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McDonald’s makes its Russia exit final – Industry roundup: 17 May

McDonald's makes its Russia exit permanent

US fast food giant McDonald's, which announced a temporary closure of its stores across Russia following the invasion of Ukraine on 24 February, has confirmed that it is putting them up for sale and exiting the country permanently at a cost of US$1.2-1.4 billion.

Reports said that the cost will correspond to the impact of writing off the assets in the country. The Chicago-based multinational cited the economic that has resulted from the conflict, which made it difficult for the company to operate.

McDonald’s owns 84% of its stores in Russia and has said that its restaurants there and in Ukraine contributed 9% of its annual revenue, or about US$2 billion. The restaurants in Ukraine remain closed and the group said it continues to pay full salaries for its employees there.

“The humanitarian crisis caused by the war in Ukraine and the unpredictable operating environment precipitating it, have led McDonald’s to conclude that the continuation of the business in Russia is no longer sustainable, nor is it consistent with McDonald’s values,” the group said in a statement.

McDonald’s had been in Russia for 32 years, opening its first store in Moscow’s Pushkin Square on 31 January 1990. The high-profile launch was even regarded as a symbol of Perestroika and a harbinger of the end of communism, which occurred the following year.

Commenting on the withdrawal from Russia, McDonald’s president and CEO Chris Kempczinski said: “We are exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald's make this announcement extremely difficult. However, we have a commitment to our global community.”

Reports suggest that McDonald’s aims to sell its portfolio of 850 restaurants in Russia to a local entrepreneur, who will not be able to use the group’s name, brand, logo or menu, although it will retain its trademarks in Russia. The group will also keep its Russia employees on the payroll until it completes a sale.

To offset its losses from the closure, McDonald’s intends to open 1,300 new outlets worldwide this year, representing a 1.5% growth in sales in local currency. Its total investments for 2022 will be US$2.1-2.3 billion.

The group currently has 39,000 restaurants in more than 100 countries, of which 95% are managed by local operators mainly through franchises.

El Salvador hosts crypto convention

El Salvador, which last September became the first country in the world to adopt bitcoin as an official currency, has hosted a meeting of representatives from 44 countries to discuss the cryptocurrency’s roll out and the benefits it has had on financial inclusion, the digital economy and helping the unbanked.

The country’s president Nayib Bukele posted a list of attendees on Twitter over the weekend, which showed 32 central banks and 12 financial authorities. He confirmed that the central banks of both Egypt and Nigeria would be present, accounting for the two biggest economies in Africa.

El Salvador’s decision to adopt bitcoin was motivated by a wish to moderate hyperinflation and reduce its reliance on the US dollar. The country has also added bitcoin to its balance sheet, with a total reserve of roughly 2,301 BTC – worth almost US$70 million at current market rates.

However, recent price volatility means that El Salvador’s crypto holdings have fallen in value by around 28% against the dollar, though the biggest purchase of 500 BTC came after President Bukele “bought the dip” when bitcoin was at its current price. Bitcoin has reclaimed the key psychological US$30,000 level today, after falling below it in Monday’s trading session.

Despite Nigeria’s attendance at the El Salvador meeting, the Central Bank of Nigeria (CBN) has also regularly warned against trading in crypto and issued a directive to banks to close accounts of persons or entities involved in cryptocurrency transactions. In 2021, reports suggest that the bank issued fines totalling more than Naira 1.3 billion (US$2.4m) to banks over alleged non-compliance with its regulation on cryptocurrency accounts.

The International Monetary Fund (IMF) has also warned other countries about following El Salvador’s lead, claiming that bitcoin “entails large risks for financial and market integrity, financial stability and consumer protection”. Despite this, the Central African Republic also adopted bitcoin as legal tender last month, making it an official currency alongside the existing CFA franc.

Many expect that Brazil could be next in joining El Salvador and the CAR. Nubank, the largest fintech bank in Brazil, announced last week that it had bought Bitcoin for its balance sheet with 1% of its treasury. In addition, Brazil's largest broker XP will start offering Bitcoin to its 3.5 million customers by the end of June, and Brazil’s stock exchange plans to offer Bitcoin futures within the next six months.

Carbonplace, Visa partner for carbon credit transfer

Carbonplace, the bank-backed distributed ledger technology (DLT)-based carbon credit settlement platform, has completed a pilot transfer with payments group Visa.

The transaction involved Visa purchasing Verra-certified credits (Verra standards assess tangible climate action and sustainable development outcomes) from Sustainable Carbon, a carbon credit project developer. It marks a key step ahead of a planned launch towards the end of 2022 for what is being dubbed the “SWIFT for the carbon markets”.

The transfer was facilitated by two of Carbonplace’s founding banks, National Australia Bank (NAB) on behalf of Visa and Itaú Unibanco on behalf of Sustainable Carbon.

The participating banks – which include BNP Paribas, CIBC, NatWest, Standard Chartered, and UBS – believe that they can collaboratively leverage their existing infrastructure, including KYC and AML procedures, to address several of the challenges that have held back the development of the voluntary carbon market.

“Carbonplace is creating new opportunities to help our customers as they take action to reduce their emissions and achieve their own targets,” said NAB corporate and institutional banking group executive David Gall. “This successful pilot transaction with Visa is a significant step towards being able to help more of our customers tackle existing barriers and make carbon credits more accessible to everyone.”

Absa Bank offers smartcard for Kenya’s doctors

Absa Bank Kenya has partnered Kenya Medical Association (KMA) to launch prepaid multi-currency smartcards, which can perform the dual function of membership identification and a prepaid card that enables doctors to access electronic payments and other financial benefits.

A statement announcing the partnership said that KMA members will also enjoy the benefits of relationship management, credit access with business unsecured loans of up to Kenyan shillings (KES) 10 million, (US$86,000), personal unsecured loans of up to KSH 6 million, and tailor-made asset financing and mortgage facilities offering discounted interest rates. They will also be entitled to an Absa Platinum and Gold Credit card that offers convenience, safety, ease, and a contactless payment solution for their transactions.

Absa Bank’s Head of Premier Banking Simon Gachahi said that the new offering is aligned with the bank’s strategy to accelerate organic growth through sector-focused customer and product segmentation to enhance competitiveness. He added that the bank is committed to delivering bespoke customer value propositions to other professionals including teachers, doctors and lawyers.

“We have been speaking to our customers and professionals from different fields in a bid to understand their specific needs and this new proposition for our doctors is just one among many others that we are rolling out for our customers in various disciplines,” said Gachahi. “For instance, this collaboration will see the delivery of differentiated customer experience and innovative solutions that speak to the doctors’ life cycle.”

Under the partnership, medical professionals licensed by the Kenya Medical Practitioners and Dentist Council (KMPDC) and practicing in both private and public health care sectors will receive prepaid cards that will also act as a KMA membership card. The cards can also be used capabilities to load funds via Absa online banking, Kenya’s M-Pesa phone-based money transfer service or at Absa branches. KMA can also load funds to any member’s cards undertaking travel or other activities on behalf of KMA.

The M-Pesa wallet has made Kenya a global pioneer in mobile money and the Central Bank of Kenya (CBK) recently issued a discussion paper assessing the applicability of a central bank digital currency (CBDC).

Contour collaborates with TradeLens

The global digital trade finance network Contour has announced a collaboration with TradeLens – the digital supply chain platform launched in 2018 by IBM and Denmark’s shipping giant A.P. Moller-Maersk – that enables the secure and transparent transfer of electronic Bills of Lading (eBL).

“The Contour-TradeLens collaboration is significant for the ecosystem as it merges direct access to major ocean carriers with an established trade finance network,” said a statement announcing the union. “No one solution can provide end-to-end digitisation but through partnerships like this, corporates and banks sync their trade finance requirements with the physical shipment and benefit from an interoperable, end-to-end paperless transaction.

“The demand for digital trade solutions is even more pertinent today, as the pandemic has highlighted the fragility of global supply chains and put liquidity pressure on the smaller players. The Bill of Lading is an essential document used to facilitate shipments, which banks require to finance goods that are still on the water. Digitally transforming eBLs will simplify and streamline the entire trade finance process.

The TradeLens eBL simplifies the issuance, transfer and surrender of original shipping documents by digitising this transfer of title process. It is an eBL solution accepted by the industry, including ocean carriers, banks and regulators and compliments a supply chain ecosystem that facilitates information exchange for more than 65% of containerized trade. Direct integration with ocean carriers allows for a native issuance of a digital BL in a structured format as soon as it is published.

Contour’s expanding network allows all banks, financial institutions, and corporates to improve digitisation, speed and transparency in their trade finance processes. Adding TradeLens to this process further enhances the solution. For example, when using Contour’s digital Letter of Credit (LC) solution, the buyer and seller can specify the TradeLens eBL as the required proof of shipment and reduce the need to receive, send, and amend paper documents. This enhances the overall user experience, reduces complex workflows and further improves turn-around time.

Carl Wegner, CEO at Contour said: “Our collaboration with TradeLens brings us closer to our goal of establishing a truly global and digital trade finance ecosystem. With rising complexities in supply chains and markets across the world, digital transformation is crucial to addressing many of these challenges. Through strategic partnerships with leading industry players, we can accelerate this shift towards digitisation and drive the trade finance industry forward.”

Accountancy software group Sage acquires Futrli

Sage, the UK-based accountancy software giant Sage has acquired cash flow forecasting software solution Futrli.

Newcastle-headquartered Sage, which also provides HR and payroll technology for small and medium-sized enterprises (SMEs), said the move deepens its commitment to supporting accountants with complete end-to-end proposal-to-advisory services as the industry prepares for the UK government’s Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) initiative.

“Futrli provides a critical tool for SMEs to maintain healthier cash flows to grow their business and reach their potential. Its solution is focused on helping growing businesses understand current and future cash flow through prediction algorithms,” a release announcing the deal stated. “These are based upon data-analysed historical trends, blending direct and indirect forecasting methods, using invoices, bills, journals, cash, and payment data – enabling customers to visualise the past, present, and future of their business.”

Commenting on the deal, Neal Watkins, EVP product, Sage said: “At the heart of every successful business is strong cashflow management. Futrli will form an important role in the way we support accountants and their clients to gain the visibility needed to deliver great advisory services – all as part of our Sage for Accountants solution.”

Futrli by Sage will be integrated with Sage for Accountants, helping accountants to combine workflows across their practice in one place via a per-client pricing model. Futrli by Sage will also remain a market solution and will continue to be available to SMEs as a standalone product post-acquisition.

Westpac selects 10x Banking for institutional banking platform

Westpac, one of the ‘big four’ of the Australian banking sector, has signed a Letter of Understanding with UK-based technology provider 10x Banking to develop the core technology for its new institutional banking platform. The new platform is expected to give institutional customers access to advanced liquidity management, cash flow forecasting and real-time payments processing.

This latest agreement between the pair builds on an existing three-year partnership, which resulted in the launch of Westpac’s banking-as-a-service (BaaS)noffering. Westpac Institutional Bank’s CEO Anthony Miller says: “Just as consumers are changing the way they bank, large institutional clients also need access to quick and secure digital transaction services.

“We’ve seen significant success working with 10x Banking and its modern technology to deliver our BaaS platform and we are now planning the next step in that evolution for our institutional clients. The new platform will enable us to improve productivity and cost-efficiencies while simplifying processes and making it easier for our customers to do business with us.”

In February this year, Westpac announced a restructure that aimed to bring tech “closer to customers” and moves to create a “small, more focused head office” by reducing its corporate functions by around 20%. This resulted in the company's support services, including technology, finance, and HR, moving into a newly created division called customer services and technology.

The new division, said the bank, would be responsible for functions that “supports our customers and benefit from operating at scale” including technology, operations, remediation, and complaints.

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