MarketLine Blog

Posts about Financial Services

Bitcoin: Bitcoin to reach a value of $100,000 per coin over the next five years

MarketLine

The term cryptocurrency has become widely spread amongst the investment news world in recent times due to its increasingly fast growth in value. Although the phenomenon began in 2008 with the release of Bitcoin, more and more cryptocurrencies have now established their presence in the market, reaching massive market values already, with thousands of investors purchasing coins on a daily basis. With large growth forecasted by analysts worldwide, regulations in this ‘currency’ market are not to be seen, but the UK treasury is working with the EU to tighten up… Read more

Brexit Uncertainty: London’s status as global financial center under threat

MarketLine

London has, for many years, been one of the world’s major financial centers. Some would even argue that it is the world’s financial center. Banks from all over the globe have offices there, many of which take advantage of the EU’s passporting system to sell their services across the Union.  However, as the threat of a rough (or no) trade deal for the UK becomes an increasingly likely prospect, many banks are looking to move their  European headquarters out of the City or at least relocate large numbers of staff… Read more

Ezetap Quest to democratize India’s digital payments industry

MarketLine

India has recently been going through a digitalization of almost everything, and this revolution has now reached the traditional banking and finance sectors. As even large banks have realized that using time tested technology means always staying a generation behind, there is now much acceptance and demand in terms of implementing financial startup products and services in the country. Additionally, the recent and largest ever government demonetization caused a cash-crunch, hitting the remote, rural areas most, and left citizens with no choice but to go digital. With nearly 1 billion… Read more

Global insurance brokers sector will hit $54.8 billion in 2021 as growth remains impressive despite deceleration

MarketLine

The global insurance brokers sector has experienced impressive growth in recent years, registering a compound annual growth rate (CAGR) of 7.0% between 2012 and 2016 to reach a value of $42.8 billion, according to data from research company MarketLine. The company’s latest report shows that sector values have increased in all regions. Global growth, however, has been primarily driven by healthy revenue increases in the US, the world’s largest individual market. As it accounts for over 63% of global sector revenues, the performance of the US market will always have… Read more

Minority Conservative government: Hung parliament will provide a better deal for business

MarketLine

The declaration of a hung parliament but with a Conservative party government is good news for the economy and businesses because the likelihood of a ‘hard Brexit’ has suddenly been reduced because in order to survive, the government will require support from opposition groups. Given the opposition parties are all but wholly united on a ‘soft Brexit’, the policy of the previous government could be about to change radically. The change makes the possibility of the UK buying access to the single market and passporting much greater than has been… Read more

Global banking industry value hit $134.1 trillion in 2016 and will see robust growth to 2021, says MarketLine

MarketLine

The global banking industry has experienced healthy growth in recent years, registering a compound annual growth rate (CAGR) of 4.7% between 2012 and 2016 to reach a value of $134.1 trillion, according to data from research firm MarketLine. The company’s latest report states that Asia-Pacific continued to be the largest region in terms of asset value, accounting for over 42% of the global total in 2016. Europe followed with over 38%, while the United States remained a large industry influence with 12%. China once again reigned supreme as the single… Read more

Another headache for RBS as European Commission probes plan to abandon Williams & Glyn sale

MarketLine

It seems like an eternity since the European Commission (EC) told RBS that it needed to divest of some of its banking operations as a result of receiving state aid in the form of a bailout. The EC argued that it would be unfair to enjoy such a position of power in the UK banking market (particularly in the SME segment) having needed such an injection of government cash. Almost nine years on from receiving that funding, the bank is no closer to any such divestment, having seen three separate… Read more

The Digital Age: A Hackers delight

MarketLine

Online storage is a huge leap forward in technology, allowing files to be accessed from anywhere without the need to send them via email. Files can be shared in a much simpler fashion and can be locked to ensure that any changes made are present in a single file as opposed to numerous versions of the file. This online system serves as a backup for companies and customers. A network of banking telecommunications (SWIFT) has been the target of numerous hacking and data leaks over recent years, serving to reduce… Read more

House prices in Sweden witness steep growth: Strong demand will continue pushing prices up even further

MarketLine

The Swedish housing market has witnessed a steep increase in prices in recent years, and this is the consequence of the supply of new houses not meeting the present and increasing demand for accommodation. A major reason for the increase in demand for buying property is that renting property has become increasingly difficult due to scarcity, especially for younger adults entering the property market for the first time. With record low interest rates currently being offered by banks, many Swedes have therefore taken on mortgages in order to purchase properties,… Read more

May’s Brexit: Twelve steps to recovery

MarketLine

Since the Brexit referendum in June 2016, the British population has been going through an uncertain period. In order to help protect the British economy and strengthen businesses following the Brexit talks, Prime Minister Theresa May has outlined a twelve point negotiation plan for the discussions with the EU. The focus of this insight is to look at the potential huge benefits to the British economy following the Brexit talks, with a look at how the talks could also be construed as detrimental and could lead to a divided Britain…. Read more

Brexit – the meaning of a messy divorce for the Euro area.

MarketLine

The lending channel between many industries and banks in the Euro area has been far from normal since 2008. This factor puts Britain in a better position to negotiate Brexit next year. The Euro area will embark on a period of further unprecedented slowdown by detaching itself from the world’s fourth largest economy. Credit to industries coming from the banking sector is key for the region to grow as the single currency area has a bank-based model as opposed to a capital market model. Debt financing to companies is largely… Read more

China’s banking industry: BIS scaremongering unwarranted but warning signs must be heeded

MarketLine

China’s economic growth has been slowing for a while now and while it remains healthy, there are concerns over the state of the country’s banking industry. Non-performing loan (NPL) rates have been increasing, with some of the country’s biggest banks seeing a surge in that particular metric. Bank of China and ICBC saw noticeable increases in their NPL rates during 2015, necessitating greater allowances for credit losses, while Agricultural Bank saw something of a surge from 1.54% to 2.39%, with the retail and wholesale industry the main cause for concern…. Read more

Williams & Glyn: RBS abandons spin-off IPO plan

MarketLine

To comply with European Commission State Aid requirements, RBS agreed in 2009 to a series of restructuring measures that were to be implemented over a four year period. One of these measures was the divestment of the RBS branch network in England and Wales and the NatWest branches in Scotland. This was scheduled to be completed by 2013, but an extension was granted after the original bidder, Santander, pulled out. A consortium known as Corsair stepped into the breach and invested, facilitating a later sale or, more likely, an IPO…. Read more

Block Chain Tech The DAO becomes the largest crowd funding campaign in history

MarketLine

Block Chain technology is seen as the key breakthrough which allowed the development of Bitcoin, the enormously successful cryptocurrency. The Block Chain stands as proof of all the transactions on the network and the block is the live part of a Block Chain which records all of the recent transactions. When completed the individual block goes into the Block Chain as permanent database or ledger. Each block is arranged properly in chronological order and connected to the block next to it. Looking at the banking system for instance, this would… Read more

Williams & Glyn: Future of RBS spin-off in doubt as launch delayed

MarketLine

Overly ambitious growth strategies initially brought great success for RBS and the company was seen as the darling of the stock market, consistently delivering double digit growth. However, the company swelled to such a size that its assets were twice the size of the UK economy and a woefully ill-advised acquisition of ABN Amro in 2007 as part of a consortium tipped the bank over the edge as it took ownership of a large amount of toxic assets. The weakness was ruthlessly exposed during the global crash of 2008/2009 and… Read more

Negative Interest rates: Desperate times, desperate measures

MarketLine

Central banks across the developed world have taken to Negative Interest Rate Policies (NIRP) in a radical attempt to stimulate demand- the idea being that those sitting on assets will be penalized in an attempt to either lend the capital or spend it. The UK’s Monetary Policy Committee (MPC) has not ruled out the idea, but Japan, the European Central Bank, Denmark, Sweden and Switzerland have enacted NIRP already for a variety of reasons; Japan and the ECB in last ditch efforts to stimulate demand, Denmark, Sweden and Switzerland in… Read more

British Economy – structurally damaged?

MarketLine

Large-scale lending has become a key component for the economic growth of Britain’s economy since the 1980s. It has aimed to incentivise British consumers to permanently increase their borrowing rates and consumption. This practice has boosted the profitability of the British financial system by an unimaginable scale. It has generated a permanent stream of cash flowing from consumers to the banking system based on the acquisition of mortgages and consumer credit to purchase durable and nondurable goods. It has also helped households to navigate through a prolonged period of house… Read more

Market maturity and intense competition forces banks to expand overseas

MarketLine

Overseas expansion is a key trend in the global banking industry as many major players look to reduce their reliance on mature and intensely competitive domestic markets. The push for overseas expansion is beginning to kick start M&A activity within the sector. CCB, ICBC, Credit Agricole, and Mitsubishi UFJ have all engaged in M&A deals that involve the purchase of at least a stake in a non-domestic player since 2013. As explored in detail in the MarketLine case study Top ten global banks: An analysis of financial performance, growth opportunities… Read more

Rise in non-performing loans potential time bomb for China’s swollen banks

MarketLine

As measured by total assets, four of the ten largest banks in the world are now headquartered in China. As the Chinese economy has swelled, so too have the balance sheets of its largest banks. This has spurred great growth in operating incomes and net profit as demand for credit has soared. However, there are signs that the curse of non-performing loans (NPLs) that wreaked such havoc with the West’s banking system could potentially strike China, a ticking time bomb if left unaddressed, with several economic sectors posing a significant… Read more

Keep calm and take advantage. Deflation, good for the consumer, not so good for business

MarketLine

On Tuesday, May 19, 2015, it was announced by the Office for National Statistics (ONS) that the UK had fallen into deflation for the first time since 1960. The Consumer Price Index (CPI) fell by 0.1% in the year to April 2015, compared to no change (0.0%) in the year to March 2015. According to the ONS, this is the first time the CPI has recorded a decline over a year since official records began in 1996, and is the first instance of deflation when using comparative data since 1960…. Read more

Sabadell’s TSB takeover sparks wave of optimism

MarketLine

On Friday (March 20), Spanish banking group Banco Sabadell announced that it had reached an agreement to acquire UK high street bank TSB, sparking talk of a potential wave of M&A activity. The cash offer of 340p ($5.60) per share represents a premium of 30% on the June 2014 flotation price of 260p ($4.28) and a slight premium on the current share price of 333p ($5.48). The advantages for all parties are clear. For its part, Banco Sabadell is prepared to pay a premium for what it sees as growth… Read more

Lloyds success to pave way for RBS sale?

MarketLine

The UK government has sold another tranche of the shares it owns in the Lloyds Banking Group – one of the banks controversially bailed out during the financial crisis. The latest round of sales, aimed to capitalise on prices close to the 12-month high, have coincided with Lloyds’ announcement that it will commence paying dividends for the first time since the bailout on the back of a fourfold increase in the group’s underlying profit. UK Financial Investments (UKFI), the entity set up to manage government stakes in bailed-out banks, had… Read more

Recovery based on more debt: is it worth it?

MarketLine

Government authorities in the United States (US) have been given an indirect go-ahead for American consumers to splash out their borrowed dollars in an attempt to push the demand for manufacturing goods produced in the US. The result couldn’t have been more predictable. Americans consumers promptly responded in a very positive fashion. The total volume of their outstanding debt reached $13tn in the first quarter of 2014. As we learned from the recent crisis, this pile of debt could potentially drag the entire economic system to a standby for years… Read more

Wonga to write off debts of 330,000 customers

MarketLine

In an unprecedented move, Wonga has today announced that is to write off the debts of around 330,000 customers who are in arrears of 30 days or more. The controversial UK payday lender has, for some time, been battling a negative public image that has seen it portrayed as something of a ‘predator on the poor’ in certain sections of the media. Wonga was embroiled in its most major scandal yet in June of this year, when it was revealed the Financial Conduct Authority (FCA) had ordered the company to… Read more

Is there a recipe to boost manufacturing sector growth in the Eurozone?

MarketLine

In 2010, the US Federal Reserve (Fed) launched its Quantitative Easing (QE) program with the aim of re-establishing credit conditions by accelerating inter-bank lending and, consequently, supporting business and consumers to have access to relatively cheap loans. The policy was designed to support the overall level of economic activity in the United States, raise inflation and employment to levels consistent with the Fed’s maximum employment and price stability mandate. The announcement that it would artificially create money by increasing its liabilities was seen as an unorthodox monetary policy by mainstream… Read more

Tesco: Fallout from profit overstating continues

MarketLine

Yesterday (September 22), the UK’s largest retailer Tesco had to make the embarrassing and damaging admission that its first half profits had been overstated by some £250m (approximately $390m). Consequently, profits for the period are now expected to be around £850m (approximately $1,328.8m) rather than the originally-reported £1.1bn (approximately $1.7bn); quite a difference. The fallout has been catastrophic and has prompted some serious questions that have led to staff suspensions, a delay in publishing its first half results, and the intervention of legal and accounting firms. Following the shock announcement,… Read more

Barclays: Can global restructuring boost bank’s profits?

MarketLine

In February 2013, Barclays CEO Antony Jenkins announced a new group strategy with the central aims of simplifying the bank’s operations and boosting profitability. The plan, termed by Jenkins as a ‘bold simplification of Barclays’, involves the establishment of a ‘non-core’ operation consisting of assets and businesses that Barclays plans to run down or exit, a noticeable reduction in headcount, a scaling back of investment banking operations, increased automation of banking processes, and changes to the bank’s UK branch network. As explored in the MarketLine case study ‘Barclays PLC: Reshaping… Read more

Developments in international tax important for multinational corporations

MarketLine

Outrage in the press can cause confusion about the process of tax planning. The nuanced relationship between the spirit and the letter of the law, and wider issues such as the conflict between disparate national tax systems and competitive international trade are therefore often missed. A recent MarketLine case study gives detailed examples of tax planning involving both multinationals and private individuals as well providing insight into changes in tax policy and the debate around the morality of tax avoidance. Although tax law itself may not be the most exciting… Read more

Commonalities between Japan, United Kingdom, US and the Eurozone – Fixing the Financial System but not necessarily the Economy

MarketLine

The Bank of Japan (BoJ) was the first central bank to adopt quantitative easing (QE) to fight the upsurge of a deflationary path in 2001. At that time, the feeble GDP reflected the collapse of aggregate demand following a financial crisis in the late 1990s. The most vicious side effect of a collapsing aggregate demand was a generalized decline in prices and production, which was already a reality in Japan at the beginning of the 2000‘s. In response to highly negative events, the BoJ launched the Quantitative Easing program (QE),… Read more

Barclays to cut 19,000 jobs in major shakeup

MarketLine

Barclays has today announced that it is to cut 19,000 jobs by the end of 2016 as it plans a major operational shakeup. According to the announcement, almost half the job losses (around 7,000) will be in the UK, with Barclays investment arm most heavily affected as CEO Antony Jenkins comes under pressure to increase profits at the bank. Barclays also announced plans to set-up a so-called ‘bad bank’ to manage, and then either run down or sell off £115bn (approximately $179.7bn) of non-core operations. Unsurprisingly, this includes around £90bn… Read more