The Monday Roundup: what we are watching this week | March 27th

By Puja Sharma

The Monday Roundup sets the scene for the week’s biggest news stories, industry deals, and upcoming events. For Prime subscribers only.

Stabilisation through acquisition

To ease fears of a global banking crisis, financial services giant UBS is set to acquire struggling investment banking giant Credit Suisse.

With invested assets valued at more than $1.5 trillion, the new business entity will be worth more than $5 trillion. Media reports suggest the acquisition will cost $3.25 billion, but no details were disclosed. Swiss authorities, including the Swiss National Bank (SNB) and Swiss Financial Market Supervisory Authority (FINMA), have fully supported the takeover.

The SNB said the takeover represents a solution that secures “financial stability and protects the Swiss economy in this exceptional situation”. Both firms have been granted “unrestricted access” to the central bank’s facilities, the SNB says, through which they can obtain liquidity, as well as the opportunity to apply for a loan worth CHF 100 billion ($107.7m). Credit Suisse can also apply for another similar loan backed by a federal default guarantee.

UBS chair Colm Kelleher said that although acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking is “a good deal” for UBS and its shareholders, “as far as Credit Suisse is concerned, this is an emergency rescue”.

“We have structured a transaction that will preserve the value left in the business while limiting our downside exposure.”

UBS CEO Ralph Hamers said the deal will support the firm’s “growth ambitions” in the Americas and Asia while adding scale to its business in Europe. UBS benefits from CHF 25 billion ($27bn) of downside protection from the transaction to support marks, purchase price adjustments, restructuring costs, and additional 50% downside protection on non-core assets.

UBS chair Colm Kelleher said that although acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking is “a good deal” for UBS and its shareholders, “as far as Credit Suisse is concerned, this is an emergency rescue”.

✂️According to a report by TechCrunch, Roofstock, a US-based fintech company, has laid off 27% of its workforce in the second round of layoffs. Despite the company’s website stating it has more than 400 employees, it is not known if that number is accurate, reports TechCrunch. Earlier, the company had laid off about 20% of its workforce.

“Today’s reduction in force (RIF) was in response to the challenging macro environment and the negative impact it is having on Roofstock’s business,” Co-founder and CEO Gary Beasley was quoted as saying.

Roofstock allows users to buy and sell rental homes in dozens of markets across the US, the report mentioned. The company’s premise is that both institutional and retail investors can buy and sell homes without forcing renters to leave.

Empowering payment merchant

FDIC offloads non-crypto Signature Bank deposits to Flagstar Bank. New York Community Bancorp subsidiary Flagstar Bank is set to acquire certain assets and liabilities from the recently shuttered Signature Bank from the Federal Deposit Insurance Corporation (FDIC).

Flagstar will acquire $38 billion worth of assets from the FDIC-controlled banking outfit, now known as Signature Bridge Bank, including cash reserves of around $25 billion and $13 billion in loans. The deal also includes assumed liabilities of around $36 billion, including deposits of around $34 billion.

Flagstar has also picked up Signature’s wealth management and broker-dealer business and will take over the bank’s 40 former branches.

The firm did not acquire any digital asset banking or crypto-related assets or deposits, nor did it acquire loans or deposits related to Signature Bank’s fund banking business. The FDIC will provide crypto-related deposits directly to customers.

J.P. Morgan is testing biometric payments with select retailers in the US. This is the first pilot solution from J. P. Morgan Payments’ new Commerce Solutions product suite, which aims to help merchants adapt to the payments landscape.

Its biometrics-based payment pilot will include palm and face identification for payment authentication in-store and works on an enroll-capture-authenticate-pay basis. The financial institution hopes the pilot offering will allow for secure and simple checkout experiences for its merchants’ customers. As a major global merchant acquirer, J.P. Morgan Payments believes it is uniquely positioned to offer this solution.

The first pilots will be run with brick-and-mortar stores in the US. A potential participant in the test will be the Formula 1 Crypto.com Miami Grand Prix. This plans to become the first Formula 1 race to use biometrics-based payments to provide guests with a faster checkout experience.

Commenting on the pilot, J.P. Morgan Payments head of omnichannel solutions Jean-Marc Thienpont said, “At its heart, biometrics-based payments empower our merchant clients to deliver a better customer payment experience. We are a trusted payments provider and financial institution worldwide, and fully equipped to manage the highly secure identification points that power biometrics solutions.

What is the buzz

India and Saudi Arabia are jointly working to create an “investment bridge” for accelerating pending bilateral investment projects and facilitating investors.

Deliberations towards this objective took place at a meeting in Riyadh between Dr. Ausaf Sayeed, Secretary in charge of the Gulf in the Indian Ministry of External Affairs, and Saudi Arabia’s Deputy Minister for International Partnerships, Mohammad Al Hassnah.

They discussed opportunities for bilateral investment exchanges, according to a readout of the meeting by the Indian Ministry of External Affairs.

Dr. Sayeed met with the Saudi Arabian Vice Minister for Foreign Affairs, Waleed bin Abdul Kareem El Khereiji. “They positively assessed the continued high-level contacts between both countries,” the readout said.

Dr. Sayeed and Dr. Faisal Al Sugair, President and CEO of the Saudi Centre for International Strategic Partnerships, reviewed the progress made under the Committee on Economy and Investment of the SPC.

“Both sides agreed to make further progress on priority opportunities identified under the Committee including in areas such as renewable energy, grid connectivity, pharmaceuticals, food security, information technology, fintech, and water resources,” the Indian Ministry said.

The Indian official thanked the Saudi Arabian Minister for Hajj and Umrah, Dr. Tawfiq Al Rabiah, during a courtesy call for restoring India’s Haj quota after the reductions during the COVID-19 pandemic.