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Fintech Belgium Summit 2017 - Societal Impact - Ebury by Andras Mecser


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Brexit scenario by Ebury.
Andras Mecser

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Fintech Belgium Summit 2017 - Societal Impact - Ebury by Andras Mecser

  1. 1. +44 (0) 20 3872 6670 | | Ebury Belgium Fintech Summit 2017 Societal Impact of Fintech
  2. 2. 01 Ebury 02 Potential implication of Brexit on Ebury's business model 03 Belgium as the first choice for Brexit plan Agenda2 +44 (0) 20 3872 6670 | |
  3. 3. Ebury thrives to be the GTA for SMEs3 Working with 24,000+ businesses & organisations 13 Countries, 15 Offices. London, Manchester, Madrid, Málaga, Lisbon, Amsterdam, Brussels, Zurich, Paris, Dusseldorf, Athens, Warsaw, Milan, Toronto and Dubai Traded $8.2bn in foreign exchange in the last 12 months Backed by well-known and respected technology investors Direct “SUPE” SWIFT member and SWIFT gpi member. Over 20,000 transactions per month. Capability in over 110 currencies. Delivered to 214 jurisdictions. Ebury is one of Europe’s fastest-growing fintech companies, providing FX liquidity, volatility risk management, international payments and trade finance to SME’s. +44 (0) 20 3872 6670 | |
  4. 4. We are a payment institution, not a bank • Ebury Partners UK Limited is an Electronic Money Institution regulated by the FCA in the UK and Passported across the EEA. Reg. No. 900797 • Ebury Partners Belgium BV is registered as a Payment Institution with the NBB in Belgium. • Ebury Partners Canada Limited is regulated by FINTRAC for Money Exchange Dealing and Money Transferring. Reg No. M17949017 • All our products (incl. FX hedging) are payment solutions not financial instruments. • This limits our risk when offering these products to our clients and make us more nimble. We facilitate B2B cross-border transactions, not B2C or in-country transactions • Ebury’s core capabilities are built to support B2B transactions and to offer global transaction services to SMEs • FX hedging capabilities are our main USP and therefore we are not focusing on B2C transactions with no FX component (e.g., in-country transactions) 1. Cross-border payments • Make cross-border payments simple and fast in 110+ currencies, including illiquid EM currencies 2. FX hedging with liquidity • Great breadth of FX hedging solutions and offer hedging capabilities in 65 currencies • Minimise cash tied up in forward contracts hedging currency risk 3. Cash management and bank account provision • Provide designated currency accounts in 68 currencies for international cash management purposes • Collect funds from buyers in different countries 4. Direct Lending – Import Finance • Working capital financing associated with the import cycle 4 Ebury business model and products PRODUCTSBUSINESS MODEL +44 (0) 20 3872 6670 | |
  5. 5. Ebury`s journey so far5 2014 Launch of Trade Finance in 2014 and opening Amsterdam office +44 (0) 20 3872 6670 | | 2009 Founded 2011 Madrid office opened 2011 First trade and expanded to Málaga 2016 Over 400 employees in 2016 and expansion to Zurich, Paris and Athens 2015 Expanded to Warsaw in June 2015 and Raised $83m in November 2015 2017 SWIFT gpi members in 2017. Opened offices in Toronto, Dubai, Lisbon, Milan, Brussels, Manchester & Dusseldorf. Over 550 employees.
  6. 6. Brexit implications - business model @ risk 1 Regulation • Risk of potentially losing Ebury’s passporting rights • Uncertainty of access to the single market resources based on the changing bilateral agreements between UK and the EU member states • Potential negative impact on the operational stability through regulatory changes in the UK after EU separation 2 Risk • Funding needs due to sharp market move • Credit worthiness of UK importers • Credit worthiness of underlying clients 6
  7. 7. Brexit scenario planning - Project Eurogeddon7 Ebury needed to define a sustainable regulatory structure that enables the group to offer its services across Europe regardless the outcome of Brexit negotiations ensuring continuous service for our clients Three different scenarios as a Brexit outcome: Scenario 1) UK still has access to the single market --> no change in license requirements Ebury would be able to operate under its current cross-border business model (UK FCA regulated firm, passporting its license to Europe) Scenario 2) UK loses its access to the single market, rest of EEA intact --> one API license in an EU jurisdiction passported across Under this scenario, Ebury would service the UK client base under the FCA license and service the European client base under an EU API license (current UK model replicated out of a European country) Scenario 3) UK loses its access to the single market, other European countries leave the EEA --> local regulation across European hubs and the UK Ebury would require to obtain API licenses in all the jurisdictions where it offers services Ebury UK (FCA license) Ebury EU (EU license) Ebury UK (FCA license) Ebury Belgium (NBB license) Ebury Spain (BoS license) Ebury Germany (BoG license) Ebury Italy (BoI license) Scenario 2 Scenario 3
  8. 8. Key for Ebury was the minimal disruption to its current business model.. Selection framework Considerations on regulations • Proactive regulatory attitude • Regulatory experience • Process of getting regulated (complexity and time) • Flexibility in onshoring /offshoring functions • Legal enforcement framework Ongoing administrative requirements • Corporate Governance and Employment Law Considerations relating to operational costs • Tax considerations • Reporting requirements Other considerations • Regulatory stability and European embeddedness • Accessibility and language consideration 8
  9. 9. Belgium and Ireland were short listed Country assessment1: Proactive regulation Regulatory experience Process of getting regulated (complexity and time) Flexibility in onshoring /offshoring functions Legal enforcement framework Corporate Governance and Employment Law Tax considerations and reporting requirements 10 1 Ebury`s own analysis
  10. 10. 11 Belgium was the preferred option mainly due to lower running cost and more proactive regulation +44 (0) 20 3872 6670 | | Regulator Process Requirements Lobbying Legal enforcement framework and employment law Other considerations Language • Two supervisors • NBB – licenced entities, single point of contact • FSMA – financial consumer protection • Forward thinking regulator with dedicated Fintech team • No enforcement against PIs to date with maximum fine lower than Ireland • Experienced entity (14 APIs and 5 EMIs already registered) • Faster licensing process assessment up to 3 months • NBB requires initial and pre-application meetings • Company incorporation process takes 1-2 months • Local corporate tax at 34% • EMIR reporting required • Local office required • 2-3 directors/ key employees on the ground (part-time) • 24/7 presence not required for the above • No local supervision • Firms could lobby on legislation derived from network between EU institutions and Belgian firms • Unfair dismissal after 6 months • Slower contractual enforcement (6-12 months) • Following English law possible (might change w/Brexit) • EU capital • Increased terror threat • French/Dutch • Direct communication available in English
  11. 11. 100 Victoria Street, London SW1E 5JL | +44 (0) 20 3872 6670 | © Copyright 2009-2017 Ebury Partners UK Limited. Company registered in England and Wales (registered no. 7088713). Registered office: 3rd floor, 100 Victoria Street, Cardinal Place, London, SW1E 5JL. Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Authorised Electronic Money Institution (Financial Services Register No. 900797).