Global Banking Shifts as UBS Faces Pressure and Tech Redefines Finance

When the bank is too big to rescue

When is a bank too big to rescue? The Swiss Central Bank is backing proposals by the Swiss government for big banks to prepare sufficient collateral to access central bank liquidity if needed. That means UBS, which is the country’s remaining big bank. UBS has a balance sheet of around $1.6 trillion while the economic output of Switzerland is about $878 billion, and the bank is eight times bigger than the country’s second largest bank Zürcher Kantonalbank.

The collapse of Credit Suisse in 2023 and its forced rescue by UBS shook the country, which had a reputation as a safe place to keep money, and has forced a re-assessment of the relationship between the state and UBS. “Other proposals include that UBS can no longer count software and deferred tax assets towards its Common Equity Tier 1 capital, while its foreign units must be fully backed with CET1 capital,” notes Reuters. “The proposals have been rejected by UBS, which said they would make Switzerland less competitive.”

The UBS chair Colm Kelleher last year raised the possibility of the bank relocating to the US to avoid what he said were punitive measures. Meanwhile, the bank said it will cut around 3,000 jobs as a result of the merger with UBS, but it plans to create 3,000 new jobs when it opens a new office in Hyderabad in India. (The bank has said the merger may eventually result in the loss of 9,000 jobs in total in Switzerland.) “‘We're looking forward to further expanding our tech capabilities, including AI, while enhancing our operations footprint in the location,’ said Matthias Schacke, who heads UBS' operations in India.

Natalia Ferrara, vice president of the Swiss Bank Employees Association, declined to comment on developments in India but said Swiss rules should not make the country unattractive for UBS”.

Big tech enters finance arena, banks head into tech

European banks have been having a good run, and Patrick Jenkins at the FT point to a number of recent initiatives that point to some
strategic shifts that augur well for the future. Among them is the move by Italy’s largest bank Intesa Sanpaolo to develop its own cloud architecture, which may then develop into a service it will offer to other banks. “Intesa Sanpaolo’s avowal to boldness is less obvious, but no less significant. The Italian lender is midway through a €9bn project to turn itself into a cloud services provider — initially for itself, but also, in time, for third parties. Like many banks the restructuring has meant closing its mainframe computer system but, unlike many banks, it also means diversifying away from a reliance on US cloud companies.

Although Google and Microsoft provide it with external cloud services, Intesa is simultaneously expanding homegrown capacity — boosting its own and Europe’s autonomy, in line with the exhortations of the European Central Bank to reduce banks’ reliance on US cloud groups.” Back in 2022, as part of its plan to take on the fintech challenge, Intesa invested £40 million into UK core banking provider Thought Machine which the bank used to build its digital bank isybank. Anxiety about reliance on US technology systems is at an all-time high in Europe: Intesa appears to be ahead of the anxiety curve.

The legend of the Fat Finger (continued)

How do you explain to your boss that you accidentally gave away forty billion dollars? Korean cryptocurrency exchange Bithumb has
retrieved 99.7 per cent of the $40 billion worth of bitcoin that it accidentally gave away last week. “Lee Chan-jin, governor of the Financial Supervisory Service (FSS), told a press conference that there was a need for
improved regulatory mechanisms to address such risks, adding that authorities will seriously consider the problems revealed by the incident as they seek tobring digital assets under regulatory control with legislation,” reports Reuters.

The exchange had planned to give away cryptocurrency worth about $1.40 each to winning customers in a promotional event, but sent about 2,000 bitcoin instead, with bitcoin currently trading around $70,000, meaning winners received the equivalent of $140 million. “Of the total 620,000 bitcoins given away by Bithumb on Friday, 99.7% were retrieved by the exchange, according to the initial investigation results by financial authorities. Of the 1,786 bitcoins already sold before the exchange suspended transactions, 93% were retrieved.

Sitoyo Lopokoiyit moves from mobile money to banking

Sitoyo Lopokoiyit confirmed to the tech and finance website Techcabal that he will depart his role as Managing Director of M-PESA Africa at the end of March to take up a role at ABSA. “Safaricom or Vodacom is yet to make a formal statement and announce Sitoyo’s successor,” it reports. “Absa Bank Kenya, the country’s fifth-biggest bank, announced on Wednesday that the executive who spent the last five years building one of Africa’s most powerful fintech platforms will be joining as Chief Executive for Personal and Private Banking, effective April 1, 2026.”

Absa chief executive Kenny Filha has been spending time in Kenya recently as the bank announces its intention to grow in Kenya by
acquisition. “Since taking the helm in 2021, Sitoyo has presided over M-PESA’s evolution into what is increasingly a financial super app, embedding savings, credit, merchant services, international remittances, and now even stock trading into the daily economic lives of more than 37 million monthly active users.”

From Influencer to Owner

Jimmy Donaldson said yesterday that his company is buying teen-focused finance app Step. “Nobody taught me about investing, building credit, or managing money when I was growing up,” the twenty-seven-year-old said,” reports Techcrunch. “I want to give millions of young people the financial foundation I never had.”

Jimmy who, you say? Donaldson is also known as leading Youtube influencer Mr Beast, who has almost 500 million followers on Youtube. Stripe led the 2019 series A funding round for the app. The announcement came at Consensus Hong Kong, with crypto investor Tom Lee praising the company. Lee is chair of Bitmine Immersion Industries, the largest corporate holder of Ether, which recently invested $200 million into Step.

Beast Industries did not disclose how much it paid for Step. While it is not a bank, Step partnered with Evolve Bank & Trust, a consumer banking company, for banking services in 2022. Step has 7 million customers.