Banking and Finance News & Trends: Nov Week 1

Table of contents

1. Banking and Finance Industry News
2. Investment, PE & VC News

Banking and Finance Sector News

1. Markets

i. Singapore’s MAS Rolls Out Global Finance & Tech Network

The Monetary Authority of Singapore (MAS) introduced the Global Finance & Technology Network (GFTN). The GFTN aims to strengthen Singapore’s role as a fintech hub while creating meaningful cross-border collaboration to foster innovation in finance. Its goals centre on financial inclusivity, resilience, economic access, and sustainability. It will be chaired by former MAS Managing Director Ravi Menon and supported by an international advisory board that includes figures like Dominic Barton and Ant Group’s Eric Jing. Its key businesses include:

• Global Connectivity & Innovation: To enhance global connections and drive innovation in financial services, particularly fintech. This could open new opportunities for collaboration between financial institutions and emerging tech startups.
• Strategic Investments: GFTN will focus on investing in early-stage and growth-stage fintech and climate tech companies, which aligns with growing trends in sustainable finance and tech innovation. Companies in the industry may find opportunities for strategic partnerships or investments.
• Operational Synergies: By combining forums, advisory services, and investment capabilities, GFTN aims to create synergistic value, offering resources for both large financial institutions and startups to innovate and scale.
• Long-Term Growth: GFTN is targeting financial sustainability within three to five years, which could provide a model for fintech-driven growth and potential investment opportunities for companies in the finance and banking sector.

ii. Hong Kong: New AI Policy, More Crypto Licenses, Possible Tax Break

Hong Kong announced several policies aimed at the financial sector.

• More Licenses: More will be granted to cryptocurrency exchanges by the end of 2024 as Hong Kong seeks to establish itself as a digital asset hub amid ongoing economic and geopolitical challenges. Hong Kong’s Securities and Futures Commission (SFC) is also forming a consultative panel with licensed exchanges to enhance oversight and collaboration by early 2025.
• Industry Benchmarks: Complementing these regulatory efforts, Hong Kong Exchanges and Clearing will launch a Virtual Asset Index Series to better track Bitcoin and Ether prices for the Asia-Pacific market.
• AI Policy: The AI policy outlines a common regulatory framework across sectors like banking, securities, and insurance, with individual regulatory bodies developing tailored AI guidelines.
• Tax incentives: Tax breaks are proposed for family offices and private funds investing in crypto and other virtual assets.

Takeaway: Hong Kong’s moves reflect its aim of reinforcing its standing in the competitive digital asset market alongside Singapore and attracting digital asset investments. However, the approval process for exchange operators has been slower than anticipated, with only three crypto platforms receiving full licenses and an additional 11 holding “deemed-to-be-licensed” status.

2. Business Moves

i. PBOC Expands Monetary Policy Tools with Outright Reverse Repo

The People’s Bank of China (PBOC) is expanding its monetary policy options by introducting outright reverse repos.

Takeaway: The move is expected to provide better control over liquidity in the banking system. It will also support the bank with expected rises in government bond issuance and the management of bond market dynamics and align it more closely with global central banking practices. The strategy also appears timely as it may help cushion potential market reactions from external events, such as the US election, and seasonal increases in liquidity demand.

ii. HSBC Joins China’s Payment Network CIPS

HSBC’s Hong Kong branch has now joined China’s Cross-Border Interbank Payment System (CIPS) as a direct offshore participant. Launched in 2015, CIPS replaces older networks, with 153 members as of September and increasing adoption in places like Russia, where banks face restrictions on using SWIFT.

Takeaway: By joining CIPS, HSBC facilitates easier renminbi (RMB) transactions and aligns with China’s broader push to elevate the yuan as a global currency. Though the yuan currently ranks fourth in global payments, Beijing aims to reduce reliance on the US dollar by making RMB transactions more accessible worldwide.

iii. CBA to Offload Another 10% Stake in VIB

Commonwealth Bank of Australia (CBA), the country’s largest lender, sold a 10% stake in Vietnam International Commercial Joint Stock Bank (VIB). The sale, which brings in around A$320 million (S$279 million), reduces its holding from 19.8% to approximately 5%. VIB, a mid-sized bank in Vietnam with a market capitalisation of US$2.2 billion, saw its shares rise slightly following the news.

Takeaway: This follows a previous divestment last month and is part of CBA’s broader strategy to reduce foreign investments and focus on its operations in Australia and New Zealand.

iv. BIS to Exit China-Supported Central Bank Digital Currency Initiative

The Bank for International Settlements (BIS) decided to exit the cross-border payments project, mBridge, launched in 2021 in collaboration with the central banks of China, Hong Kong, Thailand, the UAE, and Saudi Arabia. The move is not politically motivated but reflects BIS’s assessment that the project is now at a minimum viable product stage requiring more years of development and that its partners can manage independently. Carstens also denied that mBridge was intended to circumvent international sanctions or serve as a tool for BRICS nations to bypass restrictions.

Takeaway: The timing of this decision, following discussions at the BRICS summit about a new “Brics Bridge” payment system as an alternative to the US dollar, raises concerns. The BRICS summit, attended by China, Iran, and the UAE, highlighted a push against US-dominated financial systems. China could lead in developing mBridge after BIS’s withdrawal and integrate it with other Chinese payment systems, such as CIPS (China’s Cross-border Interbank Payment System). While this move may fracture the global payments ecosystem, it also opens the door for faster and cheaper cross-border settlements, potentially promoting the internationalisation of the renminbi (RMB). This could impact global payment dynamics as countries might seek to engage with both dollar- and RMB-based systems.

v. Expansion: HKEX, Maerki Baumann and AIA

HKEX: Hong Kong Exchanges and Clearing (HKEX) plans to open an office in Riyadh, Saudi Arabia, in 2025 to enhance its connections in the Middle East. This move aligns with the broader goal of strengthening HKEX’s role in linking financial markets between mainland China and the Middle East. The new office will help regional investors access Hong Kong’s financial products and seize opportunities related to Asia’s growth trends. HKEX aims to support Saudi companies seeking to list in Hong Kong and will also expand its metals operations with new copper and zinc delivery points in Jeddah.

Maerki Baumann: Maerki Baumann, the Swiss private bank based in Zurich, is expanding its operations into the Middle East with the opening of a new branch in Abu Dhabi. The bank is targeting the blockchain and crypto sectors in the Gulf region. The Abu Dhabi hub will operate under the recently launched crypto brand ARCHIP, which offers various services, including digital asset management, payment processing, and liquidity solutions. Andreas Fröhlicher, the Head of Legal & Compliance, will lead the new branch, building on his experience with Maerki Baumann’s crypto strategy since 2019.

AIA: Hong Kong-based insurance giant AIA will establish a new branch in Anhui province, China. This move follows its broader strategy to tap into the growing demand for insurance in emerging sectors such as new energy vehicles and green industries. The Anhui branch will join AIA’s extensive network across key Chinese regions, including Beijing, Shanghai, and Guangdong, and is expected to bring AIA’s reach to over 100 million new potential customers. The company sees significant growth potential in mainland China, which remains one of the most attractive markets for life and health insurance globally. This expansion will

vi. Visa and Coinbase to Support Real-Time Crypto Buys on Debit Card

Visa partnered with Coinbase to enable real-time fund deposits into Coinbase accounts for eligible Visa debit card holders in the US and EU, enabling customers to trade cryptocurrencies at any time. Customers can also use their Visa debit cards to buy cryptocurrencies on Coinbase and cash out to a bank account.

Takeaway: This development reflects the increasing integration of traditional financial systems with the crypto market, providing a more seamless experience for crypto investors. Visa’s involvement and the growing clarity of global crypto regulations signal the potential for greater adoption of crypto services within the mainstream financial sector.

Takeaway: A major challenge for the cryptocurrency industry has been connecting traditional financial services with the more tech-centric crypto solutions, which often complicates everyday users’ access to the available innovations. However, clearer regulations, such as the implementation of the Markets in Crypto-Assets Act (MiCA) in the EU earlier this year, have provided companies with greater clarity on what is permissible, potentially encouraging further growth in that region while posing a challenge to US expansion.

vii. Allianz Mulls Partial Sale of AllianzGI and Merger

Allianz is exploring strategic options for its Allianz Global Investors (AllianzGI) division, including the potential for a merger or partial sale. AllianzGI, which manages €555 billion in assets, could be valued at over €4 billion.

Takeaway: There is a possibility Allianz might relinquish control in such a deal. This comes in the wake of BNP Paribas acquiring AXA Investment Managers, which is expected to encourage further consolidation in the asset management industry. Amundi and DWS are considered possible buyers. AllianzGI’s US division was sold in 2022 following a fraud-related settlement.

Investment, PE & VC News

1. Markets

i. Saudi: To Start a US$1b Fund with Hong Kong, Back Brookfield’s US$2b Fund

The Hong Kong Monetary Authority (HKMA) and Saudi Arabia’s Public Investment Fund (PIF) have partnered to anchor a new investment fund targeting $1 billion. This fund will focus on sectors such as manufacturing, renewables, fintech, and healthcare, with an emphasis on supporting the localisation of Hong Kong and Greater Bay Area-linked companies in Saudi Arabia.

The SFC and Saudi Arabia’s Capital Market Authority (CMA) are also working together to enhance cross-border listings and trading opportunities, with a focus on stocks, ETFs, and bonds. The partnership includes staff secondment for training.

Concurrently, Saudi Arabia will also back Brookfield Asset Management’s new US$2 billion fund focused on investments in the Middle East. Half of the fund will be directed towards Saudi Arabia, strengthening ties between Brookfield and the kingdom’s PIF, which manages around US$1 trillion.

Takeaway: When implemented, Saudia Arabia’s partnership with Hong Kong could create high-skilled local jobs and foster regional economic growth while strengthening financial ties between the two markets. Meanwhile, its support for Brookfield also highlights Saudi Arabia’s increasing focus on domestic investments, including major projects like the US$1.5 trillion Neom city. This deal reflects the broader trend of global asset managers raising dedicated funds for the Middle East, as other firms like Goldman Sachs are also pursuing similar strategies in the region.

ii. India Mulls Expanding Measures to Draw Foreign Investments

India is considering expanding its foreign investment measures. This includes the possibility of allowing investments via mezzanine instruments, a combination of equity and debt, which are currently not permitted.

Takeaway: The move aims to liberalise India’s capital markets and increase foreign capital inflows, addressing a recent slump in foreign direct investment (FDI) that has reached a five-year low. If implemented, this shift could generate an additional $20-30 billion in FDI, which would help meet India’s growing investment needs. However, allowing mezzanine instruments could introduce risks, such as currency volatility, and place pressure on the rupee.

iii. UK Strengthens Tax Regulations for Non-Domiciled Residents

The UK is set to tighten tax rules for non-domiciled residents. The move will affect wealthy individuals who have been benefiting from exemptions that allow them to pay minimal or no tax on income earned abroad. Starting in April 2025, a new residence-based tax system will replace the existing non-dom regime. The reform is expected to raise £12.7 billion ($16.6 billion) over the next five years.

Takeaway: This change is likely to lead to an outflow of wealthy clients, with advisors noting that alternative hubs like Dubai, Singapore, Hong Kong, Switzerland, and Italy are expected to attract these individuals.

2. Business Moves

i. Olam Hits Record High Amid Potential Sale of Agribusiness Stake

Olam Group received a non-binding offer from the Saudi Agricultural and Livestock Investment Company (Salic) to purchase Olam’s remaining 64.57% stake in Olam Agri.  Salic is a subsidiary of Saudi Arabia’s PIF. Olam has appointed advisers to explore the sale, but no definitive terms or legal agreements have been finalised yet.

Takeaway: The move follows Salic’s initial investment in Olam Agri, where it acquired a 35.4% minority stake for US$1.24 billion in December 2022. It also comes amid Olam’s broader restructuring, which includes the planned spin-off of Olam Agri and a delayed IPO for the unit.

ii. Goodwill’s IPO 1.5 Times Oversubscribed

Goodwill Entertainment, a karaoke and live-show operator, recently announced that its IPO on the Catalist board of the Singapore Exchange was oversubscribed by 1.5 times. The company’s growth is fueled by increasing disposable incomes and a cultural affinity for karaoke and immersive entertainment in Singapore and Southeast Asia. Anchor investors for the IPO include Asdew Acquisitions, ICH Capital, and K-IX Capital.

Takeaway: There are early signs of a potential rebound for Singapore’s IPO market. Food Innovators Holdings’s IPO on SGX’s Catalist Board in August was also met with strong demand and is oversubscribed by 6.3 times. Meanwhile, there is also a healthy pipeline of companies preparing for listings, with expectations for stronger IPO activity in 2025. These upcoming IPOs include major potential players, such as a US$1 billion REIT offering by Japan’s NTT and Thai Beverage’s beer unit IPO.

iii. BlackRock in Talks to Buy HPS and Launches Riyadh HQ

BlackRock is in advanced talks to acquire HPS Investment Partners, a major player in the growing private credit market. If the deal is finalised, it will mark BlackRock’s second large acquisition in the past year, following its $12.5 billion purchase of Global Infrastructure Partners. The acquisition would also push BlackRock’s alternative assets portfolio to over $500 billion.

Concurrently, BlackRock will also establish its regional headquarters in Riyadh. This move will allow BlackRock to expand its operations across the Middle East, building on its six-year presence in Saudi Arabia. The move is driven by Saudi Arabia’s new regulatory requirements, which mandate firms to have a regional base in the kingdom with at least 15 employees, including executives overseeing other regional markets. Over 500 companies, including Goldman Sachs, have already set up their regional headquarters in Riyadh as part of this initiative.

Takeaway: BlackRock’s deal with HPS would help it build a significant presence in this space valued at $1.7 trillion and with the potential for much higher growth. It follows BlackRock’s recent moves in the private credit market, including forming a JV with Jio Financial Services in India.

BlackRock has been intensifying its commitment to the Middle East by securing up to $5 billion from Saudi Arabia’s sovereign wealth fund to invest in Middle Eastern assets and build a Riyadh-based team. This includes initiatives such as building a mortgage-backed securities market and leveraging the AI and tech investment space. The company’s recent high-profile event in Riyadh further underscores its growing influence in the region.

iv. Stripe’s Acquisition of Bridge Sparks Optimism for VCs

Venture capital firms are poised to earn significant returns from Stripe’s acquisition of crypto platform Bridge for US$1.1 billion. Sequoia Capital, Ribbit Capital, Bedrock Fund Management, Index Ventures, and Haun Ventures all invested in Bridge, with Sequoia emerging as the largest beneficiary, holding a 16% stake worth over US$100 million. The company, which was founded less than three years ago, saw its value increase dramatically as Stripe targeted it for its rapid growth in the stablecoin sector.

Takeaway: The acquisition stands out because of its swift turnaround, especially after a post-pandemic slump and increased regulatory scrutiny in the crypto industry. It offers renewed optimism for VCs in crypto and other sectors, where exits have been rare recently.

v. PIF Inks US$51b MoUs with Japanese Banks

Saudi Arabia’s PIF has signed five MoUs with major Japanese financial institutions, including Mizuho Bank, Sumitomo Mitsui Financial Group, MUFG Bank, JBIC, and Nippon Export and Investment Insurance (NEXI), totalling up to $51 billion. The agreements aim to facilitate two-way capital flows through both debt and equity, supporting Saudi Arabia’s Vision 2030 economic transformation.

Takeaway: The move comes as PIF also anchored a new $1 billion fund with the HKMA to target firms with ties to both Hong Kong and Saudi Arabia, particularly in manufacturing and renewables.

vi. Abu Dhabi Firms to Offer Tokenised US Treasuries Fund

Abu Dhabi-based firms Realize and Neovision Wealth Management have launched a fund that will invest in US Treasury Bills (T-Bills) through exchange-traded funds (ETFs) and convert these assets into digital tokens. This initiative, the Realize T-BILLS Fund, will tokenise units from ETFs managed by BlackRock and State Street, enabling these assets to be traded on blockchain platforms like Ethereum and IOTA. The fund aims to reach $200 million in size.

Takeaway: The tokenisation of T-Bills offers benefits such as fractionalisation and greater scalability, allowing investors to hold, trade, and transfer tokenised assets efficiently. The tokenisation of T-Bills is gaining traction in the crypto market and has a current market capitalisation of US$2.4 billion. BlackRock has already launched a similar tokenised fund, BUIDL, which invests in US Treasuries and is based on the Ethereum blockchain.

vii. Hong Kong Family Office and Chinese Fund Partner to Attract Wealthy Clients

Centaline Wealth Management, a subsidiary of Centaline Group, is leveraging a new partnership with China Asset Management (Hong Kong) to expand its family office services. The aim is to offer diverse financial products, including fixed-income funds, ETFs, and money market funds, amid a downturn in the real estate market.

Takeaway: This collaboration comes as Hong Kong seeks to rebuild its status as a financial hub, attracting wealthy Chinese clients.

vii. Tencent-Backed Airwallex to Raise US$200m

Tencent-backed Australian fintech company Airwallex is in discussions to raise US$200 million in a new funding round, aiming for a valuation of approximately US$6 billion. The company plans for further regional expansion and AI-driven product innovations and is positioning itself for a potential IPO by 2026. This comes as it acquired an online payment license in China, which allows it to operate as a third-party payment provider there.

People Moves

Mizuho: Mizuho Bank appointed Joris Dierckx as co-head of its banking division for APAC, focusing on non-Japanese clients, excluding China. Dierckx has over 25 years of experience in the APAC and Europe markets. He held key roles at BNP Paribas, including head of corporate and institutional banking for Southeast Asia and CEO of its Singapore branch.

MAS: The MAS made key board appointments for its new entity, GFTN.

• Ravi Menon, MAS’ managing director from 2011 to 2023, was appointed the chairman of GFTN. He will also remain as Singapore’s ambassador for climate action.
• Sopnendu Mohanty, MAS’ current chief fintech officer, will transition to become GFTN’s CEO in 2025.
• Kenneth Gay, a long-time MAS executive, will take on the CFO role at MAS before assuming the CFO position at GFTN.
• Leong Sing Chiong, MAS’ deputy managing director, was named the deputy chairman of GFTN.
• Neil Parekh, a nominated Member of Parliament and non-executive chairman at Tikehau Capital, was named the deputy chairman. 

Goldman Sachs: Goldman Sachs hired Jonathan Gan, a family office specialist with almost 20 years of experience, as an executive director for its alternatives capital markets group in Singapore. Prior to joining Goldman Sachs, Gan led Citi’s global family office group for South Asia and held roles at HSBC in Southeast Asia investment banking.

Ninety One: Ninety One, a global investment management firm headquartered in London, appointed Andrea Ng as its Singapore-based head of Southeast Asia advisor business. Ng has over 17 years of experience and has held leadership roles at Muzinich & Co., First State Investments, Man Group, and Credit Suisse. Ng will focus on driving business growth and strengthening relationships with intermediary and private banking clients in the region. This move is part of Ninety One’s strategy to expand its presence in Southeast Asia, where private wealth growth has surged in recent years.

Centaline: Centaline Family Office added BNP Paribas’s fund manager Patrick Ho to its team. Ho has nearly 30 years of experience in portfolio management and will focus on developing multi-asset strategies. He previously served at BNP Paribas and AMP Capital.

Prudential: Prudential appointed Patrick van Heerde as its new Chief Partnership Distribution Officer, effective November 4, 2024. Based in Hong Kong, van Heerde will oversee Prudential’s bancassurance operations across 24 markets in Asia and Africa. He has over 20 years of experience in the financial services industry and has held senior roles at HSBC Life, AIA, and Manulife Asia. He succeeds Anthony Shaw, who has left the company after nearly two decades to explore new opportunities.

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Image Credits:

• Global Finance and Technology Network
• Bloomberg
• Reuters
• The Economic Times
•  Goodwill Entertainment