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Industry roundup: 2 August

DBS and Temasek launch debt financing platform for growth stage tech-enabled companies

DBS and Temasek have announced that they have entered into an agreement to jointly launch a US$500m growth stage debt financing platform, called EvolutionX Debt Capital (EvolutionX). Headquartered in Singapore, EvolutionX will provide non-dilutive financing to growth stage technology-enabled companies across Asia, with a focus on China, India, and Southeast Asia.

The two firms say that the growth debt capital space presents a significant opportunity, and EvolutionX will invest in opportunities arising from an increasingly digital economy - across sectors such as financial services, consumer, healthcare, education and industrial development – to accelerate growth and build the next generation of technology leaders.

Beyond creating a financing solution to fulfil capital funding needs within the industry, this partnership also serves as a natural extension and segue to both DBS’ and Temasek’s existing early-stage debt initiatives and investment activities, bolstering the strength of the extended network and ecosystem through synergies fostered. EvolutionX combines Temasek’s investment expertise and DBS’ global banking networks to leverage and further catalyse the fast growing technology ecosystem in Asia.

 

Deutsche Bank reveals results of 2021 EBA stress test

In the EU-wide stress test conducted by the European Banking Authority (EBA), Deutsche Bank met the minimum supervisory requirements in both ‘baseline’ and ‘adverse’ scenarios across all three years covered by the exercise.

In the baseline scenario, Deutsche Bank’s common equity tier 1 (CET 1) ratio would remain at least 13.6%, a buffer of 321 basis points above a supervisory requirement of 10.4%. In the adverse scenario, which is more severe than in previous EBA stress tests, Deutsche Bank's CET 1 capital ratio would decline to 7.6%, 165 basis points above supervisory minimum requirements of 5.9%.

"Even in this year’s more severe adverse scenario, Deutsche Bank proves its resilience in the face of potential challenging conditions," said James von Moltke, the bank's chief financial officer. "This underscores the strengthening of our risk profile and the benefits of disciplined execution of our transformation strategy. This outcome is all the more encouraging because the strong profit growth we delivered in the first half of 2021 is not reflected in this exercise."

The stress test uses a common scenario definition and methodology for participating banks based on the balance sheet as of 31 December 2020. Accordingly, business strategies adopted and management measures implemented after that date are not reflected in the results. In the first six months of 2021, Deutsche Bank produced a profit before tax of €2.8bn and a net profit of €1.9bn, its best first half result since 2015.

The adverse scenario of the 2021 stress test is significantly more severe than in previous exercises and implies four consecutive years of EU-wide recession. From year-end 2020, after a 6.9% contraction in EU gross domestic product (GDP) during that year, the 2021 adverse scenario assumes further contraction of 3.6% in total over its three-year time horizon. This compares to a cumulative three-year contraction of 2.7% in the adverse scenario of the 2018 stress test, after growth of 2.4% in 2017. This implies a cumulative, four-year GDP contraction of 10.3% in the 2021 stress test, versus a four-year decline of only 0.4% in the 2018 exercise.

 

BBVA signs its first sustainable revolving credit facility in Belgium with Cofinimmo

BBVA has formalised its first sustainable-linked deal in Belgium with Cofinimmo. The transaction consisted of increasing an existing revolving credit facility to €25m and linking it to a fundamental environmental indicator for its sector.

The original deal, which was signed in 2020, consisted of a revolving credit facility for €20m. Now Cofinimmo, in line with its global strategy, in which environmental criteria play a fundamental part, has made it sustainable at the hands of BBVA. The way to do this was to link the price of the credit line to the variation in the group’s energy intensity (kWh / m2), an efficiency measure that reflects the energy consumption of its asset portfolio. This way, if Cofinimmo reduces its energy intensity, it will obtain a reduction in the financing margin, while an increase in its energy intensity will see an increase.

"For BBVA, sustainability is a strategic priority," commented Pedro Garrido, head of Corporate Lending for the United Kingdom and Northern Europe at BBVA. "We want to contribute to the transition towards a low-carbon economy, and that is why we support and accompany our clients who, like Cofinimmo, include their environmental objectives in their financing strategies."

 

Thomson Reuters rolls out tax system using Oracle's cloud infrastructure 

Thomson Reuters has turned to Oracle Cloud Infrastructure (OCI) as part of its multi-cloud strategy to make its indirect tax software available to customers worldwide. In addition, Thomson Reuters will build out the application on Oracle Autonomous Database to help simplify processes and elevate performance with a cloud-first solution.

Thomson Reuters ONESOURCE enterprise cloud solutions aim to provide small businesses to multinational organisations with a single, unified tax and trade engine that automates the ever-evolving tax landscape. ONESOURCE Indirect Tax Determination, powered by Oracle Cloud Infrastructure, continues to expand upon Thomson Reuters cloud-based offerings to help customers around the globe tackle the simplest to the most complex transactional tax calculations. OCI’s built-in security, high availability, and superior price-performance is designed to help customers around the world automate their transactions without having to worry about capacity constraints. 

Using the recently announced Oracle Cloud Lift Services programme, Thomson Reuters worked closely with Oracle Cloud engineers who provided hands-on expertise, technical tools and cloud engineering resources, at no additional cost, to speed the development of the cloud-native tax application.

"We are excited to bring our cloud offering for ONESOURCE Indirect Tax Determination to the Oracle Cloud Infrastructure and begin a robust collaboration with Oracle," said Sunil Pandita, president of Corporates at Thomson Reuters. "Our customers will continue to receive unmatched data accuracy in more than 56,000 global taxing jurisdictions, along with the cloud security imperative to any technology solution. We’re happy to run our next generation indirect tax application natively on OCI and open up our indirect tax determination engine to Oracle customers worldwide."

Oracle and Thomson Reuters will jointly market and co-sell ONESOURCE and other cloud-native solutions in an alliance designed to expand Thomson Reuters’ existing global footprint. Oracle’s 30 Cloud Regions worldwide offer close proximity for each Thomson Reuters location and help address data sovereignty requirements, helping to ensure customers know exactly where their data is being processed. Thomson Reuters is a member of the Oracle PartnerNetwork (OPN), and Thomson Reuters solutions are available in the Oracle Cloud Marketplace, where customers can search for available applications and services to find the best business solutions for their organisation.

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