Revolut strikes deal with Mastercard to accelerate expansion into the US - CNBC

Revolut's logo is displayed on a smartphone next to a Mastercard-branded debit card issued by the U.K. fintech firm.

Revolut

British fintech firm Revolut has partnered up with Mastercard to help it expand into the U.S. by the end of the year.

The deal means all of Revolut's first debit cards in the U.S. will be issued with Mastercard, while a minimum of half its European cards will carry the payments giant's branding.

Revolut CEO Nik Storonsky said the firm would also use some of Mastercard's new technology, including a platform that enables payments to be sent directly from one card to another.

"When we were trying to launch in the U.S. two years ago, Mastercard became our first offer for it," Storonsky told CNBC in a phone interview, adding he thought the company had "great tech and great infrastructure."

The deal arrives on the heels of a separate partnership Revolut struck with Mastercard's largest rival, Visa, a few weeks ago, which it said would help the firm hire an additional 3,500 people by the summer of 2020 to support its global expansion.

But this new tie-up means that Mastercard will get first dibs when it comes to Revolut cards issued in the U.S. Visa will still be the card network behind 75% of Revolut's cards beyond Europe though, and has said it still plans to support the firm's U.S. launch at some point in the future.

"What we've been working really hard on is accelerating Revolut's launch in the U.S.," Sue Kelsey, Mastercard's executive vice president of global prepaid and financial inclusion, told CNBC. "This will allow us 100% issuance of Revolut accounts on Mastercard" to begin with, she added.

Revolut is one of the many digital challenger banks which have gained a foothold in Europe by offering consumers colorful cards and slick mobile apps. Despite having no branches, the likes of Revolut, Monzo and N26 have gained millions of users between them.

London-based Revolut has already hired 30 employees in the U.S. and says it plans to triple its headcount there over the next six months. Rival fintech firms Monzo and N26 started rolling out in the U.S. earlier this year.

Revolut started out in 2015 with a prepaid debit card and foreign exchange service that let people spend abroad without paying high fees. It has since expanded its suite of products to add support for business accounts and trading in cryptocurrencies and, more recently, shares.

But like many of its peers in the fintech space, Revolut has yet to generate an annual profit. The company's most recent accounts showed losses more than doubled in 2018 to £32.8 million ($42.6 million) from £14.8 million a year earlier. TransferWise is one notable exception in the industry, having been profitable for three straight years.

Still, Revolut has been growing at a rapid pace, and is currently signing up between 800,000 and 900,000 new users a month.

Banking challengers have not been without their teething issues. U.S. start-up Chime recently suffered a widespread outage that left millions of customers without access to their accounts. According to fintech consultancy 11:FS, many upstarts in the U.K. faced similar problems in the early days of operating as they relied on third parties for certain processes.

And Revolut hasn't been immune to controversy, having been hit by a series of negative headlines towards the start of the year. Several reports highlighted a toxic work culture at the firm and alleged issues with compliance. The company denies it ever failed to meet any regulatory requirements, but admitted mistakes were made with regard to culture.

Challenger banks have proved to be a hot investment target for venture capitalists looking to tap into their wild growth. According to data firm CB Insights, the space saw $649 million in venture funding across 17 deals in the second quarter of the year.

Revolut is currently in talks with investors for a new round of funding that could close later this year. A recent Sky News report said the company is aiming to raise $1.5 billion, in a funding deal comprised of $500 million in equity and $1 billion in convertible notes. Storonsky declined to comment on that report.

WATCH: What is fintech?

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2019-10-22 07:03:18Z
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Revolut will partner with Mastercard for US launch - Quartz

Mastercard and Visa have been battling each other for market share for decades. These days, their competition is increasingly taking place via fintech startups.

An example is Revolut, which will use Mastercard when it launches in the US this year, according to a statement. The London-based financial app and debit-card operator will also partner with Mastercard for at least 50% of existing and future cards issued in Europe (Visa will have the other half). Revolut has an EU banking license from Lithuania’s central bank and will partner with a US-licensed bank when its rolls out in America.

In an effort to strike back, Visa recently said it will partner with Revolut as the startup expands in 24 new markets, for a total of 56 around the world. And while Revolut will start out issuing Mastercard in the US, Visa says it will get a chunk of that business from Revolut over time. Revolut says 75% of its cards outside of Europe will eventually be Visa branded.

As more transactions flow through digital startups instead of traditional banks, fintech firms represent increasingly important partnerships for the card networks. These startups could also prove vital for the card networks’ continued grip on payments, as physical cards become less important and transactions become more virtual. Four-year-old Revolut offers foreign exchange and stock and crypto brokerage as well as peer-to-peer payments. It says it has 8 million customers, and more than 1 million of them use its services every day.

Visa executives have confessed that they were slow to chase the fintech craze but say they are catching up. Mastercard claims it is the clear leader in the fintech game: The card network says it is the “partner of choice” for 60 digital banks and financial startups, which is twice as many as two years ago.

“We are very confident,” said Sue Kelsey, executive vice president and global head of prepaid cards at Mastercard. “I don’t think this is a draw by any stretch.”

Card transactions and online commerce are soaring, making payment companies some of the most valuable financial companies in the world. Mastercard and Visa’s stocks have each returned more than 30% this year, and together they have a market capitalization of more than half a trillion dollars. These payment giants take a tiny toll of a few basis points on card transactions: They processed more than $5 trillion during the most recent quarter, a 5% increase from a year earlier, amounting to nearly $10 billion in revenue.

Revolut, meanwhile, is part of a wave of digital upstarts that offer banking services through slick app interfaces instead of costly bank branches. As it expands globally, Revolut is looking to raise $1.5 billion, according to Sky News, in a deal that would value the company somewhere between $5 billion and $10 billion. Some $1 billion of that funding will reportedly be in the form of a convertible loan that converts to stock if Revolut obtains a US banking license.

While European companies like Revolut, N26, and Monzo have proven that they can quickly acquire legions of customers, questions remain as to whether they will prove better than tech unicorns like Uber at converting those users into profitable, sustainable businesses. All three fintech firms are seeking to make inroads in the US.

Some investors are wary of heady fintech valuations. “I have a Revolut card, sure,” said Mark Tluszcz, chief executive of Mangrove Capital Partners, a self-described contrarian investment firm. “But is that a long-term business? I don’t know.”

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2019-10-22 07:01:00Z
52780416234427

Revolut strikes deal with Mastercard to accelerate expansion into the US - CNBC

Revolut's logo is displayed on a smartphone next to a Mastercard-branded debit card issued by the U.K. fintech firm.

Revolut

British fintech firm Revolut has partnered up with Mastercard to help it expand into the U.S. by the end of the year.

The deal means all of Revolut's first debit cards in the U.S. will be issued with Mastercard, while a minimum of half its European cards will carry the payments giant's branding.

Revolut CEO Nik Storonsky said the firm would also use some of Mastercard's new technology, including a platform that enables payments to be sent directly from one card to another.

"When we were trying to launch in the U.S. two years ago, Mastercard became our first offer for it," Storonsky told CNBC in a phone interview, adding he thought the company had "great tech and great infrastructure."

The deal arrives on the heels of a separate partnership Revolut struck with Mastercard's largest rival, Visa, a few weeks ago, which it said would help the firm hire an additional 3,500 people by the summer of 2020 to support its global expansion.

But this new tie-up means that Mastercard will get first dibs when it comes to Revolut cards issued in the U.S. Visa will still be the card network behind 75% of Revolut's cards beyond Europe though, and has said it still plans to support the firm's U.S. launch at some point in the future.

"What we've been working really hard on is accelerating Revolut's launch in the U.S.," Sue Kelsey, Mastercard's executive vice president of global prepaid and financial inclusion, told CNBC. "This will allow us 100% issuance of Revolut accounts on Mastercard" to begin with, she added.

Revolut is one of the many digital challenger banks which have gained a foothold in Europe by offering consumers colorful cards and slick mobile apps. Despite having no branches, the likes of Revolut, Monzo and N26 have gained millions of users between them.

London-based Revolut has already hired 30 employees in the U.S. and says it plans to triple its headcount there over the next six months. Rival fintech firms Monzo and N26 started rolling out in the U.S. earlier this year.

Revolut started out in 2015 with a prepaid debit card and foreign exchange service that let people spend abroad without paying high fees. It has since expanded its suite of products to add support for business accounts and trading in cryptocurrencies and, more recently, shares.

But like many of its peers in the fintech space, Revolut has yet to generate an annual profit. The company's most recent accounts showed losses more than doubled in 2018 to £32.8 million ($42.6 million) from £14.8 million a year earlier. TransferWise is one notable exception in the industry, having been profitable for three straight years.

Still, Revolut has been growing at a rapid pace, and is currently signing up between 800,000 and 900,000 new users a month.

Banking challengers have not been without their teething issues. U.S. start-up Chime recently suffered a widespread outage that left millions of customers without access to their accounts. According to fintech consultancy 11:FS, many upstarts in the U.K. faced similar problems in the early days of operating as they relied on third parties for certain processes.

And Revolut hasn't been immune to controversy, having been hit by a series of negative headlines towards the start of the year. Several reports highlighted a toxic work culture at the firm and alleged issues with compliance. The company denies it ever failed to meet any regulatory requirements, but admitted mistakes were made with regard to culture.

Challenger banks have proved to be a hot investment target for venture capitalists looking to tap into their wild growth. According to data firm CB Insights, the space saw $649 million in venture funding across 17 deals in the second quarter of the year.

Revolut is currently in talks with investors for a new round of funding that could close later this year. A recent Sky News report said the company is aiming to raise $1.5 billion, in a funding deal comprised of $500 million in equity and $1 billion in convertible notes. Storonsky declined to comment on that report.

WATCH: What is fintech?

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https://www.cnbc.com/2019/10/22/revolut-partners-with-mastercard-to-accelerate-us-expansion.html

2019-10-22 06:33:17Z
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UBS third-quarter profit slumps; investment banking down 59% on 'persistent' negative rates - CNBC

Swiss-lender UBS saw a 16% drop year-on-year in its third-quarter profit and a 59% slump in investment banking amid a "challenging environment."

The bank's net profit attributable to shareholders for the third quarter came in at $1.049 billion. This is lower than the $1.2 billion figure reported in the same quarter in 2018.

Here are some key highlights for the quarter:

• Operating income hit $7 billion versus $7.5 billion a year ago
• Return on tangible equity stood at 8.7% versus 11.1% a year ago
• Common equity tier 1 capital ratio of 13.1% versus 13.5% a year ago

UBS also said it expects to take restructuring expenses of $100 million in the fourth-quarter of 2019. UBS, like its peers, is looking at ways to restructure as banks continue to shrink and face headwinds from low and negative interest rates.

"Low and persistent negative interest rates and expectations of further monetary easing will adversely affect net interest income compared with last year," UBS said in a statement Tuesday.

"As we execute on our strategy, we are balancing investments for growth while managing for efficiency," UBS added.

Rising rates are good for banks since they are able to lend out money to investors at a profitable rate of interest. Lower interest rates restrict the bank's ability to make profits thus adding pressure on margins.

UBS announced in August that it would introduce a 0.6% annual charge on cash savings of over 500,000 euros ($557,642.50) and 0.75% on savings of over 2 million Swiss francs ($2.03 million) in order to pass on the cost of negative rates.

Speaking to CNBC on Tuesday, CEO Sergio Ermotti said: "The entire industry is faced with the same challenge on negative rates, so we are unfortunately forced to pass some of this pain, so we are not really passing all the pain of negative rates but I think it is inevitable that we will see, probably, the rest of the industry following on that."

Headwinds

UBS continues to face headwinds in its investment banking and global wealth management business.

The lender's investment banking business saw a 59% decline in the third-quarter of 2019 in terms of operating profit before tax (adjusted) which fell from 507 million CHF ($505 million) to $203 million. This as compared to the same quarter last year.

Investment banking is a specific division of banking related to the creation of capital for other companies, governments and other entities.

Meanwhile, the bank's global wealth management business saw an 8% decline as compared to the same quarter last year.

Addressing the bank's struggles with net interest and recurring fee income, Ermotti said the lender had been able to mitigate lower rates with higher transaction volumes, and was seeking to protect that dynamic.

"When I look at recurring fees, of course there you can see our clients' risk appetite is impacting recurring fees. We see them still buying into mandates but with lower risk profile, therefore with lower margins and in that sense, it was helpful in the third quarter to see the transaction line offsetting some of this," he told CNBC's Joumanna Bercetche.

- CNBC's Elliot Smith contributed to this report. 

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2019-10-22 06:20:20Z
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Why the stock market has a ‘great distance to rise’ in the coming years - MarketWatch

There’s a lot to be glum about in the market — and the world, really — at the moment, but in our call of the day Michael Kramer, founder of Mott Capital Management, is confident there’s serious upside potential in the years ahead.

It all starts with valuations.

Kramer points out that the earnings multiple of the S&P 500 SPX, +0.45% on a trailing 12-month basis recently touched 19.7, the lowest level since June 2016 — a time when “the world literally felt as if it was on the verge of a meltdown”. (That multiple is a key method of measuring the value of a stock relative to earnings.)

But, in the reality that perhaps matters most to markets, we were in the midst of an earnings recession that would soon come to an end.

The bull market had life and, three years later, it still does, he says.

Read: How big will this year-end rally turn out to be?

For some context, Kramer used earnings data going back to 1988 and projections through to 2020, then overlaid that with a chart of the S&P for what he says is a self-explanatory reflection of where we stand.

And, more importantly, where we’re headed.

Kramer explained that the numbers show attractive equity valuations and, if corporate earnings continue to increase as expected, the market “has a great distance to rise” in the coming years.

Stocks are rising this morning, though not by “a great distance” yet.

The market

The Dow DJIA, +0.00%  , S&P SPX, +0.45%  and Nasdaq COMP, +0.61%  are all in the green as trading begins. The pound GBPUSD, +0.1079%  is fairly volatile as investors wait for more Brexit updates after Prime Minister Boris Johnson’s deal vote was a non-starter on Saturday. Europe SXXP, +0.65%  stocks are up.

The chart

Yes, it’s a bit hairy out there.

This one is really stunning: A separate index that only focuses on uncertainty in global trade policy has surged to around 100 this year. From 1996 through 2018, its average level was about 2. “I think political uncertainty is clearly far higher than it has been for a long time.” pic.twitter.com/hgdAAT4Vvi

— Steven Russolillo (@srussolillo) October 20, 2019

The buzz

We’ve got a big week of earnings coming up, with bellwethers like Microsoft MSFT, +0.24%, Amazon AMZN, +0.72%, Procter & Gamble PG, +0.76% and Boeing BA, -4.14% among notables on the docket.

Voters won’t have to wait much longer to hear how Democratic presidential candidate Elizabeth Warren plans to pay for the “Medicare for All” future she envisions. The Massachusetts senator, who says she’ll give the details of her plan soon, came under heavy fire from her opponents during last week’s debate for refusing to say whether her plan would raise taxes on the middle class.

The strike at General Motors GM, +0.50% is spilling over into a second month, and the impact is intensifying across the Midwest in the U.S.he United Auto Workers union banged out a tentative labour deal with GM last week, but union leaders opted to continue picketing until workers approve the agreement.

The quote

“Market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured and rational decisions.” — Christine Lagarde, soon-to-be president of the European Central Bank, in an interview that aired on Sunday night on CBS’s “60 Minutes”.

The economy

New and existing home sales figures for September are probably the economic highlight of the week, but we won’t get a look at those until Thursday and Tuesday, respectively. There’s nothing of note on the docket today. University of Michigan rounds out the week Friday with the consumer sentiment index.

Read: Latest data does nothing for investors ‘animal spirits’

The tweet

Hillary & her gang of rich, powerful elite are going after me to send a msg to YOU: “Shut up, toe the line, or be destroyed.” But we, the people, will NOT be silenced. Join me in taking our Democratic Party back & leading a govt of, by & for the people! https://t.co/TOcAOPrxye pic.twitter.com/TahfE2XOek

— Tulsi Gabbard (@TulsiGabbard) October 20, 2019

Random reads

Influencers can buy 1,000 fake followers on Facebook FB, +1.17% for $34. Advertisers pay billions for them to pitch products to real people.

There’s a bear market in religion.

This sure looks like Republican senator Mitt Romney’s secret Twitter TWTR, +2.26% account.

A man stabbed his brother to death; now he earns six figures in Silicon Valley.

The grim reality of what climate change could do to three major US cities.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

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2019-10-21 14:07:00Z
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Earn More in 2020 and Keep Your Social Security Benefits - The Motley Fool

Social Security currently pays benefits to more than 60 million Americans, and the majority of them receive money from the old-age side of the program. The most common age for people to claim their retirement benefits is 62, and many of them still keep their jobs and decide to supplement their income by claiming their Social Security.

You don't have to stop working to receive your retirement benefits from Social Security. However, there are some provisions that will affect some workers who take early retirement benefits while still earning a paycheck. Specifically, if your earnings from work are above the limits that Social Security sets each year, then you might have to forfeit some of your benefits back to the Social Security Administration. Fortunately, those earnings limits typically go up every year, and workers in 2020 will be able to make a little bit more money before they'd have to give anything back.

How Social Security's earnings test works

There are a couple of aspects to the Social Security earnings test that recipients should understand -- ideally before they claim early retirement benefits. First, the provision only applies to those who are younger than full retirement age. If you've already reached that key age, then you can earn as much as you want and still get your full Social Security benefits.

Image source: Getty Images.

Also, there are two sets of earnings test numbers that apply to people of different ages. If you'll remain younger than your full retirement age throughout 2020, then you'll be able to earn up to $18,240 over the course of the year without having to give up any of your benefits. That figure is up $600 from 2019's numbers. Above the $18,240 mark, you'll have to give up $1 in annual benefits for every $2 you earn over the threshold. So if your earnings come to $20,000 for the year, then that's $1,760 over the limit, so you'd have to forfeit half that, or $880.

Those who will reach full retirement age at some point during 2020 face a different set of numbers. You can earn up to $48,600 in 2020 without triggering forfeiture provisions, and the reduction is $1 in benefits for every $3 above the threshold. The $48,600 figure is $1,680 higher than the corresponding number for 2019. One other thing to keep in mind is that only the portion of earnings you have before reaching full retirement age counts toward the limit. So if you hit full retirement age in June 2020, then you can earn as much as you want during the second half of the year without any adverse effects on your benefits.

Why giving back benefits isn't quite as bad as it seems

Giving back money to the federal government always sounds like a bad move. However, with the earnings test, there is a silver lining if your benefits get taken away.

Here's how it works: For every month's worth of benefits you have to pay back to the Social Security Administration, you'll be treated as if you had claimed your retirement benefits a month later than you actually did. When you reach full retirement age, your benefit amount will get adjusted upward to account for the extra time the SSA credits you with after forfeiting benefits. Over time, those higher payments can eventually catch up with the amount of money you lost.

Making the right decision

The best strategy to follow with Social Security when you're still working depends on how much money you make. If your earnings are squarely below the limits, then you can make an informed decision based on your financial needs and other factors. However, if you make more than the limit, you might want to think twice about taking early benefits at all. The more of your Social Security you end up having to give back, the less it makes sense to make your Social Security claim early in the first place.

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https://www.fool.com/retirement/2019/10/21/earn-more-in-2020-and-keep-your-social-security-be.aspx

2019-10-21 12:03:00Z
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Four Drug Companies Reach Last-Minute Settlement in Opioid Litigation - The Wall Street Journal

AmerisourceBergen CEO Steven Collis testified before Congress on May 8, 2018, alongside other drug company executives. Photo: Alex Brandon/Associated Press

By

Sara Randazzo

Sara Randazzo
The Wall Street Journal
• Biography
• @sara_randazzo
• sara.randazzo@wsj.com

Updated Oct. 21, 2019 8:27 am ET

CLEVELAND—Four drug companies have reached a settlement at the last minute to avoid a trial here seeking to blame them for fueling the opioid crisis, according to people familiar with the matter.

Details of the settlements with McKesson Corp. , Cardinal Health Inc., AmerisourceBergen Corp. and Teva Pharmaceutical Industries Ltd. will be announced Monday morning, the people said.

A fifth defendant, Walgreens Boots Alliance, hadn’t yet reached a deal Monday morning. It wasn’t clear if Monday’s trial would proceed with Walgreens as the only defendant.

The settlements with two Ohio counties put off the federal jury trial for the companies but fall short of a more comprehensive deal currently being negotiated to resolve thousands of opioid lawsuits nationwide.

The cases of Ohio’s Cuyahoga and Summit counties had been selected to go to trial first from more than 2,300 opioid lawsuits brought in federal court by local municipalities, hospitals, Native American tribes and others that are consolidated before U.S. District Judge Dan Polster in Cleveland.

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The lawsuits broadly allege the pharmaceutical industry pushed opioid painkillers for widespread use without adequately warning of the risks of addiction and allowed high volumes of pills to flood into communities.

The five companies were the last left for the trial after several other drugmakers settled with the two counties in recent weeks.

The Ohio trial was expected to be closely watched as a benchmark for how the broader opioid litigation could be resolved. Virtually every state, along with thousands of local governments, have sued the pharmaceutical industry seeking to recover money to help address the impact of the opioid crisis.

At least 400,000 people have died in the U.S. from overdoses of legal and illegal opioids since 1999, according to federal data.

The court proceeding was set to be the first time documents would be presented and witnesses questioned in open court about how drug distributors allegedly contributed to the opioid crisis. The companies serve as middlemen that ship drug orders placed by pharmacies, hospitals and others.

An earlier opioid-crisis trial, in Oklahoma, had only drugmaker Johnson & Johnson as a defendant, limiting the scope of the narrative unspooled in court.

McKesson, Cardinal and AmerisourceBergen collectively controlled 95% of the U.S. drug distribution market in 2018, according to Drug Channels Institute, which provides research on the drug-supply chain. The three companies are among the largest in the U.S., all ranking in the top 25 of the Fortune 500.

The distributors have argued that their role is to ensure medicines prescribed by licensed doctors are delivered to patients who need them. They say they must balance their mission to deliver medicine against efforts to prevent and detect illegal diversion of those drugs.

Walgreens, widely known as a pharmacy, has been included in the trial for its role as a drug distributor to its own stores.

Israel-based Teva and its subsidiaries make generic opioid painkillers and two branded drugs used for cancer pain. The company has argued that it doesn’t market its generic opioids.

The deals come as a coalition of state attorneys general has been pushing for a comprehensive settlement with five drug companies that by some accounts could be worth as much as $48 billion.

Lawyers for cities and counties have balked at the proposal, which includes $18 billion to be paid over 18 years from AmerisourceBergen, Cardinal and McKesson; $4 billion from Johnson & Johnson over a shorter time frame; and the donation of drugs from Teva and distribution services valued at as high as $28 billion.

The local governments say that the money doesn’t come fast enough to help them address the ramifications of the opioid crisis and that too much of the funds would be controlled at the state level.

Write to Sara Randazzo at sara.randazzo@wsj.com

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2019-10-21 12:00:00Z
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