EU banking watchdog sets out ‘roadmap’ to regulate fintech

European Commission Vice Presidents Valdis Dombrovskis (L) and Jyrki Katainen address a press conference on new initiatives under the Capital Markets Union to promote sustainable finance, FinTech, and crowdfunding. (AFP)
Updated 09 March 2018
0

EU banking watchdog sets out ‘roadmap’ to regulate fintech

LONDON: The EU’s banking watchdog set out a “roadmap” on Friday to help plug gaps in how the rapidly evolving financial technology sector is regulated, but urged caution in tackling cryptocurrencies.
New EU rules from January make it easier for startups to offer traditional banking services such as payments.
Andrea Enria, head of the European Banking Authority, said the watchdog will analyze the nature of services provided by fintech firms “with a view to ensuring that similar services, entailing comparable risks, are regulated in a consistent way across the EU.”
The watchdog, which helps the bloc flesh out C rules, will report on its assessment by the end of the year.
Regulators have held back for several years from introducing comprehensive rules for fintech, saying the sector is still tiny compared with mainstream banking. Politicians are also keen not to stifle innovation as London, Paris and Berlin jostle to lure fintech firms.
Enria said the EBA will review regulatory “sandboxes” or controlled environments set up by some national regulators to allow fintech firms to try out new apps on customers.
“We need to ensure that firms can enter and participate in the internal market for financial services on an equal footing and that a high standard of consumer protection is mantained,” Enria said in a speech at Copenhagen Business School.
Brussels made its first foray into fintech regulation this week by proposing an “optional” licensing system for crowdfunding.
Enria said that bringing fintech firms under the same supervisory umbrella as banks just because they compete in some of the same sectors is not the right answer.
But “heightened monitoring” was needed on the links between banks and fintech firms, which often develop new services jointly.
Enria said EBA may recommend changes to existing EU financial rules to make them “technologically neutral” and proportionate for fintech startups.
The EU has said it “stands ready” to regulate cryptocurrencies if no action is taken at the global level after the Group of 20 economies (G-20) meets later this month to discuss possible rules.
Despite some central bankers calling for regulation, there is no strong consensus for new global rules given the different approaches being taken by countries, ranging from bans to no action at all.
Enria said he was “yet to be convinced” that cryptocurrencies should come under the full gamut of regulation, a move that would enter “uncharted territory” and require many years to develop.
Instead, a more “nuanced” short-term strategy could focus on applying anti-money laundering and terrorist financing rules, warnings to consumers — a step already taken by EBA — and preventing banks from holding cryptocurrencies.
“This strategy would avoid granting any official recognition to a sector that is still very heterogenous, changing fast and, as such, difficult to regulate and supervise,” Enria said.


Emirates NBD profit surges on asset sale and forex gains

Updated 17 July 2019
0

Emirates NBD profit surges on asset sale and forex gains

  • Dubai’s largest bank reports 80 percent rise in net profit for second quarter

DUBAI: Emirates NBD, Dubai’s largest bank, reported an 80 percent rise in second-quarter net profit helped by the sale of a stake in Network International and strong non-interest income on foreign exchange gains.

The result included a gain of 2.1 billion dirhams ($572 million) from the sale of a stake in digital payment provider Network International in an initial public offering in London in April.

The earnings showed that top banks in the UAE have still withstood strains from a sluggish economy and a property downturn in Dubai.

Second-quarter net profit jumped 80 percent to 4.74 billion dirhams. EFG Hermes had expected a net profit of 4.06 billion in the second quarter.

The bank said net interest income rose 6 percent in the second-quarter from a year earlier, as growth in assets offset a drop in net interest rate margins.

Non-interest income surged 23 percent, helped by gains in foreign exchange income and investment banking activities.

Provisioning for bad debts more than doubled to 656 million dirhams in the second quarter from a year earlier.

The bank said the cost of risk had increased in 2019 to a more normalized level from relatively better credit quality conditions in 2018.

Cost of risk reflects the price a lender pays to manage its risk exposure. In 2018, Emirates NBD signaled that it expected cost of risk to revert to a long-term level of 80-100 basis points from the 63 basis points seen in 2018.

“The increased cost of risk of 82 basis points in H1 2019 is a result of an expectation of a reversion of credit quality to more normalized levels from the benign conditions in 2018, coupled with the expectation of lower write-backs and recoveries,” it said.

Credit-rating agency Moody’s had warned earlier this year provisioning charges for top banks in the UAE will increase in 2019 owing to pressure in the property and the retail sectors.

The Dubai lender said its net profit surged 49 percent in the first half of the year. “Core operating profit advanced 8 percent compared to the first half of 2018, helped by loan growth, higher foreign exchange income and increased investment banking activity,” the bank’s chief executive Shayne Nelson said in a statement.

Nelson said that the bank continued to make progress on the acquisition of Turkey’s Denizbank and expects this transaction to close in the third quarter of 2019.

Emirates NBD said in April that it was buying Denizbank from Russia’s Sberbank at a roughly 20 percent discount to a previously agreed price, after a steep fall in the Turkish lira.