facilitate transfers between banks, businesses and individuals. The multicurrency capabilities of TARGET Services were first activated for the T2S platform when Danmarks Nationalbank joined with the Danish krone in October 2018. TIPS, which operates around the clock, already settles instant payments in two currencies, the euro and the Swedish krona.

 

Over half of businesses say they are paid late

More than half (51%) of businesses say they are paid late on average, according to Taulia’s global Supplier Sentiment Survey. When asked about businesses’ top motivations for wanting early payments, more than half (52%) said their main motivation was to address cash flow gaps. Other main reasons include optimising working capital (31%, up from 26% in 2022), ensuring payment predictability (27%), ease of use (14%), and reducing days sales outstanding (11%).

While the survey revealed an increasing desire for early payments, it also highlighted that businesses continue to exhibit poor payment practices. Only 44% receive payment on time, and just 3% are paid before the due date.

The survey has been conducted since 2014. This year’s edition collected views and insights from 11,300 businesses across its global network in over 130 countries.

“In the current landscape of supply chain disruptions and a challenging inflationary environment, it is unfortunate to see late payments on the rise,” said Bob Glotfelty, Chief Growth Officer at Taulia. “Now more than ever, access to working capital solutions is crucial. Not only does it provide businesses with much-needed liquidity and payment flexibility, it also supports them in their day-to-day operations.”

 

Fed rate cuts are coming soon

After plummeting through most of 2023, US core inflation has rebounded recently (on a sequential basis). With new data in hand, Goldman Sachs Research (GSR) raised its forecast for core PCE for the fourth quarter of 2024 back to 2.4%, roughly where it stood last fall, Jan Hatzius, Goldman Sachs' Chief Economist, said in the team's report. GSR economists also shaved their forecast for Federal Reserve rate cuts this year from four to three.

Even so, GSR forecasts that the US economy is still poised for a soft landing - meaning a return to 2% inflation without a recession. Recent growth and employment numbers have reinforced the economists’ view that the supply-demand imbalances in the economy are abating. Favourable weather is part of the reason for February's strong jobs report, and the January figures were revised lower. A slowdown in wage growth suggests that the recent rebound in services inflation is likely to reverse.

An immigration surge is a crucial reason GSR expects the labour market to rebalance smoothly despite strong GDP growth and rapid payroll gains. Its economists estimate that net immigration last year was about 1.5 million people above the long-term trend. The surge in immigration is expected to increase US GDP growth and helps explain the recent rise in the unemployment rate (from 3.4% in April 2023 to 3.9% in February 2024).

GSR expects the Fed — as well as the European Central Bank, the Bank of England, and the Bank of Canada — to begin cutting rates in June. The Bank of Japan, meanwhile, decided last week to end its negative interest rate policy and other exceptional policy measures. Even so, the GSR economists’ long-term view on BOJ policy remains dovish. They point out that real GDP contracted in the second half of 2023, and the tracking estimate for first-quarter growth is “marginally negative.” 

 

BNP Paribas Asset Management launches global net zero transition equity fund

BNP Paribas Asset Management (BNPP AM) has launched the BNP Paribas Global Net Zero Transition Equity fund, a Luxembourg-domiciled equity fund offering investors exposure to a well-diversified strategy across sectors, regions, and market cap. The fund has a strong focus on decarbonisation and an overweight in sustainable investment.  

In a statement, BNPP AM says the fund is one of the few active equity funds in the market with net-zero alignment as a primary objective with a Just Transition lens. The portfolio is diversified across sectors and regions with a broad investment universe and little to no significant style, regional or sectorial tilts vis-à-vis the benchmark. It promises a behavioural fundamental approach aimed at delivering consistent excess returns. The fund’s investment objective is to reduce GHG emissions and implied temperature rise (ITR) below 2 degrees over time.

The fund is managed as an active core fund, using the Global Equity team’s investment philosophy and process, which has roots in behavioural finance. To select stocks in the portfolio and assess companies' net-zero alignment, the investment team uses the BNPP AM Sustainability Centre’s proprietary net-zero alignment framework, which is inspired by the Paris Aligned Investment Initiative’s Net Zero Investment Framework. 

“Net zero can be achieved through directing investments towards companies providing solutions and those adopting solutions to decarbonise and therefore contribute to net zero alignment,” said Nadia Grant, Head of Global Equities at BNPP AM and Portfolio Manager of the fund. “With this new equity fund, we aim to provide an innovative strategy aligned with BNPP AM Net Zero commitments while leveraging our social and environmental expertise and focusing on engagement.”   

 

China Mobile opens corporate treasury centre in Hong Kong

Invest Hong Kong (InvestHK) has announced that its client, China Mobile Communications Group, is leveraging Hong Kong’s global status to set up its corporate treasury centre (CTC) and an innovation research institute in the city as part of the long-term business development strategy.

The Financial Secretary, Paul Chan, congratulated the establishment of China Mobile's CTC and their innovation research institute. Chan said that the HKSAR is committed to developing Hong Kong as a global innovation and technology hub with an emphasis on promoting the cooperation of the government, industry, academic and research sectors. At the same time, Hong Kong is well suited as a global financial centre for multinational treasury functions, such as overseas capital, remittance, fundraising, and risk management matters. 

The CTC and the innovation research institute are examples of China Mobile's attempt to use Hong Kong’s opportunities and the deepened cooperation between Mainland China and Hong Kong to accelerate the group's business development. The group has invested more than HK$30bn billion in recent years in the city, hoping to help lift Hong Kong's status as a global telecommunication hub.

The CTC in Hong Kong will serve as China Mobile's overseas treasury platform. It will use Hong Kong as a global hub to manage overseas capital management, services, and operations, opening up capital channels within and outside China and managing overseas capital risk.

 

Baader Bank selects Broadridge for regulatory trade and transaction reporting

Baader Bank AG has chosen Broadridge for its regulatory trade and transaction reporting. The agreement further extends Broadridge’s strategic relationship with the bank, which uses the technology firm’s front and middle office suite of solutions for order management, trading and market connectivity.

The bank offers its clients access to a full spectrum of asset classes, including equities, bonds, derivatives, funds/ETFs, and primary market transactions. Broadridge’s platform should support the bank in effectively meeting the evolving requirements across multiple jurisdictions due to the fast-changing regulatory landscape, including MiFID, FinfraG, EMIR (Refit), and SFTR. Baader Bank will adopt Broadridge’s holistic reporting solution, which will ensure a more unified and comprehensive regulatory reporting framework.

“As banks continue to grapple with the challenges of meeting complex regulatory demands, we are extremely proud that Broadridge continues to be the preferred technology partner for global financial institutions looking to simplify, transform and innovate across the trade lifecycle,” said Ben Cooling, General Manager, Regulatory Transaction Reporting Solutions at Broadridge.

 

Natixis leads US$1.27bn construction financing of Invenergy renewable energy projects

Natixis Corporate and Investment Banking (Natixis CIB) has closed a series of financings to support developing and constructing Invenergy’s renewable power projects in Kansas and Texas. The four projects represent a combined total capacity of 677 MW, and are as follows:

• Diversion, a 200 MW wind project located in Baylor and Wilbarger Counties, Texas.
• Flat Ridge IV, a 135 MW wind project located in Harper and Kingsman Counties, Kansas.
• Flat Ridge V, a 153 MW wind project located in Harper and Kingsman Counties, Kansas.
• Pixley, a 189 MW solar project located in Barber County, Kansas.

All four projects are currently under construction. American Electric Power (AEP) subsidiaries Southwestern Electric Power Company (SWEPCO) and Public Service Company of Oklahoma (PSO) will assume ownership of the projects upon the start of commercial operations. Diversion will be purchased by SWEPCO and is expected to begin commercial operations in Q4 2024. Pixley, Flat Ridge IV and Flat Ridge V will be bought by PSO and are expected to start commercial operations in Q1 2025. SWEPCO and PSO pursued approval of the projects to satisfy customer capacity needs, and the selected facilities were the best overall economic option for customers.

Natixis CIB acted as joint lead arranger, co-green loan coordinator and joint bookrunner. Natixis CIB was also the sole documentation agent and administrative agent across the four financings.

“This transaction was made possible by Invenergy’s strong financial and project partners who share our vision to build a more sustainable world,” said Brian Bortman, Senior Vice President of Finance & Capital Markets at Invenergy, “Our talented finance team is grateful for Natixis’ continued confidence in our premier development capabilities, and we look forward to finishing construction on these important clean energy centres for AEP and customers in the region.”

 

FV Bank introduces euro deposits

FV Bank, a US-licensed global digital bank that offers a vertically integrated suite of traditional and digital asset banking and custody services, has announced an expansion in its deposit capabilities. Clients now have the option to deposit euros into their USD bank account. In addition to USD deposits, account holders now have the flexibility to receive euros directly into their FV Bank account, where euro deposits are automatically converted to USD upon processing.

This integrated approach aims to simplify banking for FV Bank enterprise customers, offering a range of deposit options without the need to open additional currency accounts. Account holders can review daily EUR/USD conversion rates in the banking dashboard before initiating a deposit.

Including euro deposits extends FV Bank's deposit capabilities, complementing existing services such as international and domestic USD wire transfers and ACH transactions.

In addition to the new EUR deposit facility, FV Bank's cross-border payments offering allows clients to transfer money from their account in 10 different currencies without the need to open additional accounts or hold foreign currency balances.

 

ANZ backs Neoen AU$1.1bn renewable energy portfolio financing

ANZ has announced it acted as lead arranger for Neoen, Australia’s largest renewable energy company, on its AU$1.1bn renewable energy portfolio financing, which closed in late February 2024. ANZ also acted as facility agent, interest-rate swap provider and bank-guarantee provider.

The portfolio comprises eight wind, solar, and battery storage assets across five states in Australia, totaling 1.5 gigawatts (GW) of generation capacity.

The assets will include the Collie Battery Stage 1 (219 MW / 877 MWh), which is currently under construction in the southwest region of Western Australia (WA). As Neoen’s first significant project in WA and the company’s first four-hour long-duration battery globally, the asset will provide grid-scale services locally, storing high-density, low-cost renewable energy. The transaction aligns with ANZ’s strategy of funding and facilitating at least AU$100bn in environmental and social outcomes by 2030.

Collie Battery and other wind and solar assets under development will contribute to Australia’s 82% renewables penetration by 2030. The project’s construction is on track for completion in Q4 2024. This is the second Australian transaction ANZ has supported Neoen in, the first being for its 209 MW Goyder South Stage 1 Wind Farm in South Australia.