EU delays core element of Basel bank capital reforms by one year

The European Union (EU) will delay a core element of global reforms to bank capital rules by one year to January 2026, the bloc’s financial services chief announced, to ensure a level playing field between EU banks and their US rivals.

Countries are introducing the last batch of a global bank capital accord known as Basel III, rolled out after taxpayers were forced to bail out lenders in the global financial crisis of 2007-09.

EU financial services commissioner Mairead McGuinness said it was becoming clear the United States would not be able to meet its self-imposed deadline of July 2025 for introducing the rules.

"In practice, the entry of application of the Basel standards in the US is now highly unlikely to take place before January 1st, 2026, at the earliest," McGuinness told a conference.

"This one-year delay ensures a global level playing field, for those big European banks competing with other global players. It gives us time to see what others are doing," McGuinness said.

EU banks compete with lenders from the US and elsewhere in offering market activities and related financial services for international companies.

The EU had planned to introduce all of the reforms in January 2025 but will now delay the section on how banks cover markets risks in their trading books, known as the fundamental review of the trading book, or FRTB.

The remaining changes are set for implementation as scheduled, McGuinness said.

"In the EU, we are firmly adhering to our date of January 1st 2025 for entry into application of the bulk of the Basel standards," she added.

A senior European banking official said delaying the FRTB is ʺnot any big reliefʺ given that the bulk of Basel III is being introduced next January across the bloc.

The Bank of England (BoE) has said that it plans to roll out the final leg of Basel III from July 2025 but has yet to issue the final version of its rules as the regulatory calendar has been put on ice pending the 4 July general election.

 

UK inflation dips to meet Bank of England’s 2% target

The United Kingdom’s headline inflation rate fell in May to 2% from 2.3% the previous month, hitting the Bank of England’s (BoE) 2% target for the first time since July 2021. But few expect the members of the Bank’s. Members of the BOE’s monetary policy committee (MPC) to have sanctioned an interest rate cut when their latest decision is announced later today.

Money market pricing indicates just a 5% probability of a reduction this month and even the odds of a rate cut in August are no more than 30%.

While the 2% inflation reading is a significant milestone, particularly as politicians set out their stalls ahead of the UK’s 4 July general election, it was widely anticipated and was largely driven by the sharp year-on-year decline in energy prices. Fluctuations in the rate over the coming months are expected as the drag from energy fades.

Policymakers are equally focused on services inflation, key to understanding domestic price pressures in the country’s services-oriented economy, which came in at 5.7% — higher than the 5.5% forecast by economists in a Reuters poll.

Core inflation, excluding the volatile components energy, food, alcohol and tobacco, remained well above the central bank’s long-term average at 3.5%.

“We’ve seen some good stuff in terms of seasonality, food prices are coming down as well,” commented James Sproule, chief economist at Handelsbanken. “But looking over the rest of the year, even the BoE itself is expecting inflation to start to creep up a bit again over the course of the autumn.

“I think the most disturbing thing lots of economists like myself are looking at right now is what’s happening in services inflation. That’s largely about people’s salaries and earnings. And those numbers have been proving a good deal stickier than we would like,” Sproule said, with the Bank targeting services inflation of around 3%.

Average UK wage growth excluding bonuses remains uncomfortably high for the BOE at 6%, despite signs of a loosening labour market.

At last month’s meeting, the central bank said that recent inflation readings had been “encouraging,” but that the chance of a rate cut would be assessed at each meeting and based on the latest data.

Members of the MPC, including Governor Andrew Bailey, are expected to be more tight-lipped than usual today due to the upcoming national vote. The BoE is politically independent and MPC members have stressed they would be willing to enact a rate cut if it believed one was required, irrespective of an election.

Two members of the MPC voted to cut rates at the May meeting, versus seven who voted to hold. James Smith, developed markets economist at ING, expects a repeat of that split this month.

“That may be hard to square against the idea that the committee is very close to cutting rates. But the key thing to remember is that the five internal committee members, who hold the key to the first cut, tend to move as a pack,” Smith said earlier this week.

A BoE decision to hold rates would come after the European Central Bank (ECB )began its own path of reductions at its June meeting. Headline inflation in the euro zone came in higher than in the UK at 2.6% in May, but the core figure has cooled further.

Fitch raises India’s FY25 growth forecast to 7.2%

Fitch Ratings has raised India’s economic growth forecast for the current fiscal year ending March 2025 to 7.2%, up from 7% projected last March. The upward revision reflects a recovery in consumer spending and increased investment, according to Press Trust of India (PTI).

For the fiscal years 2025-26 and 2026-27, the credit ratings agency projected growth rates of 6.5% and 6.2%, respectively.

“We expect the Indian economy to expand by a strong 7.2% in FY24/25 (an upward revision of 0.2 percentage points (pp) from the March GEO),” Fitch stated in its global economic outlook report.

Fitch's estimates align with those of the Reserve Bank of India (RBI), which earlier this month projected 7.2% growth for the current fiscal year, supported by improving rural demand and moderating inflation.

Fitch noted that investment will continue to rise, although more slowly than in recent quarters. Consumer spending is expected to recover, supported by high consumer confidence.

Purchasing managers survey data indicated continued growth at the start of the current financial year. The anticipated normal monsoon season is expected to support growth and stabilise inflation, though India’s heatwave over recent weeks poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” Fitch added, indicating that growth will be driven by consumer spending and investment.

 

CBDCs could boost Middle East's financial inclusion, says IMF

An International Monetary Fund (IMF) survey of the Middle East and Central Asian region concludes that while central bank digital currencies (CBDCs) might not be essential they can advance financial inclusion and lower the cost of financial services.

The uptake of CBDC's could only have marginal benefits in the Middle East and Central Asia (ME&CA) region if other barriers are not addressed, the IMF findings said.

The survey said that the 19 central banks in the region are exploring issuing a CBDC and the countries are mainly focused on how CBDCs can enhance financial inclusion and payment system efficiency.

The survey also said that CBDCs can advance financial inclusion and lower the cost of financial services, and yet adopting a CBDC, requires careful consideration. However, the survey noted that underlying constraints and improving other digital payment systems may be a more practical alternative to CBDCs.

The IMF has been researching the evolution of CBDCs and guiding member nations about how and whether to integrate them into their respective monetary systems. A senior IMF official has also said that ʺone global CBDC platform that will allow for capital controls could cut payment costs.ʺ

 Several nations in the ME&CA region have explored the use of CBDCs, including Saudi Arabia, whose central bank recently joined a cross-border experiment with CBDCs for international trade with the Bank for International Settlements (BIS). The IMF's Managing Director Kristalina Georgieva has also previously said that CBDCs could replace cash in island economies.

ʺUltimately, introducing digital currencies will be a long and complicated process that central banks must approach with care,ʺ the IMF survey concluded. ʺPolicymakers need to determine if a CBDC serves their country’s objectives and whether the expected benefits outweigh the potential costs, risks for the financial system, and operational risks for the central bank.ʺ

 

Deloitte partners with dsm-firmenich on sustainable food supply chains

Global professional services firm Deloitte and the Dutch-Swiss nutrition, health, and beauty company dsm-firmenich are to launch a strategic collaboration aimed at providing solutions for the agricultural sector to improve the sustainability of the food supply chain, with a focus on sustainable animal protein production.

The collaboration will utilise dsm-firmenich’s Sustell software platform, which helps users assess environmental footprinting across the animal protein value chain, using data captured directly from the feed and farm sectors. The platform enables users to determine environmental impact to understand what is driving environmental footprint, provide a baseline to measure improvements, identify impact hotspots in the value chain, and test interventions through modelling across various scenarios, according to dsm-firmenich.

Dr. David Nickell, Vice President of Sustainability & Business Solutions at dsm-firmenich, Animal Nutrition & Health, said: “Our critical, on-the-ground insights on animal feed and farming, coupled with Deloitte’s global leadership and cross-sector knowledge, will help unlock the missing ingredients needed to create a greener food ecosystem for everybody.”

Deloitte will help expand and enhance the Sustell platform’s reach, in addition to helping to enable growth opportunities for businesses deploying the platform, with advice on how to operate the platform, apply insights to operations, and prepare environmental, social and governance (ESG) reporting.

Jorg Schalekamp, Partner, Consulting, Deloitte Netherlands, said: “The food industry needs holistic value chain transparency to make better choices and transform to future proof business models. This collaboration will help leaders in the agricultural sector access the precise, real-time data and insights that they need to embed sustainability considerations into their operations, contributing to a virtuous cycle that can drive both a profitable agriculture sector and a more sustainable global food system.”

Deloitte added that the new collaboration forms part of the firm’s “latest effort to explore, develop, and scale new climate and nature-positive solutions, working directly with businesses to help implement future-proof strategies and promote transparency across the food ecosystem.”

Deloitte Global Future of Food leader Randy Jagt said: “From regenerative agriculture and executive education programs with universities around the globe, to working with non-government organizations to find the optimal balance between protein and plant-based consumption, to leveraging technology to create more resilient supply chains and working toward zero waste, Deloitte is committed to supporting and accelerating the food systems transformation.ʺ

 

NatWest to buy Sainsbury’s banking arm

NatWest is to buy the main banking business of Sainsbury’s as the UK supermarket chain exits the sector to focus on its core grocery business.

Under the deal, NatWest will take on the credit cards, loans and savings accounts of Sainsbury's Bank, although t is not buying the Sainsbury's Bank brand, or its cash machines, insurance or travel money businesses.

NatWest is also not automatically taking on those Sainsbury’s employees affected by the deal, although a spokeswoman for the supermarket said ʺboth parties are committed to exploring opportunities for ongoing employment with NatWestʺ.

NatWest said it would gain about one million customer accounts as part of the deal, which is expected to complete at the end of March 2025. The bank will take on £1.4 billion (US$1.78 billion) of unsecured personal loans and £1.1 billion of credit card balances, as well as £2.6bn of customer deposits.

Sainsbury's Bank will pay out £125 million to NatWest and £250 million to Sainsbury's as part of the agreement.

Sainsbury's Bank launched as a joint venture with the Bank of Scotland in 1997, before Sainsbury's took full ownership in 2014. But the supermarket said in January that it planned to wind down its banking division in order to focus on its core business.

Sainsbury’s is following the lead of rival Tesco, which in February sold its banking division to Barclays in a deal worth £600 million.

 

JPMorgan Payments and Loop join forces to monetise freight payments

JPMorgan Payments has launched a partnership with audit and payment platform Loop, designed to “boost working capital with freight payments” and foster stronger relationships between US shippers and carriers.

A release announcing the union cites data from the American Trucking Association showing that trucking revenues account for more than US$940 billion, or 80%, of the US freight bill.

“Yet a tangled legacy network of paper invoices and delayed payments snarls supply chains and drives up costs,” the companies commented.

“As shippers push to reconcile invoices, capital is trapped, a dynamic mirrored by their carrier counterparts. While quick pay options have long been accessible to shippers with flexible balance sheets or those partnered with specialized financial institutions, major gaps persist across the supply chain.”

Legacy payments are often late, the release notes, adding friction, hampering carrier relationships, and driving up late fees. Even as the industry digitizes, transparency and compliance in the supply chain are growing issues, with fraud rates increasing.

“This collaboration fills these gaps, ensuring carriers receive payments faster while shippers receive a market-leading financing rate thanks to the enhancements made through AI. Loop’s logistics-AI and automation improve accuracy, speed, and trust, enabling JPMorgan Payments to provide capital and payment flexibility with confidence,” the release said.

“Together, the firms are unlocking working capital that propels growth and collaboration across the supply chain.”

 

Mastercard and Thought Machine partner on core banking capabilities

Mastercard and the London-based cloud banking tech Thought Machine have expanded their partnership to deliver payments and core banking capabilities to financial institutions worldwide.

ʺThis collaboration brings together Mastercard’s global network and digital solutions and Thought Machine’s cloud-native core banking and payments platform,ʺ the companies said in a press release, adding that together they  aim to help financial institutions shift from legacy core banking and payment technologies to cloud-native ones.

With these cloud-native technologies, the partners plan to enhance banking efficiency, lower costs, enable rapid introduction of more customer-centric experiences and allow banks to offer more innovative pay-now solutions, per the release.

“We are excited to simplify and enhance the modernization experience for complex banks worldwide and make it even easier for them to deliver sophisticated customer experiences,” said Paul Taylor, CEO and founder of Thought Machine.

The expanded partnership builds upon an earlier one from June 2022, when Mastercard and Thought Machine collaborated to launch an issuer processing solution called Vault Payments. In addition, Thought Machine participated in Mastercard’s startup engagement programme, Start Path, in 2020.

“We’ve had a longstanding relationship with Thought Machine, and they’re now our first strategic, end-to-end partner in the core banking space,” said Mark Barrnett, president, Mastercard Europe. “We’re providing leading banks and financial institutions with a comprehensive core banking and card issuing solution that meets tomorrow’s payment needs, and we look forward to scaling our joint capabilities.”

Thought Machine was founded by Taylor, a former Google engineer, in 2014 to power online financial services on behalf of legacy financial institutions

 

Nium partners with Air France and KLM to transform airline payments

Real-time, cross-border payments fintech Nium is partnering with Air France and KLM to revolutionise the way travel agents pay their airline partners

The fintech, which specialises in real-time global payments, will power closed-loop electronic payments between the airlines and select travel agents.

By leveraging the Nium Airline Payments (NAP) solution, Air France and KLM ʺwill be accessing an alternative to travel agent card transactions, using a private network of trusted Universal Air Travel Plan (UATP) authorisation rails and bank transfers,~ a release noted.

ʺAs such, NAP will provide lower payment costs, more optionality and guaranteed payment acceptance for airlines and travel agencies.

ʺPowered by a private network of UATP authorisation rails, NAP eliminates intermediaries from the payment flow, giving KLM and Air France greater flexibility to provide a new payment method for select travel agent partners. 

By using NAP, Nium can not only guarantee payment acceptance, it also reduces settlement time from hours to minutes, and, in some cases, even seconds.

Spencer Hanlon, Global Head of Travel Payments at Nium, says: “For decades, the travel industry has been grappling with complex, slow, and expensive payment methods. 

“Nium is helping travel agents and their airline and hotel partners unlock the potential of global real-time payments, transforming the way money moves through the travel ecosystem for the better.

“We look forward to helping Air France and KLM resolve some of the inequities – for both the airlines and for the travel-selling intermediaries – associated with outdated traditional payment models.”

 

Iran ready to launch digital rial

Iran said that it is ready to begin testing its prototype central bank digital currency (CBDC) on Kish Island in the Persian Gulf.

The Central Bank of the Islamic Republic of Iran (CBI) announced that it will testing of the “digital rial” will commence from 21 June, or Tir 1 in the Iranian calendar. Users can scan a barcode to make purchases and transfer money, without using paper money or bank cards. The central bank began testing a prototype CBDC in 2022.

Two commercial banks, Mellat Bank and Tejarat, will participate in the test