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Starling Bank founder’s appetite for disruption

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Think of a banker, and the chances are you won’t think of someone like Anne Boden. Granted, there are plenty of women in their 50s working in the banking sector. But Boden — who describes herself as “quirky”, has a chemistry degree and a thing about purple handbags — positively relishes breaking the “City Boy” stereotype.

Banking on It is the highly readable (and often mildly scandalous) story of how she came to launch Starling Bank, one of a clutch of digital challengers to hit the UK market in recent years.

If there was ever a business book suitable for TV adaptation, this is it.

Having been told it can’t be done, Boden hatches a plan to launch an entirely digital bank on a cruise around South Africa (a trip she deliberately chose to avoid her workaholic tendency of exploring foreign bank branches while on holiday).

She quits her job at Allied Irish Bank to found a start-up in 2014 using her own savings, the sale of her house in Swansea and her relentless persuasiveness (all credit to her for running up a £3m tab with KPMG and PwC for consultancy fees).

If she thought being a woman in banking was tough, the cliquey alpha male worlds of both fintech and fundraising nearly cook Starling’s goose.

One chapter begins “Things I didn’t know when I decided to start a challenger bank” and is an upsum of months spent knocking on doors, bouncing contacts into meetings and firing off endless emails while camped out inside Starbucks.

“If you don’t have track record as an entrepreneur, you won’t get investment,” Boden admits. “Even if I did have track record, the sort of money I needed was out of the question. And apparently, building the tech infrastructure I envisaged was impossible.”

Does she let this put her off? Does she heck.

Yet as a 54-year-old woman, the odds were stacked against her raising money for a new venture of any kind, let alone a digital bank. In the UK, just 1 per cent of venture capital funding goes to female-founded teams. But things perk up when millennial fintech cool guy Tom Blomfield is persuaded to join as chief technology officer, and potential investors fawn over him.

The simmering rivalry that emerges between them powers this page-turner. In Boden’s version of events, a rift caused by the loss of a major funding partner sees Tom and the techies conspire against her on HipChat (a precursor to Slack) in an attempt to push her out. Then, when she refuses to go, Blomfield storms off with most of the team to launch rival digital bank Monzo.

Given Boden’s penchant for bloody-mindedness, you wonder how many people told her not to write about the finer details of their break up — only for her to insist on adding more gore. While Blomfield has remained silent, I am sure there would be a bidding war for his side of the story if he ever wanted to tell it.

The drama does not end there, as the rivals race to get a banking licence, secure funding and then launch to customers. Although the book will be overshadowed by the bust-up, Boden’s repeated attempts to woo venture capital and private equity backers provide valuable lessons for entrepreneurs, as she has no qualms writing about the sector’s limitations or her own failures (a very tech trait). The moment when she finally totters off the Bahamas yacht of Harald McPike with a £48m investment has all the makings of a biopic.

Very much the star of her own story, Boden makes frequent mention of various backroom boys. Yet for all her crowing about the need to fix gender diversity in banking and fintech, there’s a surprising absence of any backroom girls. Tech investor Eileen Burbidge, who famously backed Monzo, has a cameo role at least.

The subtitle of the book “How I disrupted an industry” is a somewhat audacious claim, given the numbers of digital start-ups still jostling for position, not to mention Big Tech’s strides into the payments industry.

Nevertheless, Boden deserves plaudits for Starling’s push into business banking, supporting start-ups and entrepreneurs. In this respect, Boden practises what she preaches. At the time of writing, Starling is the only UK bank still accepting applications from new business customers who wish to access the state-backed bounceback loan.

Nevertheless, when judged on customer numbers, Monzo has about four times as many as Starling, which only passed the 1m milestone last year. Both banks have yet to turn a profit, although Boden has said she is confident of doing so by the end of this year — undoubtedly a factor in the timing of her tell-all book.

Banking on it: How I Disrupted an Industry by Anne Boden, Penguin Business, £20



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Stocks on Wall Street notch first back-to-back slide since March

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Global stock markets dropped on Tuesday, with companies whose fortunes are tied closest to the reopening of the global economy hardest hit.

Wall Street’s blue-chip S&P 500 index, which hit a high last week, fell 0.7 per cent to notch its first back-to-back declines since late March. The technology-focused Nasdaq Composite slipped 0.9 per cent.

Shares of travel and leisure companies led the retreat as global coronavirus cases rose. An index of stocks that Goldman Sachs estimates “stand to benefit the most in a reopening scenario” fell 2.6 per cent, with shares of hotel operator Marriott International declining 4 per cent and American Airlines falling 5 per cent.

Bank and financial stocks also slid after the European Central Bank gave a downbeat assessment of credit conditions in the pandemic-scarred bloc.

The declines come during what is expected to be a bumper quarterly earnings season. Blue-chip US companies are projected to report quarterly earnings growth of about 25 per cent year on year on the back of a strong economic recovery from the coronavirus.

But lofty equity valuations and a longstanding expectation that this earnings season would be stellar left little room for further improvements, said Trevor Greetham, investment strategist at Royal London.

“With stock markets, it is often better to travel than to arrive,” he added.

European equities also dropped on Tuesday after the region’s fragile economic recovery was called further into question by a survey suggesting that bank lending in the bloc was declining.

The Stoxx Europe 600 index closed down 1.9 per cent and the UK’s FTSE 100 dropped 2 per cent. The declines followed a survey from the ECB that raised questions over the durability of the region’s fragile economic recovery.

The report from the central bank, which comes ahead of its next monthly meeting on Thursday, showed that European lenders may restrict access to credit in the second quarter of this year.

“This reflects banks’ uncertainty regarding the severity of the economic impact of the third wave of the pandemic,” the ECB said.

The ECB has committed to spending €1.9tn on bonds, stepping up its purchases in recent weeks. Yet analysts fear policymakers may not communicate strongly enough how they plan to soften the blow from the health crisis.

“We do not expect to hear anything inspiring” from the ECB after Thursday’s meeting, said Nadège Dufossé, head of cross-asset strategy at fund manager Candriam.

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Analysts at Bank of America also forecast “no additional guidance for the months ahead” from the ECB. This, they said, could leave “room for market jitters ahead of the June meeting” while “the risk of a hawkish policy mistake can’t be ruled out”.

US government bonds strengthened as equities shifted lower. The yield on the 10-year Treasury, which moves inversely to its price, slipped 0.04 percentage points to 1.56 per cent.

The yield, which has climbed from about 0.9 per cent since the start of the year, influences borrowing costs worldwide and is highly sensitive to expectations about the central bank’s future interest rate decisions.

The US dollar climbed 0.1 per cent against a basket of peers but remained near its lowest level since early March. The euro was flat against the greenback at $1.2031 while sterling lost 0.4 per cent against the dollar to trade at $1.3933.

Brent crude settled 0.7 per cent lower at $66.57 a barrel.



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ExxonMobil proposes carbon storage plan for Texas port

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ExxonMobil is pitching a plan to capture and store carbon dioxide emitted by industrial facilities around Houston that it said could attract $100bn in investment if the Biden administration put a price on the greenhouse gas.

The oil supermajor is touting the scheme ahead of the US climate summit starting on Thursday, where President Joe Biden plans to announce more aggressive national emissions targets and hopes to spur world leaders to increase their own carbon-cutting goals.

Carbon capture and storage, or CCS, “should be a key part of the US strategy for meeting its Paris goals and included as part of the administration’s upcoming Nationally Determined Contributions”, said Joe Blommaert, head of Exxon’s low-carbon focused business, referring to the targets that countries are required to submit under the 2015 Paris climate agreement.

Oil and gas producers have sought to highlight their commitments to tackle emissions ahead of this week’s climate talks, which promise to heap pressure on the fossil fuel industry. BP pledged to stop flaring natural gas in Texas’ Permian oilfields by 2025, while EQT, the country’s largest natural gas producer, said it backed federal methane regulations.

The International Energy Agency has called carbon capture and storage, which uses chemicals to strip carbon dioxide from industrial emissions, “critical for putting energy systems around the world on a sustainable path”.

But the technology has struggled to gain traction as costs have remained persistently high. The most recent setback in the US came last year with the mothballing of the Petra Nova project, the country’s largest, which captured carbon from a Texas coal-fired power plant.

Many environmental groups have been critical of the oil and gas industry’s focus on carbon capture, arguing it is used to justify continued investment in oil and gas production and is not economical, especially as the costs of zero-carbon wind and solar power have plummeted.

Exxon said that establishing a market price on carbon — which has been attempted by a handful of US states, Texas not among them — would be important. The US government should “implement policies to enable CCS to receive direct investment and incentives similar to those available to other efforts to reduce emissions”, Blommaert said.

Exxon declined to comment on the carbon price it thought was needed to justify the investment, but said its plan would generate $100bn of investment from companies and government in the Houston region.

The company’s plans call for a hub that would capture emissions from the 50 largest emitting industrial facilities along the Houston Ship Channel, such as oil refineries and petrochemical plants, and ship the carbon by pipeline to reservoirs for storage deep under the sea floor of the Gulf of Mexico.

The project could capture and store about 100m tonnes of CO2 a year by 2040 if developed, Exxon said. That is 2 per cent of the roughly 4.6bn tonnes of US energy-related carbon emissions in 2020, according to the Energy Information Administration.

Exxon has been under intense pressure from investors, including a proxy fight with the activist hedge fund Engine No 1, to bolster its strategy for the transition to cleaner fuels. In February, it created a low-carbon business line that it said would spend about $3bn over the next five years.

Biden’s $2tn clean-energy focused infrastructure plan would expand carbon capture and storage tax credits. The administration said it would back 10 projects focused on capturing carbon from heavy industry, but it did not endorse a price on carbon.

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European stocks hit record after strong US earnings and economic data

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European equities hovered around record levels, the dollar dropped and government bonds nudged higher on Monday as markets continued to cheer strong economic data while also banking on continued support from the US Federal Reserve.

The regional Stoxx Europe 600 index gained 0.3 per cent during the morning to set a new record, before falling back to trade flat.

This follows a week of upbeat earnings from US banks as investors await results from big businesses including Coca-Cola and IBM later on Monday. Data released last week showed US homebuilding surged to a near 15-year high in March while retail sales increased by the most in 10 months.

The dollar, as measured against a basket of currencies, fell 0.4 per cent as bets on higher interest rates receded. The euro rose 0.4 per cent against the dollar to buy at $1.203. Sterling also gained 0.4 per cent to €1.389.

Federal Reserve chair Jay Powell told the Economic Club of Washington DC last week that the central bank would not taper its $120bn of monthly asset purchases until it saw “substantial further progress” towards full employment.

Haven assets such as government debt remained in demand. As prices ticked up, the yield on the benchmark 10-year US Treasury note fell 0.02 percentage points to 1.557 per cent, while the yield on the equivalent German Bund slid 0.01 percentage points to minus 0.271 per cent.

Investing convention assumes that US Treasuries and global equities move in opposite directions to cushion against falls in either asset class, but both have now rallied in tandem for an unusually sustained period.

The S&P 500, the blue-chip US stock index, has risen for four consecutive weeks to set new records. The yield on the 10-year Treasury has fallen from about 1.74 per cent at the end of March to just under 1.56 per cent on Monday as investors bought the debt. Treasuries and US stocks not have risen together for so long since 2008, according to Deutsche Bank.

Futures markets indicated the S&P would drift 0.2 per cent lower as Wall Street trading opens.

“I am not saying it’s a rational time in the markets,” said Yuko Takano, equity fund manager at Newton Investment Management. A reason for caution, she added, was signs of “bubbles” in alternative assets such as cryptocurrencies and non-fungible tokens. “There is really an abundance of liquidity. There will be a correction at some point but it is hard to time when it will come.”

“Markets may have become temporarily overbought,” strategists at Credit Suisse commented. “For now, we prefer to keep equity allocations at neutral” rather than buying more stocks, they said.

In Asia, Hong Kong’s Hang Seng index closed up 0.5 per cent and Japan’s Topix slid 0.2 per cent.

Global oil benchmark Brent crude fell 0.3 per cent to $66.57 a barrel.



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