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Most finance chiefs preparing for greater regulatory scrutiny in 2024 - Industry roundup: 12 February

Most finance chiefs preparing for greater regulatory scrutiny in 2024

Eight in 10 finance chiefs are prioritising preparing their departments to operate under increased regulatory scrutiny, according to a new global study commissioned by Basware and conducted by Forrester Research. The research revealed that 84% of finance leaders said adapting to stricter compliance standards was a critical or high priority for the year ahead. As organisations worldwide face pressures to elevate their compliance standards, the trend is further intensified by the global surge in e-invoicing and tax mandates, considered one of the most effective measures for governments to combat tax evasion and close the VAT gap.

Some 82% of respondents cited ‘attracting and retaining talent’ within the finance team as a high priority for the year ahead. Inflationary pressures and high interest rates also saw finance leaders look to reduce costs, with more than three-fourths of respondents declaring that improving cashflows was of great importance this year.

Other critical measures listed included managing cost optimisation (82%), increasing efficiency (81%) and driving digital transformation (79%). Finance leaders also cited accounts payable automation as a critical priority towards delivering digital transformation, with 84% saying it was a major priority for the year ahead.

When asked how AP automation will impact their business, 57% listed improving efficiency as a key outcome, with 52% saying the process would improve their organisation’s overall ESG footprint.


Barclays to acquire Tesco’s retail banking business

Barclays Bank UK has entered into an agreement with Tesco Personal Finance (operating under the trading name ‘Tesco Bank’) to acquire Tesco Bank's retail banking business, which includes credit cards, unsecured personal loans, deposits, and the operating infrastructure. Additionally, Barclays UK will enter into a long-term, exclusive strategic partnership with Tesco Stores Limited for an initial period of 10 years to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, as well as explore other opportunities to offer financial services to Tesco customers.

In a statement, Barclays said that partnering with Tesco, the UK’s largest retailer, which also operates the UK’s largest loyalty scheme, represents a key opportunity to further its UK retail banking strategic ambitions. Barclays UK will market Tesco-branded credit cards, unsecured personal loans and deposits to customers through Tesco’s distribution channels as well as on the open market. The acquired customer base will complement Barclays UK’s current business, as well as build on the existing UK strategic partnerships with other leading retail, consumer electronics and loyalty programme brands.

The transaction involves the acquisition of approximately £8.3bn of unsecured lending balances with a credit quality consistent with existing Barclays UK portfolios. The transaction as a whole is expected to offer attractive financial returns over the term of the agreements. It will increase the weighting of the unsecured lending business within Barclays UK. The company being acquired includes approximately 2,800 employees, encompasses technology and operational infrastructure, and made an adjusted operating profit of approximately £85m in the 12 months ending February 2023. Barclays UK intends to integrate the business into its operational infrastructure over time.

If completion of the transaction were to occur at the end of July 2024, Barclays UK expects to acquire approximately £4.2bn of gross credit card receivables and £4.1bn of gross unsecured personal loans, together with approximately £6.7bn in customer deposits. Tangible net assets acquired at completion of the transaction are expected to be approximately £960m, including an expected credit loss allowance of approximately £(490)m. The consideration payable by Barclays UK at completion is expected to be approximately £600m.

As previously disclosed, Barclays is currently engaged in a process to sell its German consumer finance business (comprising credit cards, unsecured personal loans and deposits) as part of its ambition to simplify Barclays and support its focus on growing key businesses. Any sale, if agreed, would be expected to be accretive to Barclays’ CET1 ratio.


UK starting salary inflation softened to 34-month low in January

The latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global, highlighted that ongoing uncertainty around the economic outlook continued to impact hiring decisions at the start of the year. Permanent placements fell at a sharp and accelerated pace, while the downturn in temp billings remained mild. Overall vacancies meanwhile declined slightly for the fourth time in five months.

Lower levels of recruitment activity and redundancies fuelled further increases in staff availability. Though sharp, upturns in both permanent and temporary candidate numbers cooled from December, however. Competition for staff with desirable skills and the rising cost of living underpinned further increases in starting pay, albeit with rates of salary and wage inflation both posting below their long-run trends.

The latest survey of recruitment agencies across the UK revealed a further drop in hiring activity at the start of 2024, particularly for permanent workers. Notably, permanent staff appointments fell at a sharp and accelerated pace, while temp billings fell only slightly. There were frequent reports that businesses had often paused recruitment plans due to the subdued economic environment, while fewer vacancies also dampened staff placements.

Total vacancies across the UK declined again during January, albeit marginally. Demand for staff has now weakened in four of the past five months, driven by a sustained reduction in permanent job opportunities. Meanwhile, temp vacancies expanded at the slowest rate since November 2020 and only slightly.

Although starting salary inflation remained sharp in January, the latest pay increase was the softest recorded since March 2021 and slower than the series average. Temp wage growth quickened slightly to a five-month high but was also below the historical trend. According to recruiters, competition for suitably-skilled staff amid a strong inflationary environment pushed pay rates higher. However, there were also reports that pressure on client budgets had limited overall increases in pay.


HSBC partners with Google Cloud to grow climate tech ecosystem

HSBC has partnered with Google Cloud to accelerate climate mitigation and resilience through financing and support for companies in the Google Cloud Ready – Sustainability (GCR-Sustainability) programme. GCR-Sustainability is a validation programme for companies with solutions available on Google Cloud that help customers achieve goals including carbon emission reduction, increased sustainability in value chains, and processing of ESG data to help identify climate risks.

Under the new partnership, Google Cloud will introduce GCR-Sustainability companies to HSBC’s specialist climate tech finance team to explore venture debt financing options. Key goals of the partnership include:

  • Google Cloud will continue to increase the number of partners in the GCR – Sustainability programme over the next two years.
  • HSBC will seek financing opportunities for companies within the GCR-Sustainability ecosystem, as part of its ambition to deploy US$1bn of climate tech finance, as well as facilitating connections with HSBC’s customer base.

The partnership launches with a venture debt financing package from HSBC delivered to GCR-Sustainability-validated company LevelTen Energy, which provides renewable transaction infrastructure for buyers, sellers, advisors and financiers in the clean energy economy. To date, the company has facilitated over US$5bn in clean energy transactions.

“This venture debt package will enable us to scale our platform, which provides transaction infrastructure for carbon-free energy buyers, sellers and financiers,” said Ross Trenary, Chief Financial Officer of LevelTen. “HSBC’s global reach aligns with our international presence, while giving us opportunities to connect with HSBC clients that are looking to achieve sustainability goals.”


A booming business: US sports betting could become worth US$45bn

US sports betting has rapidly grown into a US$10bn industry since a 2018 Supreme Court decision allowed states to legalize the practice. Significant expansion could lie ahead, according to Goldman Sachs Research.

Americans will legally spend US$45bn on sports betting each year once the market matures, forecasts Ben Andrews, the head of leisure and travel research for Goldman Sachs Research in Europe, where legal sports betting companies have a more extended history. “We expect growth to be driven by a combination of new state openings and a higher share of the consumer wallet being spent on sports betting over time,” he says.

According to data from the comparison team at CasinospotDK, the fact that each US state is developing its own regulatory framework for sports gambling means there is great diversity in rules and conditions for betting operators across the country. There is a trend towards the expansion of legal sports betting not only in physical locations but also online, reflecting the global trend towards the digitalisation of gambling.

“The future of sports betting is the convergence of media and sports and betting,” predicts Noah Naparst, who evaluates sports betting companies for Goldman Sachs Asset Management. “You're watching a basketball game in your betting app, and a player is about to take a free throw. The odds that he or she makes it pop up on screen, and the app asks, 'Do you want to do this bet or not?' That's where the industry is heading.”

How significant will Sunday's Super Bowl be? Naparst says that while it shouldn't have an outsized effect on revenues, given operators' diversification, the game is “quite significant from a customer acquisition and visibility standpoint.”


BofA programme delivers banking and investing benefits to 4 million corporate client employees

Bank of America has announced that over 450 corporate and commercial clients have enrolled in its Employee Banking & Investing (EBI) programme – more than doubling the number of companies in the program from two years ago. Introduced in 2020, the program now provides nearly 4 million employees access to industry-leading financial education, rewards, and banking and investing capabilities to support their short-and long-term financial health.

Corporate clients in the US offering the Bank of America programme to their employees range from large and mid-sized companies across various industries. This month, TriNet became one of the newest companies to roll the programme out to its more than 333,000 worksite employees and colleagues. Based in Dublin, CA, TriNet is a leading provider of comprehensive human resources solutions for small and medium-size businesses.

“At TriNet we strive to power the success of small and medium-sized businesses by supporting their growth and enabling their people in addition to providing access to programs such as Bank of America’s Employee Banking & Investing program,” said Burton M. Goldfield, President and CEO of TriNet. “We are thrilled to partner with Bank of America to offer this amazing program to our valued customers and TriNet colleagues.”

According to Bank of America’s 2023 Workplace Benefits Report, 96% of employers feel responsible for their employees’ financial wellness, yet only two out of five employers offer financial wellness programmes. This research study, conducted annually for over a decade, also found that companies who offer these programmes will continue to stand out as employers of choice, often see higher rates of employee satisfaction and retention, and noticeable reductions in employee stress.


Marsh McLennan’s Oliver Wyman to acquire Innopay

Oliver Wyman, a global management consulting firm and a business of Marsh McLennan, has announced it has reached an agreement to buy Innopay, which it sees as a complement to the firm’s existing payments consulting capabilities. Terms of the transaction, which is expected to close before the end of the first quarter of 2024, were not disclosed. 

Innopay will join Oliver Wyman as a specialist consulting business within the group’s European region. It will continue to operate in the Netherlands and Germany, maintaining its presence in Amsterdam and Frankfurt. Shikko Nijland, CEO, INNOPAY, will join as Senior Vice President and be part of Oliver Wyman’s payments leadership team, reporting to both Dr. Stephen Whitehouse, Partner and Head of Payments, Europe, Oliver Wyman, and Ted Rudholm-Alfvin, Partner, Oliver Wyman.

“The European payments landscape is undergoing significant transformation, driven by technological advancements, changing consumer preferences, and regulatory developments,” commented Dr. Stephen Whitehouse, Partner and Head of Payments Europe, Oliver Wyman. “Bringing Oliver Wyman and Innopay together creates a unique offering, which will accelerate the impact of our people and work as we look to unlock value through deep industry knowledge and collaboration.”


FinMont partners with B2B payments platform ConnexPay

Global payment orchestration platform FinMont has partnered with the B2B payments platform ConnexPay. Through this new alliance, FinMont is adding ConnexPay’s payments solution to their travel orchestration platform.

Purpose-built for the travel industry, ConnexPay’s unified payments solution aligns incoming customer payments with outgoing supplier payments, in real-time, with one contract and one reconciliation. With ConnexPay, clients get real-time access to incoming customer funds that they can use to pay suppliers, which drives significant cash flow for travel businesses.

“Our solution will allow FinMont’s clients to use one system to both accept and make payments, unifying the entire payments process with one contract and one reconciliation for ease and convenience,” said Bob Kaufman, Founder and CEO at ConnexPay.

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