Fintech News from Ireland and around the World

How Terry Clune, fintech entrepreneur, built a Kingdom

28/7/2022

Over at the Fintech Ireland page, you will find a short blog on this article on Terry Clune of leading fintech and tech group, CluneTech .

Recommend you follow the Fintech Ireland Page on Linkedin and our Twitter Account for more regular news alerts and releases. Our Founder Peter Oakes also blogs on Fintech in Ireland and Internationally. Follow him on LinkedIN HERE.

Clune Tech is a suite of eight businesses which all, bar one, were spun out of Taxback.com. Terry is arguably one of the most successful Irish entrepreneurs ever, particularly in fintech and, of course, technology. As you may know, it is one of a handful of Irish founded tech unicorns and a smaller number of fintech / regtech unicorns being recently valued at more than €1 billion following a €70 million investment from Railpen, one of the UK’s largest pension funds.

The suite of eight businesses, as reported, include Immedis; which handles global payroll, Benamic; a marketing agency, Sprintax; tax filing for non-resident professionals, Visa First; providing business and tourist travel visas, Taxback.com International; TransferMate Global Payments and Gradguide.

Read More - https://www.linkedin.com/posts/fintech-ireland_fintech-irishfintech-fintech-activity-6958054174890598401-wCjT?utm_source=linkedin_share&utm_medium=member_desktop_web

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Starling Bank abruptly ends its application for a bank authorisation in Ireland

24/7/2022

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Anne Boden, Starling Bank founder and chief executive: ‘Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking’

Starling Bank in talks with Irish staff after banking licence U-turn

The #fintech firm abruptly withdrew its application for a licence from the Central Bank of Ireland last week, four years after beginning the process writes Charlie Taylor Business Post

The British challenger bank founded by Anne Boden, the former chief operating officer at AIB, declined to say how many people it employs locally.

The British challenger bank founded by Anne Boden, the former chief operating officer at AIB, declined to say how many people it employs locally, but said it had a “small team” in Dublin. As of Friday, it was still advertising a number of roles for its Irish operation.

Starling abruptly withdrew its application for a banking licence from the Central Bank of Ireland last week, four years after beginning the process.

A spokeswoman for Starling Bank told the Business Post that its decision not to proceed with the licence, which it is believed was in the process of being granted, “had nothing to do with the regulatory regime in Ireland and was made purely as a commercial decision”.

Starling has said it is now focusing on taking its software to banks around the globe through Engine, its software-as-a-service (SaaS) subsidiary, and by expanding its lending across a range of asset classes, including through targeted M&A activity.

“This was a really tough call to make, particularly as we have had Ireland in our sights for so long. Sometimes changing course is the right option,” Boden said in a statement last week.

“My job as chief executive is to constantly test our thinking against evolving circumstances and to make sure that we are delivering value and maximising potential for growth. Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking.”

Starling last Thursday reported its first full year of profitability, swinging to a pre-tax profit of £32.1 million (€37.7 million) for the 12 months ending March 31, 2020, from a £31.5 million loss a year earlier. Revenue rose 93 per cent to £188.1 million over the year as its deposit base grew by 55 per cent to £9 billion.

In April, Starling announced a £130.5 million internal funding round that valued it at £2.5 billion, more than double what it had been worth a year earlier.

https://www.businesspost.ie/tech/starling-in-talks-with-irish-staff-after-banking-licence-u-turn/

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Crypto firm Celsius Network files for Bankruptcy; meanwhile Central Bank says tech can't save us from risk

14/7/2022

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Any surprises here?

In the same week that Bank of England, Deputy Governor for Financial Stability (John Cunliffe) said “Financial assets with no intrinsic value … are only worth what the next buyer will pay. They are therefore inherently volatile, very vulnerable to sentiment and prone to collapse,” we learn of yet another crypto firm filing for bankruptcy and the protection it affords..

Put another way: technology can’t remove all financial risks.

Celsius Network, one of the world’s largest cryptocurrency lenders, filed for bankruptcy, following a wave of digital asset companies that have frozen assets and entered restructuring amid a sharp sell-off in cryptocurrencies thus far in 2022.

Its business model was simple old-fashioned lending. Celsius took in customer deposits and lent out the funds at higher interest rates, making a profit from the difference. There is nothing innovative here, just as there is nothing innovative about Buy-Now-Pay-Later (laybuy on an app). In both cases it is simply technology putting a new spin on an old play.

To lure investors, Celsius offered high-interest rates and claimed its risks were small. Yet according to a Financial Times investigation, Celsius took on increased financial risks in recent months as demand for loans from institutional investors waned. This is classic behaviour by financial firms when they finally see the writing on the wall.

What do we learn from the filing?

Chapter 11 bankruptcy filing comes roughly a month after it froze customer assets, trapping billions of dollars across more than a million accounts.
it listed between $1bn - $10bn in assets, the same amount in liabilities
100,000 creditors
filing will be an “opportunity to stabilise its business” and undergo a restructuring “that maximises value for all stakeholders”.
had it not restricted withdrawals there would have been a run on its deposits operating on a first come, first served basis, leaving others with illiquid and less certain claims.

A rather ironic outcome of the Celsius failure is that Alvarez & Marsal, a consultancy best known for unwinding failed investment bank Lehman Brothers after the 2008 financial crisis, is Celsius’s restructuring adviser.

Cunliffe is also reported saying "Cryptocurrencies may not be “integrated enough” into the rest of the financial system to be an “immediate systemic risk,” but he suspects the boundaries between the crypto world and the traditional financial system will “increasingly become blurred.”.

Now Celsius is not alone. We have also seen the implosion of a highly leveraged crypto hedge fund, Three Arrows Capital, which filed for bankruptcy in July 2022 too. Crypto lender Voyager Digital also filed for bankruptcy recently while other companies narrowly averted a similar fate by taking in emergency cash at fire sale prices. BlockFi agreed to a rescue deal with crypto trading exchange FTX on July 1 that valued the lender at up to $240mn, far below an earlier valuation of $4bn.

What about investors?

I don't mean the customers but the backers. Celsius’s failure is poised to leave venture capital backers nursing large losses. In late 2021, it raised $750mn from WestCap and Quebec-based pension fund Caisse de dépôt et placement du Québec at a valuation of more than $3bn. Ouch - especially for current and future retirees of the pension fund. Did they sign up their money for such illiquid investments?

Further Reading:

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Virtual Asset Service Provider applicants told to improve the quality of their applications and AML/CFT frameworks and knowledge by the Central Bank of Ireland CLICK HERE

11/7/2022

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Today (Monday 11 July 2022) the Central Bank of Ireland issued a press release highlighting weaknesses in Virtual Asset Service Providers’ (VASP) AML/CFT Frameworks.

Accompanying today's press release is a bulletin in relation to VASPs, seeking to assist applicant firms to strengthen both their applications for registration and their Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Frameworks.

The Central Bank says while it seeks to anticipate and support innovation in the financial services industry, firms operating in novel areas must ensure their businesses will not be used to launder the proceeds of crime or to finance terrorism. The Central Bank issued the bulletin to VASPs to assist them in strengthening their applications and frameworks.

Read more here, including an analysis by CompliReg.

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How Terry Clune, fintech entrepreneur, built a Kingdom

Starling Bank abruptly ends its application for a bank authorisation in Ireland

Crypto firm Celsius Network files for Bankruptcy; meanwhile Central Bank says tech can't save us from risk

Virtual Asset Service Provider applicants told to improve the quality of their applications and AML/CFT frameworks and knowledge by the Central Bank of Ireland CLICK HERE

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