FinTech Futures: Top five stories of the week – 22 July 2022
Here’s our pick of five of the top news stories from the world of finance and tech this week.
Australia’s ANZ snaps up Suncorp Bank in $3.3bn deal
Australian banking and financial services firm ANZ is set to acquire Suncorp Bank, the banking unit of Suncorp Group Limited, in a deal worth AUD 4.9 billion ($3.3 billion).
The firm says the deal will boost the growth of its retail and commercial businesses “while also improving the geographic balance of its business in Australia”.
The acquisition includes around $32 billion in home loans, $30 billion in deposits and $7.5 billion in commercial loans.
ANZ says Suncorp Bank will “initially operate under its existing Authorised Deposit-taking Institution licence with no changes to the total number of Suncorp Bank branches in Queensland for at least three years from completion”.
BNPL firms Zip and Sezzle agree to call off proposed merger agreement
The acquisition of US buy now, pay later (BNPL) firm Sezzle by Australian rival Zip has been called off, with both firms mutually agreeing to terminate the deal.
The merger was initially announced earlier this year with Zip looking to boost its global expansion plans, in particular its foray into the US market.
However, in an announcement made to the Australian Securities Exchange (ASX), Zip cites “current macroeconomic and market conditions” as a reason behind the termination.
Despite this, the firm adds the US “remains a core market and area of focus, and a significant opportunity for the business”.
Starling withdraws Irish banking licence application in expansion rethink
UK challenger Starling Bank has withdrawn its application for a banking licence in Ireland in a rethink of its global expansion strategy.
The company had already completed the first phase of its licence application with the Central Bank of Ireland but has now determined the move is “no longer a top priority”.
Starling says it will focus on “other expansion projects” instead, taking its software to banks through its software-as-a-service (SaaS) subsidiary, Engine.
The firm also intends to expand its lending across a range of asset classes, including through targeted mergers and acquisitions (M&A).
US regulators fine Bank of America $225m for “botched disbursement” of unemployment benefits
The Consumer Financial Protection Bureau (CFPB) has fined Bank of America (BoA) $100 million for “botching” the disbursement of state unemployment benefits at the height of the pandemic.
“Bank of America automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud,” the CFPB says.
In a separate order, the Office of the Comptroller of the Currency (OCC) is also fining the bank $125 million for “violations of law and unsafe or unsound practices relating to the bank’s administration of a prepaid card program to distribute unemployment insurance and other public benefit payments”.
Digital challenger Varo Bank lays off 75 employees in effort to cut costs
San Francisco-based digital bank Varo has laid off 75 members of staff as it looks to restructure in the pursuit of profitability.
In an announcement on the bank’s website, CEO Colin Walsh says the firm is “not immune to the impacts of our current environment” and the job cuts were an “extremely tough decision” made to ensure Varo has sufficient capital to execute its strategy and “path to profitability”.
In addition to the job cuts, Varo has taken steps to decrease its burn rate, “including limiting hiring to the most critical roles and pulling back on marketing investments in the near-term”.