FT : Revolut seeks to hedge Brexit risk with Luxembourg licence

Revolut seeks to hedge Brexit risk with Luxembourg licence
Fast-growing fintech company predicts London’s role as a financial centre could fade

\The UK’s fastest-growing financial technology company has applied for a licence in Luxembourg to cope with the potential disruption of Brexit.

Revolut, the digital payments company that has almost tripled its customers to 2.8m in a year, plans to set up an office in Luxembourg and is in talks with the country’s regulators about how many staff it needs there.

“It takes us six months to get an e-money licence and so we have applied for one in Luxembourg – just to be on the safe side,” said Nikolay Storonsky, the Russian-born co-founder and chief executive of Revolut.

The British government has promised to defend Britain’s position as a global fintech hub. However, some executives in the sector have warned that Brexit could undermine its attractiveness, especially if it technology specialists become harder to hire in the UK.

Mr Storonsky said he had no plans to leave London, adding “I love it here”. But he predicted the UK capital would fade as a financial centre because “more banks will cut back as they make less money, they are squeezed by regulation and face competition from fintechs”.

Revolut met UK regulators last year about applying for a banking licence but instead it decided to apply for one in Lithuania, partly to avoid the disruption of Brexit.

Mr Storonsky, who created the company in 2015 after working for Lehman Brothers and Credit Suisse, said he expected Lithuania to grant its banking licence next month.

But he added that it could still be many months before the company secured the necessary authorisations in each EU country to “passport” from Lithuania across the rest of the bloc.

Revolut launched three years ago in a crowded field of British pre-paid card operators seeking to disrupt traditional banks by offering cheap cross-border payments.

It quickly diversified into cryptocurrencies, insurance and small-business services and earlier this year it raised $250m from investors that valued it at $1.7bn.

According to its recently filed annual report, the company’s revenues increased more than fivefold to £12.8m last year, while its pre-tax losses more than doubled to £14.8m.

Its net cash generated from operating activities was a negative £33.3m last year, but Mr Storonsky said it started to break even on a monthly operational basis earlier this year.

Mr Storonsky said Revolut “has shown no signs of slowing down” and it now has z\sclose to 3m users who do $3bn of transactions a month. He predicted its revenues would quadruple this year after it signed up 80,000 people for its new metal card, offering extra services such as travel insurance and additional cash withdrawals for £12.99 a month.

This week, Mr Storonsky will visit Tokyo to announce plans for launching its services there later this year, which could make Japan its first Asian market. The company also plans to expand in the US, Canada, Australia, New Zealand, Singapore and Hong Kong.

Revolut employs more than 500 people, many in support and technology roles in Poland and Russia. It recently moved out of the Level 39 start-up accelerator in London’s Canary Wharf into its own offices a few streets away and plans to open another support centre in Europe.

FT : Avon lady gets a digital makeover

Avon Chart :


Avon lady gets a digital makeover
Direct sales group puts new emphasis on social media to promote cosmetics

The Avon lady is getting a digital makeover in a belated campaign by the beauty company to drag its direct sales business into the 21st century.

Up to a million members of Avon Products’ global army of doorstep sellers are to receive training by the end of the year in how to exploit social networks to promote cosmetics.

The push into tech-driven “social selling” is part of what Avon executives are calling a revolution at the company, founded in 1886 by a door-to-door bookseller.

Yet the initiative is likely to encounter scepticism given Avon’s long struggle to adapt to the age of ecommerce. 

“Over the last number of years we lost our way,” Jan Zijderveld, who was installed as chief executive in February, told the Financial Times. “But the beauty market is growing, the direct selling market is growing – the core and essence of what Avon has to offer is still absolutely relevant.”

It is Avon’s latest attempt to reverse a multiyear slide in revenues and an exodus of sales reps. Previous efforts to harness technology have failed to spur a turnround.

Avon, based in west London and listed in New York, has lost to rivals in the booming yet rapidly changing beauty sector. Its market capitalisation has collapsed from 2004 highs of almost $22bn to $1.1bn.

The digital training forms part of $300m investments the company is making, disclosed at a presentation for investors on Friday. At the same time it is also planning to cut $400m worth of costs by 2021. 

As part of the shake-up Mr Zijderveld, who spent 30 years at Unilever, is planning to reduce the number of products Avon offers. “We have a huge tail – many products are selling absolutely minimally,” he said.

He wants Avon Ladies, who sell via printed brochures, to also become “e-representatives”, targeting contacts through Instagram, Twitter and Facebook. “Friends selling to friends … You trust your friends, the lady you may know.”

“We’re willing to question everything and do things in a new way,” he added. “But the strategy is one thing – in the end it’s about execution.” 

Savvier operators have outflanked legacy companies with techniques to target younger image-conscious shoppers such as partnerships with YouTube personalities.

Jonathan Myers, a former Procter & Gamble executive who joined last year as chief operating officer, said: “If I were to say we need to play catch-up in e-commerce, that would be a good example of British understatement. What we need to do is actually trigger a revolution inside Avon.”

Having separated its North America business in 2016, Avon’s largest markets include Brazil, the UK and South Africa. It is targeting expansion in other countries including India and China.

Last week it said it would sell offices in Rye, New York in a move that would cut 100 jobs. Activist investors this year demanded Avon put itself up for sale, although a truce was reached in March when Barington Capital secured a boardroom seat.

>>> Henkel sees further acquisition potential (translated)

Henkel sees further acquisition potential (translated)
23 SEP 2018
Henkel [ETR:HEN3], the German household chemical company, sees further acquisition potential, Chief Financial Officer Carsten Knobel told Boersen-Zeitung.
During a conversation with the German-language daily, he said acquisitions are a particularly likely strategy in cases where the company enters a new business category.
Asked whether the skincare operations being sold by Swiss food company Nestle [SWX: NESN] would be of interest, he merely said that Henkel is always reviewing the market for possible takeovers. Henkel is big enough to grow in all its major divisions, including beauty care, he said.
Acquisitions since 2012 have brought Henkel more than EUR 3bn in additional revenues, he noted. For the company's current strategic cycle, it has defined M&A as an integral component of its strategy. In 2017, Henkel spent almost EUR 2bn on acquisitions, according to the interview. However, Knobel said the company currently is integrating the many acquisitions it made in recent years.

>>> Endemol Shine suitor Liberty Global withdraws from bidding - report

Endemol Shine suitor Liberty Global withdraws from bidding - report
23 SEP 2018
Endemol Shine suitor Liberty Global [NASDAQ:LBTYA] has withdrawn from the bidding for the Netherlands-based television production company, The Irish Independent on Sunday reported. The newspaper cited a Bloomberg report, which cited people with knowledge of the matter for the information.
Endemol Shine has been put up for sale by its owners Twenty-First Century Fox [NASDAQ:FOXA] and the private equity firm Apollo Global Management [NYSE:APO].
The deadline for second-round offers for Endemol is within weeks, according to the sources.
Interested parties include the UK-based broadcaster ITV [LON:ITV] and the French content production company Banijay Group, the sources said.
Endemol is looking for a sale price exceeding EUR 2.5bn (USD 2.94bn), but the company’s debt of more than USD 1.6bn and concerns about the future prospects of established reality television shows that Endemol is known for may make achieving that valuation difficult, according to the sources cited by the report.
The California-based artist management company Endeavour (formerly William Morris Endeavour) is keeping an eye on Endemol and may be interested depending on the price, according to one of the people cited by the report.
Spokespersons for Endemol, Banijay, Endeavour and ITV refused to comment, the item said.

Background:
The UK-based television production company All3Media, which is backed by Liberty Global, was also mentioned by a Sunday Times report on 16 September as a potential bidder for Endemol. Banijay has backing from the French media group Vivendi [EPA:VIV], the item said.
Endeavour’s shareholders include the private equity firm Silver Lake Partners and the Japanese technology group Softbank [TYO:9984], as previously reported.
The report appeared in the Sunday Business section of the print edition of The Irish Independent on 23 September.

ZH : Why We're Ungovernable: Germany's Merkel Demoted To Figurehead

Why We're Ungovernable: Germany's Merkel Demoted To Figurehead
by Tyler Durden
Sun, 09/23/2018 - 07:00
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You don’t see “Germany” and “ungovernable” in the same headline very often. But that might be about to change, as Chancellor Angela Merkel, for the past decade the central pillar of Europe’s Establishment, loses influence both at home and abroad.
First came a wave of populist gains across Europe (read anti-euro, anti-austerity, anti-immigration), culminating with an actual victory in Italy’s most recent election. Then came the rise of Germany’s own populist movement, Alternative for Germany, or AfD, which has become a legitimate power in some parts of the country.
And now Mekel has apparently lost control of her cabinet. From yesterday’s New York Times:

BERLIN — For nearly two weeks Chancellor Angela Merkel tried to find a way to fire her own domestic intelligence chief, a man who had publicly contradicted her and become the darling of the far right for questioning the authenticity of a video showing angry white men chasing an immigrant.
But she couldn’t — not without risking the collapse of her fragile government.
Hans-Georg Maassen, the rebellious spy, has powerful friends, among them his immediate boss, Interior Minister Horst Seehofer, the leader of the Bavarian conservatives and one of Ms. Merkel’s pricklier coalition partners.
Instead of firing Mr. Maassen, Ms. Merkel had to allow Mr. Seehofer to promote him. Mr. Maassen will get a pay raise of about 2,500 euros a month.
“You couldn’t make it up,” said Andrea Römmele, a professor of political science at the Hertie School of Governance in Berlin.
If the episode shows anything, analysts said in the aftermath, it is that Ms. Merkel is growing more feeble even as the far right — in Parliament, online and on the streets — is getting stronger.
The chancellor’s inability to act decisively has exposed the spectacular weakening of a leader who not long ago was seen as a key defender of the liberal order. That view was cemented by her decision in 2015 to welcome to Germany hundreds of thousands of migrants from the Middle East, Africa and elsewhere who were not wanted by neighboring European countries.
Three years later, as a nationalist and populist backlash is spreading, Ms. Merkel has so little authority left that many here wonder how much longer she can last.
“Merkel was an authority at home and abroad,” Ms. Römmele said. “She stood up to Trump, negotiated peace deals and passed the laws she wanted to pass. She was the queen of consensus.”
“Now she can’t even fire the head of an agency,” Ms. Römmele added. Six months into her fourth term, “she has become a lame duck.”
Ever since an inconclusive election last September, Ms. Merkel has stumbled from one political crisis to another. In the election, her party saw a significant decline in voter support and a far-right party, the Alternative for Germany, entered Parliament for the first time in more than 60 years.
In the end it took six months to form a government, an unwieldy one straddling left and right, with Ms. Merkel perched precariously at its center.
That government almost fell apart in the summer, when Mr. Seehofer, the interior minister, challenged the chancellor over her immigration policies and demanded the reintroduction of border controls with Austria.
That earlier episode was just a foretaste of how the Alternative for Germany, or AfD, has been using its toehold in Parliament — where it now has the megaphone of being the leading opposition party — to reorder German politics.
Mr. Seehofer’s party, the Christian Social Union, has been veering sharply to the right ahead of state elections in Bavaria next month, trying to fend off a challenge from the AfD, which is on course to deprive it of its absolute majority.
Where to now? The NYT article’s last sentence gives a clue:
“Mr. Seehofer’s party, [Merkel’s coalition partner] the Christian Social Union, has been veering sharply to the right ahead of state elections in Bavaria next month, trying to fend off a challenge from the AfD, which is on course to deprive it of its absolute majority.”
Centrist coalitions faced with a non-mainstream challenge have two choices: Either bring in new partners from the other end of the spectrum (in this case the left) or co-opt the right wing populists by adopting some of the latter’s policies. The Christian Social Union has apparently chosen door number two.
That pulls the central government towards the populists’ point of view, which might be healthy, since unlimited immigration is clearly failing. Or it might be destabilizing since a dominant, pro-European-integration Germany is all that’s keeping the “European Project” on track at the moment.

And let’s not forget that all this is happening in the context of soaring debt and peripheral country banking crises (Italian banks only exist because of ongoing ECB bailouts while Spain’s banks are on the hook for 5% of GDP lent to Turkey) that could easily spread to the core. The current global expansion, meanwhile, is now the longest on record and ought therefore to end shortly.
In other words, big, probably negative changes are coming even with a stable German government. Let Germany descend into political turmoil and the difficult becomes impossible. Get ready for a massive euro devaluation.

TechCrunch : A Lime scooter rider died this morning in Washington, D.C., marking

A Lime scooter rider died this morning in Washington, D.C., marking the second fatality this month
Connie Loizos@cookie / 1 day ago

Lime, the 18-month-old, San Francisco-based company whose bright green bicycles and scooters now dot cities throughout the U.S., launched a pilot program in Tacoma, Washington, today, but that tiny victory might have felt short-lived. The reason: on the opposite side of the country, a Lime rider was killed today by an SUV while tooling around Washington D.C.’s DuPont neighborhood. The local fire department shared video of the rescue, which shows that the victim, an adult male, had to be pulled from the undercarriage of the vehicle.
It’s the second known fatality for the company following a death earlier this month in Dallas, when a 24-year-old Texas man fell off the scooter he was riding and died from blunt force injuries to his head.
On the one hand, the developments, while unfortunate, can hardly come as a surprise to anyone given how vulnerable riders or e-scooters are. E-scooter use is on the rise, with both Lime and its L.A.-based rival Bird, announcing this week that their customers have now taken north of 10 million rides. At the same time, city after city has deemed their use on sidewalks illegal out of fear that fast-moving riders will collide with and injure pedestrians. That leaves riders sharing city streets with the same types of giant, exhaust-spewing machines that they hope to increasingly displace. In fact, sales of traditional SUVs has continued to surge, thanks in part to low unemployment, high consumer confidence, and Americans’ enduring love with gigantic vehicles.
One solution to the issue, and one for which the e-scooter companies and their investors have been advocating, are protected lanes that would allow e-scooters to be operated more safely. Bird has even publicly offered to help fund new infrastructure that keeps cyclists and scooter riders safer.
Another possible answer would appear to be mandating the use of helmets with e-scooters, though California evidently disagrees. On Wednesday, Governor Jerry Brown signed a billinto a law that states Californians riding electric scooters will no longer be required to wear helmets as of January 1.

TheVerge : Trump’s Space Force may come with a big price tag, and no one can agr

Trump’s Space Force may come with a big price tag, and no one can agree how to structure it

A lot of debate this week over how to make the thing

Two months after Vice President Mike Pence announced the plan to create a Space Force, the military is fighting over how to make it happen. This week, an internal Air Force estimate leaked to the press that said the Space Force would cost nearly $13 billion to create. And an Air Force organization is arguing that we shouldn’t create the Space Force at all, but rather rename the Air Force.
This is just the beginning of a debate about the right way to move forward with the Space Force, says Brian Weeden, a space expert at the Secure World Foundation, a nonprofit that specializes in space security. Creating a new branch of the military is going to require a lot of complicated bureaucratic reshuffling. “The other piece of it is, how do we create something that is going to placate Trump while doing what actually needs to be done,” Weeden said.
Here are all the Space Force updates that happened this week and what they mean:
A HEFTY PRICE TAG
On Monday, multiple outlets reported that they had received an internal memo, signed by US Air Force Secretary Heather Wilson and dated September 14th, that said creating both a Space Force and a unified space command would cost $3.3 billion for fiscal year 2020. The memo, tweeted out by Inside Defense reporter Courtney Albon, showed that more than 13,000 new personnel would be needed, as well as a five-year budget of $12.9 billion.
That’s a lot of money to create a separate branch of the military that would effectively do what the Defense Department does now. The DOD has launched many satellites that do surveillance, missile detection, and communication. And the people who oversee these technologies are spread throughout the Department of Defense, situated in the Air Force, the National Reconnaissance Office, and the Navy. The Space Force, presumably, would take the people working on space missions within those branches and put them in one central branch.
Courtney Albon@calbon
·
In a new memo from @SecAFOfficial, the Air Force estimates a new Space Force will cost $12.9B over five years ($3B in FY-20) and proposes integrating the NRO into the new Space Development Agency https://insidedefense.com/daily-news/air-force-projects-space-force-will-cost-129-billion-through-2025 …
Air Force projects Space Force will cost $12.9 billion through 2025
NATIONAL HARBOR, MD -- The Air Force estimates establishing a new space service would cost $12.9 billion from fiscal years 2020 to 2025 and require an additional 13,000 personnel, according to a new...
insidedefense.com
Courtney Albon@calbon

Here’s a breakdown of the Air Force’s cost estimate: pic.twitter.com/zrYS2zdxy2
8:51 PM - Sep 17, 2018
Twitter Ads info and privacy

But the leaked memo seems to be calling for a bunch of new people and infrastructure, in addition to what the military already has. “Reading through the remarks, it seems she’s talking about those people stay there now, and we add a bunch of new people and new budgets,” Weeden says.
Of course, this memo only refers to what the Air Force thinks will be needed to create a Space Force. No one told the Air Force to come up with an estimate, but Secretary Wilson said it was the branch’s duty. “As airmen, we have a responsibility to develop a proposal for the president that is bold, and that carries out his vision,” Wilson said on Monday during the Air Force Association’s annual Air, Space and Cyber Conference. But the Defense Department may ultimately choose to completely disregard what the Air Force suggests. We won’t know what the real arrangement will be until President Donald Trump’s budget request comes out in February.

“It’s all part of the process — seeing the sausage being made,” Marcia Smith, a space policy expert and founder of SpacePolicyOnline.com, tells The Verge.
But other people see this leak as an attempt to derail the Space Force, since it’s harder to get Congressional support for an expensive idea. “This is the highest estimate I think you could possibly come up with,” Todd Harrison, a budget analyst at the Center for Strategic and International Studies, told reporters on Thursday.
“This could be a poison pill,” says Weeden. “By putting it out there, a bunch of congressman are going to be like, “Oh yeah we can’t afford that,’ and undermine it.”
WHAT ABOUT THE AEROSPACE FORCE INSTEAD?
Meanwhile, the Air Force Association, a nonprofit organization that promotes the Air Force, released a paper on Monday, arguing against the Space Force. The group argues that the Air Force has been managing most of the military’s space missions for decades now and those capabilities shouldn’t be taken away.

“The US Air Force has led the Armed Forces in establishing America’s space capability such that it is unrivaled in the world,” the Association wrote in the paper. “Today, to split up the well-integrated set of air and space capabilities that have been organized to seamlessly contribute to America’s military capabilities would result in more harm than good.”
Instead, simply rename the Air Force to the Aerospace Force, the group argues. It’s a move that makes sense for the nonprofit, since supporting the Air Force is their top priority, according to Weeden. “It was not surprising that an institution that supports the Air Force would be against taking away a significant amount of people and mission from the Air Force,” he says.
However, the AFA does make a few good points. The organization argues that there is a strong link between air and space technologies, which is why the two should stay under one branch. Many of the technologies needed for aircraft are used in spacecraft as well. NASA develops both kinds of technologies; it is the National Aeronautics and Space Administration, after all.

The AFA also argues that there aren’t any weapons that have been developed and deployed in space right now. Most of the military’s space assets revolve around information gathering and communication. “Currently there are no space arms which are fundamental to setting up an armedservice,” the AFA said in its statement.
Plus, these arguments aren’t new. “Actually a lot of the arguments they put forward were the arguments that Sec. Wilson and others were putting out before the president’s directive,” says Smith. “That this is not the time to be dividing things. These were the previous arguments form the Pentagon.”
DEBATE WITHIN THE DOD
Deputy Defense Secretary Patrick Shanahan gave a speech at the Air Force Association’s Air, Space and Cyber Conference on Wednesday, where he said that creating the Space Force is a “complicated process.” Mainly, no one agrees about how the branch should be structured, he said.
Shanahan noted that one debate is over whether to keep the space acquisitions — or the procurement of new space technologies — and space warfighting decisions within the same organization. “We get into these arm-wrestling contests where there will be no separation between the fighter and the acquisition process,” he said during his speech. “And then you have some people like me that are saying, ‘Well, I don’t know. Maybe we should have separation.’ You’ll see that’s kind of where the debate is.”

Combining warfighting with procurement seems like a strange move, says Weeden. Those two functions are separate elsewhere in the military, with different chains of command. One is the organize, train, and equip function, or OTE, which involves making decisions about the types of equipment and technologies the military needs and then training personnel to use those technologies. This is what the Air Force, Navy, and Army do, and technology acquisitions fall under these branches as well. The warfighting chain of command is responsible for deciding how to implement the technologies and personnel that the military branches comes up with. Warfighting is done under the US’s unified chains of command, such as Centcom or USStratcom.
Right now, space warfighting is done within USStratcom, which oversees nuclear deterrence. However, Congress recently proposed making the space warfighting chain of command its own separate organization called the US Space Command, in the National Defense Authorization Act (NDAA) for fiscal year 2019. Now it seems as if there is some debate over whether the Space Force should also include space warfighting. “The space force is the acquisitions and service, and the US space command is the warfighter,” says Weeden. “Traditionally those are two separate things and they seem to be lumping them together.”
SO WHAT NEXT?
The Department of Defense has to come up with a complex plan on how to create the organization before February. That way Congress can consider the proposal for the next NDAA. “They’ve been given a very short schedule to do all this, and it’s been a long time since the Department of Defense has tried to create a new department,” says Smith. “I think it’s going to be a challenge to pull something together, but they are the Pentagon, and they follow orders.”
Meanwhile, not everyone is sold on the idea of a Space Force yet, and with midterm elections coming up, the makeup of Congress could shift very soon. That might put Space Force’s chances in jeopardy, especially if more stories about soaring budgets come out. Still, nothing is certain until the president’s budget request is published next year, which is when we’ll get a definitive breakdown of the Space Force structure and cost. Then it’s up to Congress to decide whether they want it.

FT : Fintech pair aim to disrupt industry with investments for millennials

Fintech pair aim to disrupt industry with investments for millennials
New funds from Revolut and Plum will appeal to smartphone generation

Europe’s asset management industry is likely to have an abrupt wake-up call as two of the fastest-growing fintech companies, which aim their products at millennials, roll out new investment propositions.

Revolut and Plum have attracted close to 3m users in the past two years. They have their sights set on disrupting the industry with cheap and easy-to-use investments that suit customers traditional managers find hard to attract.

“The goal is not to be just another medium-size bank — we want to become the Amazon of finance,” said Chad West, head of marketing at Revolut, which is in the process of offering exchange traded funds to its 2.6m users across Europe.

Plum, a robo-adviser tool used via Facebook’s Messenger service, has focused on helping its 200,000 users save money and reduce spending. Now, though, it has turned its attention to investments and is rolling out six funds to all its customers on Monday.

The start-up has partnered with Vanguard, Standard Life Aberdeen and Legal & General Investment Management.

A beta version of the offering, which was open to 2,000 customers, has been running over the summer and £500,000 has been invested so far.

Plum will offer three Vanguard funds designed for different risk profiles: conservative, balanced and growth. It will also provide access to three themed funds: an LGIM tech fund, an SLA ethical fund and a Vanguard emerging markets fund.

Victor Trokoudes, Plum chief executive, said the themes were chosen to appeal to the interests of millennials and that the company would consider rolling out funds focused on the environment, healthy eating and artificial intelligence.

“We are trying to open up investments to millennials,” said Mr Trokoudes, a former Morgan Stanley trader who launched Plum two years ago. “I think we will see this massive wave where people get more comfortable investing money and grow their funds over time.”

Plum will charge investors £1 a month as well as an annual fee of 0.15 per cent of their assets. Additional fund charges range from 0.22 per cent to 0.9 per cent.

Revolut, a challenger bank that adds up to 7,000 customers a day, is in the process of applying for an ETF broker licence. It has agreed a deal with an unnamed ETF provider to sell its funds and provide custodial services.

The ETF proposition will be part of a commission-free trading service for stocks and other securities that the bank plans to unveil in coming months.

Mr West said Revolut was following the lead of Robinhood, a commission-free investing app that sells ETFs in the US, but would do so globally. He said it planned to launch in the US, Canada, Hong Kong, Singapore and Japan this year.

Mr West added that, though Revolut’s customers were typically aged 25 to 35, it was not a service just for younger investors. “A lot of 40-plus customers invest in stocks and ETFs,” he said. “We see this as a real opportunity to make this a service for all and not just for millennials.”

Bob Steers, chief executive of the $60bn US investment company Cohen & Steers, said traditional managers that did not provide strong returns and value for money were in for a rude awakening.

“With data becoming ubiquitous and younger generations doing everything on mobile devices, it’s not hard to imagine in the not-too-distant future someone just turning on their phone and saying, ‘I want a manager with top quartile performance, bottom quartile fees and an environmental, social and governance overlay.’ Those managers will be identified instantly,” he said.

“Having armies of salespeople and hundreds of products that mostly don’t beat their benchmarks is not going to be worth anything.”