Veneto banks, bitcoin and Southern Europe
Talks involving Intesa Sanpaolo, government authorities in Rome and European Union regulators are ongoing as a deal to retrieve performing portions of the troubled Veneto banks — Veneto Banca and Popolare di Vicenza — draws closer in Italy. “What is certain is that there won’t be a bail-in,” an unnamed source told a Reuters reporter. “That is to say senior bondholders and depositors will not be hit.” At the same time Italy has to comply with European rules that prevent state capital from being used to rescue an ailing financial institution. The solution being worked on seeks to carve out ‘good’ and ‘bad’ banks. The extent of Intesa Sanpaolo’s involvement remains undefined, as the board is reportedly still discussing a contribution to the rescue. UniCredit has reportedly declined a role.
The Italian deal comes on the heels of the recent public-private arrangement for Banco Popular Español, with a Greek package too seeming inevitable in the near future. “Leaving aside the inconsistent application of a one-size-fits all European directive to troubled lenders,” writes Patrick Houlihan of Lafferty Research, “the most important take-away from the last few weeks is that crisis continues to haunt the European banking system, especially in Southern Europe. The Spanish solution may not be possible in many cases, while state intervention along the Italian lines would first have to be approved by regulators at the European level, which would be difficult to achieve.” Read more of his analysis in this month’s Lafferty Global Intelligence.
Competition is hotting up in America’s mobile P2P space: payments service Zelle is set to impact the mass market, with instant bank transfers an attractive USP. In response, PayPal’s Venmo has announced that it too will shortly be able to send funds to bank accounts within minutes — at a cost of 25 cents per transaction. Currently it takes a day or more to transfer funds. The new “instant transfers” service, which is also coming to PayPal over the summer, requires eligible MasterCard and Visa debit cards. According to TechCrunch, “PayPal’s combined services of PayPal, Venmo and Xoom processed $64 billion in 2016, and Venmo is the fastest-growing of PayPal’s products. Venmo’s service increased transactions 135% last year to reach $17.6 billion in 2016.”
As pointed out by Marc Hochstein last week, a key feature of bitcoin is what could be called a “censorship resistance” that allows for freer flow of goods and services without any ethical, political or indeed politicised brakes applied. Two bitcoin stories from opposite sides of the planet demonstrate that the cryptocurrency’s onward march continues, undimmed by concerns in some quarters about its consequences for economies and societies. In New York, the state’s financial regulator is now inspecting bitcoin startups, while in Japan, the most popular contactless smart cards are adding bitcoin hardware wallets.