Fintech companies to benefit most from SAMA open banking policy

Fintech companies to benefit most from SAMA open banking policy
SAMA said in a statement that the policy would enable bank customers to securely manage their bank accounts and share their data with third parties. (Supplied)
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Updated 12 January 2021

Fintech companies to benefit most from SAMA open banking policy

Fintech companies to benefit most from SAMA open banking policy
  • The policy will also improve trust among all stakeholders in a financial relationship, whether banks or fintech companies

RIYADH: The open banking policy approved by the Saudi Central Bank (SAMA) on Sunday is expected to benefit the Kingdom’s financial technology (fintech) companies due to its advanced and varied services, experts said.

SAMA said in a statement that the policy would enable bank customers to securely manage their bank accounts and share their data with third parties. Customers will also have access to bespoke financial products and services from the same platform and enjoy smoother daily banking activities.

Fadhel Al-Buainain, a former Saudi banker, said that it is a known fact that only the customer and the bank have access to confidential banking information. Following the implementation of the new policy, however, a third party can also have access to such information if the customer grants it permission. In this way, customers will be able to securely manage their bank accounts and share financial data.

“Competition between financial institutions will become fiercer once the policy has been implemented. Institutions will compete over offering innovative financial products to attract more customers. Besides, customers can combine all bank accounts onto a single platform,” noted Al-Buainain, who is a member of the Saudi Financial Association.

Digital services will improve as they constitute a significant part of the strategy for developing the finance sector, he explained, indicating that new financial companies will be able to offer their services to customers, especially in the private sector. The data available to the credit and investment sectors will also be enhanced.

“Fintech companies will benefit the most from the policy because of their desperate need for financial data, which help them make sound financing decisions. This in itself will increase the benefits that the digital sector will reap from the policy at a time when the finance sector needs a lot of digital development to keep pace with digitization,” Al-Buainain pointed out.

The policy will also improve trust among all stakeholders in a financial relationship, whether banks or fintech companies.

Dr. Abdullah Baeshen, a financial advisor, said the banking sector has seen major developments in terms of infrastructure and technology and is monitored closely by SAMA.

“The new open-banking policy will enable customers to use data easily and perform swift financial transactions through their bank accounts — the backbone of any industrial or commercial transaction and even in the stock exchange markets. In only a short amount of time, fintech paved the way for a major industry to emerge and become a center of attraction in stock exchange markets,” explained Baeshen, who is he chairman of Team One Financial Consultants.

The new policy will develop the financial sector and help global banks penetrate the market, he said, noting that piracy, hacking and other electronic crimes continue to pose risks for accounts and might lead customers to be skeptical about a bank’s ability to protect its clients’ personal information.

Abdulla Almoayed, CEO and founder of Tarabut Gateway, the Middle East’s first and largest regulated open banking platform, welcomed the news and told Arab News: “The positive policy steps taken by the Saudi Central Bank (SAMA) support the Kingdom’s visionary plans for enhancing financial technology and infrastructure. Open banking empowers a community of innovation between banks and entrepreneurial start-ups, to improve customer experiences and services. As MENA’s first and largest open banking platform, we are delighted that the Kingdom has taken this strategic approach and look forward to a bright future of collaboration.”


China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
Updated 55 min 54 sec ago

China crypto crackdown reveals scale of digital yuan ambitions

China crypto crackdown reveals scale of digital yuan ambitions
  • All crypto trading and mining deemed illegal in China
  • China's central bank digital currency could launch as soon as 2022

LONDON: If there’s one thing the Chinese Communist Party likes it is control.

A raft of edicts from President Xi Jinping this year have asserted the government’s control over ever larger swathes of the Chinese economy and the everyday life of Chinese people.

The financial cost of these measures is difficult to accurately gauge, but billions of dollars have been wiped off the value of tech companies, including Alibaba, Didi and Tencent, following a squeeze on their activities, including limits on how long children can spend playing online games.

There have been considerable financial costs too from China’s crypto crackdown, which intensified yesterday with a blanket ban on all crypto transactions and mining. Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.

That represents a major escalation from May this year, when China banned financial institutions and payment companies from providing services related to cryptocurrency transactions. It had issued similar bans in 2013 and 2017.

Despite an initial drop in the value of cryptocurrencies on Friday, they stabilized on Saturday and most analysts don’t see the measures having a long-term effect on the value of crypto assets.

“For the institutional crypto industry, it won’t change much as those who could leave already left and those who couldn’t have either closed or gone under the radar,” said George Zarya, CEO at digital asset prime brokerage and exchange BEQUANT. “The retail market most likely has gone under the radar and will continue to support market volumes.”

The biggest financial cost is to Chinese businesses involved in trading and mining cryptocurrencies.

Virtual currency mining had been big business in China before May, accounting for more than half the world’s crypto supply, but miners have been moving overseas.

“[China] will now lose around $6 billion worth of annual mining revenue, all of which will flow to the remaining global mining regions,” said Christopher Bendiksen, head of research at digital asset manager CoinShares, citing Kazakhstan, Russia and the United States as beneficiaries.

Crypto exchanges OKEx and Huobi, which originated in China but are now based overseas, are likely to be the worst affected since they still have some China users, analysts said. Tokens associated with the two exchanges plunged over 20 percent on Friday.

Despite all this disruption and loss of wealth, there is a major upside for China.

The Chinese government has repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.

Most of all, cryptocurrencies are a threat to China’s sovereign digital yuan, which is at an advanced pilot stage. The People’s Bank of China, the country’s central bank, plans an official launch of the digital yuan as soon as 2022, following testing at the Winter Olympics.

Widespread use of the digital yuan would give Chinese policy makers greater visibility into how money flows around China’s economy.

This would help them track any illicit flows of funds, such as money laundering or terrorist financing, and it would also allow them to experiment by targeting monetary policy interventions on specific economic classes, regions or other groups.

However, by killing off independent cryptocurrencies, China closes off a huge area of financial innovation and risks reducing the dynamism of its economy in the future.


Europe needs long-term energy plan, Eni CEO says

Europe needs long-term energy plan, Eni CEO says
Updated 25 September 2021

Europe needs long-term energy plan, Eni CEO says

Europe needs long-term energy plan, Eni CEO says
  • Households across Europe face much higher energy bills due to surging wholesale power and gas prices

MILAN: Soaring gas prices as winter approaches are evidence that the EU needs to work out a long-term energy security plan, the head of Italy’s Eni has told La Repubblica newspaper.

Claudio Descalzi noted the EU imports almost all the natural gas and most of the oil it needs, making it structurally dependent on foreign supplies.

“Europe needs to have what it hasn’t got today, a structured and long-term energy security plan,” Descalzi said in an interview published on Saturday.

“I don’t think there will be problems with gas procurement, but it will cost more,” he said regarding this winter.

Eni has strategic long-term gas supply contracts with a series of gas-producing countries including Russia.

Households across Europe face much higher energy bills due to surging wholesale power and gas prices, and consumer groups have warned the most vulnerable could experience fuel poverty.

Spain has urged the European Commission to devise guidance to help member states react consistently to power price spikes without testing the rules of the bloc.

Italy’s Prime Minister Mario Draghi this week also said Europe needed to act to diversify its energy supplies and strengthen the bargaining power of purchasing countries to help curb power and gas price rises.


Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters
Updated 25 September 2021

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters
  • Venezuela has agreed to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude

CARACAS/HOUSTON/WASHINGTON: Venezuela has agreed to a key contract to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude, with the first cargoes due this week, five people close to the deal said.
As the South American country seeks to boost its flagging oil exports in the face of US sanctions, according to the sources, the deal between state-run firms Petroleos de Venezuela (PDVSA) and National Iranian Oil Company (NIOC) deepens the cooperation between two of Washington’s foes.
One of the people said the swap agreement is planned to last for six months in its first phase, but could be extended. Reuters could not immediately determine other details of the mwpact.
The oil ministries of Venezuela and Iran, and state-run PDVSA and NIOC did not reply to requests for comment.
The deal could be a breach of US sanctions on both nations, according to a Treasury Department email to Reuters which cited US government orders that establish the punitive measures.
US sanctions programs not only forbid Americans from doing business with the oil sectors of Iran and Venezuela, but also threaten to impose “secondary sanctions” against any non-US person or entity that carries out transactions with either countries’ oil companies.
Secondary sanctions can carry a range of penalties against those targeted, including cutting off access to the US financial system, fines or the freezing of US assets.
Any “transactions with NIOC by non-US persons are generally subject to secondary sanctions,” the Treasury Department said in response to a question about the deal. It also said it “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy,” but did not specifically address whether the current deal is a sanctions breach.
US sanctions are often applied at the discretion of the administration in power. Former US President Donald Trump’s government seized Iranian fuel cargoes https://www.reuters.com/article/us-usa-iran-cargo-idUSKCN25A2AH at sea bound for Venezuela for alleged sanction busting last year, but his successor Joe Biden has made no similar moves.
In Washington, a source familiar with the matter said the swap arrangement between Venezuela and Iran has been on the radar screens of US government officials as a likely sanctions violation in recent months and they want to see how far it will go in practical terms.
US officials are concerned, the source said, that Iranian diluent shipments could help provide President Nicolas Maduro with more of a financial lifeline as he negotiates with the Venezuelan opposition toward elections.
Sanctions on both nations have crimped their oil sales in recent years, spurring NIOC to support Venezuela — including through shipping services and fuel swaps — in allocating exports to Asia.
In a meeting at the UN General Assembly in New York on Wednesday, the foreign ministers of Venezuela and Iran publicly stated their commitment to stronger bilateral trade, despite US attempts to block it.
Trump’s tightening of sanctions contributed last year to a 38 percent fall in Venezuela’s oil exports — the backbone of its economy — to their lowest level in 77 years and curtailed sources of fuel imports, worsening gasoline shortages in the nation of some 30 million people.
A US Treasury spokesperson said the department was “concerned” about reports of oil deals between Venezuela and Iran, but had not verified details.
“We will continue to enforce both our Iran and Venezuela-related sanctions,” the spokesperson said. Treasury “has demonstrated its willingness” to blacklist entities who support Iranian attempts to evade US sanctions and who “further enable their destabilizing behavior around the world,” the official added.
The swap contract would provide PDVSA with a steady supply of condensate, which it needs to dilute output of extra heavy oil from the Orinoco Belt, its largest producing region, the people said. The bituminous crude requires mixing before it can be transported and exported.
In return, Iran will receive shipments of Venezuelan heavy oil that it can market in Asia, said the people, who declined to be identified as they were not authorized to speak publicly.

CARGOES THIS WEEK
PDVSA has boosted oil swaps to minimize cash payments since the US Treasury Department in 2019 blocked the company from using US dollars. Washington has also sanctioned foreign companies for receiving or shipping Venezuelan oil.
Since last year, PDVSA has imported two cargoes of Iranian condensate in one-off swap deals to meet specific needs for diluents, and it has also exchanged Venezuelan jet fuel for Iranian gasoline.
The new contract would help PDVSA secure a source of diluents, stabilizing exports of the Orinoco’s crude blends, while allowing its own lighter oil to be refined in Venezuela to produce badly needed motor fuel, three of the people said.
The first 1.9 million barrel cargo of Venezuela’s Merey heavy crude under the new swap set sail earlier this week from PDVSA’s Jose port on the very large crude carrier (VLCC) Felicity, owned and operated by National Iranian Tanker Co. (NITC), according to the three people and monitoring service TankerTrackers.com.
NITC, a unit of NIOC, did not reply to a request for comment.
The vessel was not included in PDVSA’s monthly port schedules for September, which lists planned imports and exports. However, TankerTrackers.com identified it while at Jose this month.
The Venezuelan crude shipment is a partial payment for a cargo of 2 million barrels of Iranian condensate that arrived in Venezuela on Thursday, according to the three sources and one of PDVSA’s port schedules.

LITTLE ENFORCEMENT
Last year, the previous Trump administration seized over 1 million barrels of Iranian fuel bound for Venezuela and blacklisted five tanker captains, as part of a “maximum pressure” strategy, but the United States has not interdicted recent Iranian supplies to Venezuela.
The US State Department declined to comment on the deal. A Treasury spokesperson did not respond to a Reuters question on how concerned the government might be that Iran-Venezuela deals would allow PDVSA to step up exports.
US government officials have insisted they do not plan to ease sanctions on Venezuela unless Maduro takes definitive steps toward free and fair elections.
Trump’s curbs on established companies doing business with PDVSA prompted the socialist-ruled nation to turn to swaps with Iran and other countries, while trading with a series of little-known customers.
PDVSA’s new customers and swaps have allowed it to keep exports stable around 650,000 barrels per day (bpd) this year, after they zigzagged in 2020.
However, a worsening shortage of diluents has recently limited oil exports, placing the Orinoco Belt production in an “emergency,” according to PDVSA documents from August and September related to its output status that were reviewed by Reuters.
PDVSA plans to mix the Iranian condensate with extra heavy oil to produce diluted crude oil, a grade demanded by Asian refiners that it has struggled to export since late 2019 when suppliers halted diluent shipments due to sanctions, the three sources said.


UAE announces ministerial changes including finance, environment

UAE announces ministerial changes including finance, environment
Updated 25 September 2021

UAE announces ministerial changes including finance, environment

UAE announces ministerial changes including finance, environment
  • Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum has been appointed finance minister and deputy prime minister

RIYADH: United Arab Emirates Prime Minister and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum announced ministerial changes on Saturday, including new finance and environment ministers.
Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum has been appointed finance minister and deputy prime minister and Maryam Al Muhairi becomes the minister of climate change and environment.
Sheikh Mohammed announced the changes on Twitter, along with several structural changes.


LNG prices continue to soar as buying ahead of winter starts

LNG prices continue to soar as buying ahead of winter starts
Updated 25 September 2021

LNG prices continue to soar as buying ahead of winter starts

LNG prices continue to soar as buying ahead of winter starts
  • Bangladesh pays nearly $30/mmBtu for prompt cargo - sources
  • China and Turkey seek cargoes for winter

SINGAPORE: Asian liquefied natural gas (LNG) prices surged by about 10 percent this week as demand continues to rise in the region despite higher prices and amid a supply crunch.
The average LNG price for November delivery into Northeast Asia was estimated at about $26.50 to $27 per metric million British thermal units (mmBtu), up at least $2 from the previous week, industry sources said.
“The post-COVID recovery in some places has been fast, which is pushing up demand, while there are some supply issues in several places, which is causing a crunch,” a Singapore-based trader said, adding that prices are expected to rise even higher during winter when demand for heating peaks.
Bangladesh, for instance, bought a cargo for delivery in late September from Vitol at $29.89 per mmBtu, the highest the country has paid for the super-chilled fuel, three industry sources said.
It did not award a separate tender seeking a cargo for October delivery as the offer was at around $35, two other sources said. Instead, it will issue two tenders next week to buy two cargoes for delivery in October, a third source said.
Demand from China was also firm with Unipec Singapore, the trading arm of Sinopec, seeking 11 cargoes for delivery in winter while Beijing Gas and Guangzhou gas also sought a cargo each for delivery in October and November, traders said.
Turkish state energy company Botas is also seeking 20 cargoes for delivery in winter, while Thailand’s Egat was seeking two cargoes for delivery in October, they added.
Some spot cargoes were offered in the market from Angola, Australia, Russia and Indonesia from October to January, but lower shipments from Egypt and Malaysia were supporting prices, traders said.
Cameron LNG in the US said on Wednesday the liquefaction train shut for maintenance at its Louisiana export plant was expected to return later this week, which could add some supply.