“If BRICS nations decide on taking in new members, India would want formulation of well-established criteria for qualification,” commented one source. “Once the criteria is in place, some eligibility condition could be mutually decided; for instance meeting three out of five stated criteria.”

Last week Ethiopia, one of Africa’s fastest-growing economies, became the latest potential candidate when it asked to join the BRICS bloc.

“We expect BRICS will give us a positive response to the request we have made,” foreign ministry spokesperson Meles Alem told journalists. However, while the Horn of Africa nation has the second-largest population in Africa, its economy ranks only 59th in the world according to the International Monetary Fund (IMF) and is less than half the size of the smallest BRICS member South Africa.

Last year Argentina, the world’s 23rd largest economy, said it had received China’s formal support to join the group, which is seen as a powerful emerging-market alternative to the West. The bloc has also previously said that other countries have also applied to join.

BRICS countries account for more than 40% of the world’s population and about 26% of the global economy. In addition to Argentina, other front runners to join the bloc include  Argentina, Egypt, Indonesia,  the United Arab Emirates, Saudi Arabia, Algeria, Bangladesh and Iran

China is particularly keen to expand BRICS membership to more countries, but reports suggest that neither India nor Brazil want to lose influence in the bloc, with New Delhi concerned that enlargement would only grow Beijing’s strategic influence.

All current members share a desire to reform the international system, analysts say, but a new world order is mostly in Russia and China’s interest. There are also doubts as to whether the grouping could become a counterweight to existing regional alliances.

 

UK’s ESG raters face voluntary code ahead of possible rules

Companies in the UK that compile the environmental, social and governance (ESG) ratings of different firms will face a new voluntary code of conduct ahead of potential regulations for a sector that channels trillions of dollars in investments.

Investors who want to put cash into sustainable companies rely heavily on the ratings firms to make stock picks, but the sector is not directly regulated in the UK.

The announcement by regulator the Financial Conduct Authority (FCA) came a year after the FCA appointed the International Capital Market Association (ICMA), a fixed income trade body, and think-tank International Regulatory Strategy Group (IRSG) to assemble a working group to draft a code.

The group includes ESG raters such as the London Stock Exchange (LSE) Group and Moody's, along with investment manager M&G and law firm Slaughter and May.

“Today is an important step in increasing transparency and trust in the growing market for ESG data and ratings products,” said Sacha Sadan, director of ESG at the FCA

The code reflects recommendations from global securities watchdog the International Organisation of Securities Commissions) IOSCO, covers governance at the raters, systems and controls to ensure high-quality ratings, managing conflicts of interest and transparency over methodologies.

The UK’s voluntary approach contrasts with the European Union (EU), which last month proposed a draft law to regulate ESG raters as regulators seek to crack down on greenwashing and firms that exaggerate their sustainability credentials.

British finance ministry officials are consulting on whether ESG raters should be formally regulated, a process that would take time to implement. “The code will play an important role in raising standards in the short-term, as well as continuing to apply to any firms that fall out of the scope of potential future regulation,” Sadan said.

A public consultation on the code runs until October 5, with the final version due to be published late this year.

 

Eurozone business activity contracts in June

Eurozone business activity contracted in June, with a general downturn across the services industry and a deepening decline in factory output according to the Purchasing Managers’ Index compiled by S&P Global.

The bloc’s PMI score, seen as a reliable gauge of overall economic health, fell to 49.9 last month from 52.8 in May. The reading of below 50, the mark which separates growth from contraction, for the first time since December. The score in June was also lower than initial estimates.

A sister survey released on Monday showed manufacturing activity contracted faster than initially thought.

There were at least glimmers of hope on inflation. The composite output prices index fell to 53.8 in June from 56.4 previously, its lowest since March 2021.

That will likely be welcomed by policymakers at the European Central Bank (ECB), who have failed to get inflation back to their 2% target, despite tightening monetary policy aggressively and hiking interest rates to 22-year highs.

 

China state lenders lower dollar deposit rates

China’s largest banks have cut rates for the nation’s US$453 billion corporate US dollar deposits for the second time in weeks, according to reports, as authorities intensify measures to shore up the struggling yuan (CNY).

At least nine banks, including the four big state lenders, removed the spread they previously offered over the US Secured Overnight Financing Rate (SOFR) for corporate clients, sources said. Before the latest reduction, banks were offering 5.7% for one-year deposits, down from 6% about a month ago. The SOFR stands at 5.09%.   

The People’s Bank of China (PBOC), which typically issues guidance on US dollar deposit rates to state banks, did not comment on the reports and the lenders – Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Communications – did not immediately respond to requests for comment.

Traders and analysts said policymakers, worried that a prolonged yuan slide could both discourage foreign investment and spur an outflow of funds abroad, want to bring down US dollar deposit rates – which typically track offshore rates – towards domestic rates, which have been cut to aid the flagging economy.

The CNY is one of the worst-performing Asian currencies this year, nearly 5% lower against the US dollar due to a slowdown in China’s economy and widening yield differentials with the US.

“It shows that the move is to narrow the interest rate advantage of the US dollar in onshore markets,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

“It is likely aiming to prevent stockpiling US dollars and encouraging (foreign exchange) settlements.”

The lower rates could both discourage households from putting savings into higher-yielding US dollar deposits and incentivise Chinese firms, especially exporters, to settle foreign exchange receipts in CNY.

 

DBS Bank China launches digital yuan transaction tool

Crypto-friendly bank DBS has launched a digital yuan merchant collection solution for business clients.

The new payment solution, exclusive to corporate clients of DBS Bank China, will allow mainland Chinese businesses to receive payments in the central bank digital currency (CBDC).

The DBS merchant collection platform allows businesses automated settlement of e-CNY into their bank deposit accounts. The CBDC payment solution is designed to bring several benefits, including allowing businesses to collect CBDC “without having to go through manual settlement processes,” the bank noted. 

With this tool, the bank will also allow merchants to receive payments in underserved regions with limited internet connectivity. It also provides reconciliation using consolidated merchant reports with itemised e-CNY transactions through the bank's digital platform for business banking.

DBS Bank (China) CEO Ginger Cheng said that the bank had already completed the first e-CNY collection for a client, a catering company in Shenzhen. He added that by integrating the CBDC payment solution on the existing traditional payment systems, i will position their business for a digital future where consumers in China use e-CNY for their daily activities.

DBS Bank has a reputation for its pro-crypto stance. In 2020, Singapore’s largest bank launched crypto trading and custody services for institutional clients.

 

Chapa partners with Telegram for digital payments in Ethiopia

Chapa, the payment processing platform for businesses in Ethiopia, is partnering with the popular messaging app Telegram. The collaboration “aims to empower merchants using Telegram to seamlessly accept payments from their customers, marking a significant milestone for financial inclusion and digital payments in Ethiopia.”

A release stated; “With over 500 million active users globally, Telegram has emerged as a trusted platform for communication, surpassing even Facebook Messenger, WhatsApp, IMO, and other messenger apps in Ethiopia. Leveraging Telegram's immense popularity, hundreds of thousands of businesses on the platform have been successfully selling their products through Telegram channels and groups.”

Chapa's integration with Telegram's bot ecosystem allows merchants to accept payments without requiring customers to leave the app. Whether through mobile money, bank transfers, or debit/credit cards, Chapa enables users to make payments instantly, enhancing convenience and accessibility. This partnership brings a new level of ease and efficiency to the world of e-commerce, benefiting both businesses and consumers.

"We are honored to represent Ethiopia on the international stage as the exclusive Telegram payment provider in Africa," said Israel Goytom, CTO and Co-founder of Chapa. “This noteworthy accomplishment speaks to the progress of our emerging fintech sector and reaffirms our commitment to drive financial technology advancements within the region.”

 

Gazprom subsidiary files lawsuits against German banks

RusKhimAlyans, a subsidiary of Russian gas giant Gazprom, has filed lawsuits seeking a total of roubles (RUB) 31 billion s (US$348 million) from Deutsche Bank  and Commerzbank (ETR:CBKG), Russian court documents show.

The company, in which Gazprom has a 50% stake, is seeking more than RUB22 billion from Deutsche Bank and over RUB8 billion from Commerzbank, according to the documents filed at the Court of Arbitration of St Petersburg and the Leningrad Region. No other details were available.

In January, the same court ordered nearly US$500 million of assets belonging to German industrial gases company Linde, to be frozen at the request of RusKhimAlyans, which is building a gas complex at the Baltic Sea port of Ust-Luga.

In 2021, Linde and Renaissance Heavy Industries signed an engineering, procurement and construction (EPC) contract with Gazprom and its partners for the Ust-Luga gas complex.

Linde notified the customer in May 2022 that it had suspended work under the contract due to European Union sanctions imposed after Russia’s invasion of Ukraine.
 

Silverstone names Santander UK as sustainability partner

British motor racing circuit Silverstone has announced Santander UK as its official sustainability partner.

Santander will provide Silverstone with a range of mobility solutions starting with the transition to a fleet of zero or low-emission vehicles supplied through Santander Consumer Finance. The new fleet will be used for on-site mobility, event operations and on-track safety and rescue requirements.

The bank will also expand its Santander Cycles scheme to Silverstone. In trials taking place later this year with Santander Cycles partner Tier, the new e-bikes will be available to Silverstone employees. In the longer term, it is planned to make e-bikes available for guests and visitors.

Silverstone managing director Stuart Pringle said: “As the home of British motorsport we have a responsibility to lead the way with smarter and cleaner methods of working and sustainability is now at the heart of all we do at Silverstone. I am delighted to be partnering with Santander as we continue on our shift to [net] zero and introduce these initiatives to help us on our journey.”