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Bank of Lithuania’s Response to the Covid-19 Crisis: Responsible Action or Over-Regulation?
The Covid- 19 Pandemic has created many novel situations that are unlikely to disappear in the near future. Like in the majority of novel post- apocalyptic scenarios, the uncertainty of the a new world order, especially in the financial sector, is always looming upon not only the governmental sector, but also on the private sector, which leads to many legal lacunas.
Within the EU financial sector, it is still uncertain whether the crisis has entered into its second act, or if it is still at the overture level.
The Bank of Lithuania, for example, has demonstrated great resilience with the initial response to the Crisis, that was remarkable in comparison to the initial response of ESMA. The Bank has issued six points of reference to the financial institutions which are regulated under the Bank which are crucial for each Electronic Money Institution’s (hereinafter- EMI) reporting duties and financial duties.
For instance, part of these requirements are in direct correlation to the Market Abuse Regulation, 5 AMLD, PSD2, and MiFID II. When discussing the Market Abuse Regulation, the Bank has issued a notice that processes and business decisions issued within the quarantine time are considered inside information, and should be disclosed under the appropriate framework.
Bank of Lithuania is also aware that regulated entities, especially EMIs and Payment Institutions (hereinafter-PI) which have not been working from their usual headquarters, but on a remote basis, still have to continue their financial and regulatory report as usual. Documents should be sent on a password controlled basis, and physical documentation should not contain confidential or sensitive information.
In regards to trading activity and trading in a regulated environment, the Bank has announced its intentions for allocating means for legal enforcement for proper functioning of the market in Lithuania. By this, the Bank has decided to examine requests for suspended trading only after receiving well- reasoned submissions, which are objective, reasoned and legally justified.
This is not the first time that the objective, reasoned and legally justified criteria has been raised in a European context. The criteria is remarkably similar to the Subsidiarity and Proportionality principle of EU jurisprudence, which has been discussed countlessly in the Treaty of Maastricht, the Single European Act (SEA), and in T29/92, which established that the subsidiarity principle does not constitute sufficient grounds to tackle the legality of an EU legal act, especially in trade aspects between Member States and Association Agreement Countries.
In the financial services realm, this is one of the few times that this has occurred. Implementing the Subsidiarity and Proportionality Criteria in the Lithuanian context, has surpassed the EU Agency level (ESMA) and has been directly implemented by the Lithuanian Regulator.
It may seem to some that this leap is the first sign of over-regulation in Member States, which tend to over-regulate in times of crisis, yet this measure can also be deemed as responsible action. The fact that the Bank of Lithuania has managed to implement the measure in a short time frame, with minor and almost non-existent instructions from ESMA, proves once again that in cases of financial services, mutual and not exclusive competence is the golden route for financial institutions.
EMIs and crypto exchanges that have been licensed in Estonia in comparison, which have lately been scrutinized by regulatory enhanced enforcement, have not received any formal notification in regards to the Covid-19 crisis, and have not received an extension for financial and regulatory reporting, bearing in mind the July 1st deadline that is looming on the entire crypto industry in Estonia.
EMIs in Lithuania on the other hand, have received specific instructions on their financial and regulatory reporting, and the widely anticipated API open banking system will be presented during the Payment Council later this year.
Be that as it may, EMIs that are licensed in Lithuania need to bear in mind that additional enhanced procedures are anticipated from the Bank, and they need to prepare themselves for the regulatory whirlwind that will hit the compliance and operational desks within the foreseeable future.
About the author: Ella Rosenberg
EU Law Regulatory Consultant at Porat Group and CEO of the Israel-EU Chamber of Commerce and Industry. She primarily deals with high risk industries in Israel and Europe. Ella holds an LLB in EU Law from the European Law School, Maastricht University and an LLM in Commercial and Company Law from Erasmus School of Law, Erasmus University Rotterdam. Ella consults on AML in the crypto currency industry, Blockchain, AI, drone regulation, EU firearms regulatory framework, Art industry, financial arbitration and tokenization of maritime logistics. She also focuses on Foreign Trade Agreements of the EU and Israel, TRIPS and GATT agreements, WTO Law and EU Legal Policy. Ella serves as a member of Europe Forum in Israel, and actively consults the public and governmental sector in Israel on the EU Regulatory Framework.
PB Fintech witnessed a 2% decline in its stock price, reaching Rs 1,313.65 per share, as approximately 8.4 million shares, equivalent to 1.86% of outstanding shares, were exchanged via block deals on the exchanges. By 9:44 AM, the volume surged to 9 million shares collectively on both exchanges, while PB Fintech’s stock price dipped by 0.56% to Rs 1,333 apiece, contrasting with a 0.22% decline in the S&P BSE Sensex.
Executive Share Sales
On May 16, PB Fintech announced that its Chairman and CEO, Yashish Dahiya, alongside Vice Chairman and Whole-time Director, Alok Bansal, intended to sell partial stakes in the company. Dahiya plans to sell up to 5.4 million equity shares, while Bansal aims to divest up to 2.97 million equity shares. Proceeds from the sale will be allocated primarily towards taxes on current and future ESOP exercises.
Following the sale, Dahiya will retain a 4.83% stake, while Bansal will hold a 1.63% stake in PB Fintech on a fully diluted basis. The company clarified that no further share sales are planned by the duo for at least one year.
Company Profile and Financial Performance
PB Fintech is actively involved in providing integrated online marketing and IT consulting services, primarily for the financial services industry, including insurance. The company operates Policybazaar, India’s largest digital insurance marketplace, and Paisabazaar, which offers lending-related services.
In Q4FY24, PB Fintech reported a net profit of Rs 60.19 crore, marking a significant improvement from the Rs 9.34 crore loss in the corresponding period of the previous year. The company’s revenue from operations surged by 25.4% year-on-year to Rs 1,090 crore in Q4 FY24, compared to Rs 869 crore in Q4 FY23.
For the entire fiscal year, PB Fintech’s net profit stood at Rs 64 crore, contrasting with the Rs 488 crore loss in FY23. The company’s consolidated operating revenue rose by 34% year-on-year to Rs 3,437 crore.
Analyst Perspectives
Analysts at Nuvama Institutional Equities raised their FY25/26 Ebitda estimates significantly to accommodate higher growth and improved profitability. However, they maintained a ‘Reduce’ rating on the stock due to its rich valuation, revising their target price to Rs 1,160.
Keynote Capital downgraded PB Fintech’s stock to ‘Reduce’ from ‘Buy’, citing that most of the positives appear to be priced in. Despite acknowledging the company’s positive momentum and profitability, the brokerage believes that current market expectations may be overly optimistic.
PB Fintech continues to navigate its growth trajectory amidst strategic initiatives and evolving market dynamics, as reflected by varying analyst viewpoints.
Source: business-standard.com
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Yendo, a prominent fintech company based in the United States, has successfully secured $165 million in funding through a combination of debt financing and equity investment.
Funding Structure
The funding round comprised a mix of debt financing and equity infusion, highlighting investors’ confidence in Yendo’s growth prospects and business model. This significant financial injection underscores Yendo’s position as a key player in the fintech sector.
Investment Highlights
Yendo’s ability to attract such substantial investment underscores its appeal to investors. The company’s innovative approach and strategic positioning within the fintech landscape have positioned it for accelerated growth and market expansion.
Utilization of Funds
The newly raised capital will likely be deployed to fuel Yendo’s expansion initiatives, including product development, market expansion, and strategic acquisitions. The infusion of funds will provide Yendo with the financial resources needed to capitalize on emerging opportunities and consolidate its market position.
Market Impact
Yendo’s successful funding round is expected to have a positive impact on the broader fintech market, signaling investor confidence in the sector’s growth potential. The influx of capital into Yendo reflects the ongoing trend of significant investment activity within the fintech industry, driven by increasing demand for innovative financial solutions.
Source: fintechfutures.com
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Commerce Bank goes live with instant payment service FedNow through Temenos Payments Hub
Commerce Bank, headquartered in Kansas City, USA, has recently activated the FedNow instant payments service as part of its ongoing modernization efforts.
Collaboration with Temenos
Commerce Bank has partnered with Temenos, a leading Swiss vendor, to enhance its real-time payment capabilities. This collaboration builds upon Commerce Bank’s previous deployment of Temenos’ core banking platform in 2022 and its adoption of the Infinity loan origination solution earlier this year.
Utilization of Temenos Payments Hub
Commerce Bank has opted for the Temenos Payments Hub to integrate the FedNow service seamlessly. According to Temenos, this choice aims to amalgamate advanced banking products with cutting-edge delivery methods.
Insight from David Roller
David Roller, CIO of Commerce Bank, views this selection as a strategic step in their modernization journey. He emphasizes the bank’s commitment to meeting the evolving expectations of its customers by leveraging the capabilities offered by the Temenos platform.
Features of the Platform
The Temenos Payments Hub, delivered via Software-as-a-Service (SaaS), offers a comprehensive suite of payment tools and frameworks. These include features like straight-through processing, automated exception handling, cloud security measures, intelligent routing, and customizable workflows.
Leveraging the US Model Bank
In addition to the Temenos Payments Hub, Commerce Bank has also leveraged Temenos’ US Model Bank. This collection of pre-configured banking processes is tailored to address the specific requirements of the US market, further enhancing Commerce Bank’s operational efficiency and customer service.
Source: fintechfutures.com
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