HSBC names CFO as its new chief – Industry roundup: 18 July
by Graham Buck
HSBC’s new CEO to continue bank’s Asia focus
HSBC has once again sourced its new chief executive from within its ranks, three months after the unexpected announcement of Noel Quinn’s departure.
Georges Elhedery, the bank’s chief financial officer (CFO) for the past year, was announced this morning as Quinn’s successor, and will take up the new position at the start of September. While his appointment as CEO extends a tradition of internal hiring that goes back 20 years, the Lebanese-born banker is the first non-Brit to hold the role.
ʺ[Mr Elhedery] is an exceptional leader and banker who cares passionately about the Bank, our customers, and our people,ʺ HSBC's chairman Sir Mark Tucker said in a statement.
“I am deeply honoured by the trust placed in me to lead this great institution into the future," Mr Elhedery said.
In his time at HSBC Mr Elhedery has held several roles, including being the co-head of the business that houses its trading and investment banking advisory operations.
Noel Quinn, who has worked at HSBC for 37 years, was first appointed as its chief executive on an interim basis in 2019, after his predecessor John Flint was ousted from the role. In March 2020, he took the reins of HSBC on a permanent basis.
Mr Quinn oversaw the sale of several of the bank's businesses around the world.
HSBC recently completed the sale of its operations in Canada and announced plans to do the same with its business in Argentina. The sales were part of efforts by the London-based bank to focus more on faster-growing markets in Asia.
He also steered HSBC through the pandemic and fought off pressure from a major shareholder to break up the 160-year-old lender.
The attempt to spin off the bank's Asia assets was a sign of the challenges faced by HSBC at a time of increased tensions between the US and China.
HSBC also announced that it has hired Danny Alexander, a former UK member of parliament and chief secretary to the Treasury, to head a new unit focused on infrastructure financing tied to the low-carbon transition.
Mr Alexander, who left British politics in 2015 and most recently worked as vice president for policy and strategy at the Asian Infrastucture Investment Bank (AIIB), will join HSBC in November as chief executive officer of HSBC Infrastructure Finance, according to an internal memo. He will report to Greg Guyett, CEO of HSBC’s global banking and markets business.
Tokenised US Treasurys ʺcould reach US$3 billion by end of yearʺ
Tokenised United States Treasurys could reach US$3 billion by the end of 2024, showcasing the benefits of financial asset tokenization and its widespread adoption.
Tokenised Treasurys would need to grow nearly twofold to reach the US$3 billion mark by the end of this year.
Reaching the US$3 billion mark is possible due to the growing trend of decentralised autonomous organisations increasingly diversifying their holding into tokenized US Treasurys, according to Tom Wan, a research strategist at 21.co.
Tokenised US Treasurys will grow to US$3 billion thanks to the product offerings of global giants like Securitize and BlackRock, the strategist wrote in a 15 July X post. “With the two projects allocating to tokenised US treasury, we could be seeing the total markPasteet cap of tokenized US treasury increasing to $3B+ by the end of 2024.”
Tokenised US government securities have amassed over US $1.6 billion in total assets under management, according to data from the web-based platform Dune.
BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) became the largest tokenised Treasury fund in late April after it surpassed Franklin Templeton’s one-year old tokenised Treasury fund.
BUIDL became the largest tokenized fund in just six weeks, amassing over $375 million in market capitalization during that time. The fund is currently worth over $528 million and holds an over 28.8% market share.
BlackRock’s fund will add significant momentum for the inflows into tokenized Treasurys, according to Wan. He said:
“As the strategy laid out by Securitize and Blackrock, they intend to provide diversification for the crypto ecosystem to access risk-free US treasury yield without needing to leave the blockchain ecosystem.
Indonesia central bank holds interest rates steady
Indonesia’s central bank has held its benchmark interest rate steady, saying the current level remained consistent to manage inflation through to 2025 and stabilise the rupiah, while eyeing room for easing in the fourth quarter.
As expected the seven-day reverse repurchase rate, aka the Bank Indonesia (BI) Rate, was maintained at 6.25%, where it has been since a surprise 25 basis points (bps) hike in April to bolster the currency. BI also kept other policy rates unchanged.
Governor Perry Warjiyo said the decision would ensure inflation remained within the target range in 2024 and 2025, while the short-term policy focus was directed at strengthening the rupiah currency and attracting inflows.
BI has been focusing on managing the rupiah's volatility, including by intervening in the currency and bond markets, with inflation already within its target range since the middle of last year.
The rupiah has seen bouts of weakness this year due to a resilient US dollar as well as investors' concerns regarding Jakarta's fiscal prudence under an incoming government that is set to take office in October.
The currency has recovered by around 2% in recent weeks since hitting a four-year low last month.
Warjiyo said there is rising possibility of Fed cutting rates in November, compared to BI's earlier estimate in December, which may lead to a more stable or strengthening rupiah, giving room for BI to ease its own policy rates.
He said earlier this month BI would assess the possibility of reducing borrowing costs in Southeast Asia's largest economy in the fourth quarter.
ʺWe still see room for BI rate to ease in the fourth quarter. Even with the Fed expected to ease earlier ... everything would still be data-dependent,ʺ he said, when asked whether BI would also move forward its outlook on policy easing.
Bank Permata economist Josua Pardede maintained his forecast that BI will keep its policy rate unchanged throughout 2024 and may cut in the first quarter next year.
Klarna considering US IPO for 2025
Swedish firm Klarna is reportedly weighing financial advisors for its US initial public offering (IPO).
Goldman Sachs, J P Morgan Chase and Morgan Stanley were the top contenders to advise the Swedish payments FinTech, the Financial Times reports, citing inside sources. The company, a pioneer in the buy now, pay later (BNPL) field, could list in the first half of next year, the sources said.
As the FT notes, Klarna was last valued at US$6.7 billion in 2022 in a funding round that was deeply discounted at a time of rising interest rates and plummeting tech stocks. That valuation was a steep drop from the US$46 billion the company had reached a year earlier, making it the most valuable startup in Europe.
Now, sources told the FT, Klarna and its advisors are confident the IPO market would stage a comeback in 2025 following several turbulent years.
Sebastian Siemiatkowski, Klarna’s co-founder and CEO, told the FT in 2023 that the company was primed to go public, thanks to a sustainable business model and room for growth, but was holding out for stronger market conditions.
FSB issues recommendations on improving cross-border payments
The Financial Stability Board (FSB) has published two consultation reports proposing policy actions to improve cross-border payments.
The first report aims to promote greater alignment and interoperability of data, while the second report aims to strengthen consistency in regulating and supervising banks and non-banks that provide cross-border payment services.Both reports are open to public consultation until 9 September. The recommendations aim to “address frictions in data flows related to cross-border payments and to promote a level playing field between bank and non-bank providers of payment services.ʺ
The FSB’ proposals include the establishment of a forum for cross-sectoral collaboration on data issues related to cross-border payments to ensure that the recommendations are taken forward in a coordinated manner.
Public consultationsʺ form part of the FSB’s efforts to prioritise work and strengthen private-sector participation under the G20 cross-border payments roadmap.ʺ
Singapore’s Net Zero-X exchange launches
Net Zero-X, a Singapore-based blockchain exchange for impact investors, launched this week to tackle the significant financing gap impeding the global transition to a net zero future.
Open to institutional and accredited investors, the Net Zero-X exchange enables sustainability-minded investors to identify and support vetted green, clean, and climate tech projects, Net Zero-X said.
According to a statement, the exchange has identified 60 immediate sustainability projects seeking investment, with plans to onboard many more in the future to drive capital mobilization for a sustainable future.
It aims to onboard 500 projects within the next five years, facilitating the deployment of over US$10 billion in impact capital over the next decade.
This ambitious goal positions Net Zero-X as one of the largest and most influential platforms for sustainable finance globally.
ADB, AIIB to fund Indian solar power project
Demonstrating support for sustainable energy development in India, the Asian Development Bank (ADB) and the Asian Infrastructure investment Bank (AIIB) have joined forces to finance a large-scale solar power project in Gujarat.
The project, led by the ENGIE group, marks a substantial step in India's journey towards its ambitious renewable energy goals.
The 400-megawatt solar photovoltaic power plant, to be located in Surendranagar District, Gujarat, will be funded through a US$175.9 million long-term local currency loan.
This financing package, equally split between ADB and AIIB, with ADB acting as the lead arranger, underscores the growing international support for India's green energy transition.
ENGIE's subsidiary, Enren Energy Private Limited, will spearhead the project's implementation. The plant is expected to generate 805 gigawatt-hours of electricity annually over a 25-year period.
This output translates to a reduction of approximately 662,441 tons of carbon dioxide emissions each year, highlighting the project's significant environmental impact.
A main feature of this venture is its commitment to local manufacturing. The solar panels will utilise locally produced bifacial photovoltaic power modules, aligning with India's push for domestic production in the renewable energy sector.
The project has secured a power purchase agreement with Gujarat Urja Vikas Nigam Limited, a state-owned electricity distribution company, ensuring a stable market for the generated power.
This solar plant is poised to play a crucial role in India's ambitious target of achieving at least 500 gigawatts of non-fossil fuel energy capacity by 2030. It represents a concrete step towards reducing the country's carbon footprint and diversifying its energy mix. For ENGIE, this marks their second major solar project in India financed by ADB, following their flagship project in 2020.
Coca-Cola HBC secures US$130 million loan from EBRD
The European Bank of Reconstruction and Development (EBRD) has approved a loan of US$130 million (€119.5 million) for Coca-Cola Hellenic Bottling Company (HBC) to finance its CapEx and working capital requirements.
The loan will further Coca-Cola HBC’s investment in people development and sustainable business practices in Egypt, the bottler said.
The company will also receive an additional US$750,000 from the Global Environment Facility (GEF) to implement advanced wastewater treatment technology and water management systems in Egypt, in line with Euopean Union (EU) discharge standards.
Chief financial officer (CFO) of Coca-Cola HBC, Anastasis Stamoulis, stated, “This collaboration with EBRD as a strategic partner is an exciting development for our business in Egypt and is founded on our common goals of developing people and progressing sustainable business solutions.
“It will enable us to continue driving growth and investing in innovation and the latest sustainable technologies. It will also help us continue building best-in-class capabilities for our people and empowering youth and women through dedicated programmes. We look forward to the positive impact this will bring for our customers, consumers, and the communities in which we operate.ʺ
UK’s biggest pubs chain integrates Payit by NatWest
UK pub operator JD Wetherspoon has integrated Payit by NatWest into its app, enabling customers to pay for food and drink using Open Banking technology.
Payit by NatWest is now available to customers in all Wetherspoon pubs across the UK, meaning that patrons can complete in-app pay orders without the need to input card details, or provide personal information to sign up for an account.
If they choose to pay for their orders with Payit in the app, it will directly open their banking app of choice, allowing them to select the appropriate bank account to pay with.
All Wetherspoon customers will have the option to pay for their order using Payit, regardless of whether they are existing NatWest customers or bank with another provider, with 24 banks connected to the service, including the UK’s nine largest banks.
Mark Brant, NatWest Group’s chief payments officer, said: “This new partnership with one of the UK’s most recognisable brands is an exciting move for Payit by NatWest. It’s one that allows us to provide a company with an extensive consumer base a way to reduce the cost of taking payments.”
Brant added: “Ensuring the latest payment technology is available to as many consumers as possible is also one of our key ambitions as a business.
“The added security afforded by Open Banking technology reduces the risk of sensitive information, such as card details, falling into the wrong hands.”
At the start of the year, Payit by NatWest released the findings of a survey which showed that UK businesses already using Open Banking reported saving 150 hours annually on operational tasks, such as processing invoices and financial data, recurring payments and processing refunds.
Clearco and Boundless offer working capital for e-commerce merchants
Canadian businesses e-commerce invoice funding firm Clearco and small-business-focused capital marketplace Boundless announced a partnership designed to provide working capital to e-commerce brands, with Clearco offering businesses outside their core target direct access to Boundless’ marketplace, and Boundless connecting eCommerce brands to Clearco to access funding in 24 hours.
“eCommerce brands, especially small-and-medium-sized enterprises (SMEs), struggle to source traditional means of financing or lending for their business,” the companies said in a release.
“Alternative working capital or funding providers are necessary to support this emerging, high-growth sector of the United States’ economy. Clearco not only offers such businesses this critical funding but does so without requiring collateral or personal guarantees or diluting founders’ ownership,” the companies added.
For its part, Boundless aims to ease the “transparency challenges” SMEs face in getting funding, working with lenders, financiers and funding partners to match businesses with the best capital solution, the release said.
“Adding Clearco to their marketplace provides a much-needed working capital provider specific to their eCommerce customer-base,” the companies said.
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