Payments / Infrastructure
- Open banking and technological advances have resulted in the development of firms who provide impressive and innovative technologies that disrupt the payment market as we know it.
- We have seen real developments in relation to buy now pay later, real time payments, debit cards that can link to multiple accounts/currencies, cryptocurrencies and non-fungible tokens, deposit aggregators and many more.
- However, the players in the payment sector are subject to more significant challenges than ever before, which threatens to derail their growth or, at worst, result in corporate failure.
- Funding and liquidity: This is more than just ensuring sufficient cash flows to meet the next milestones. Firms need to ensure they have the right investors who can support their growth aspirations and allow the appropriate level of autonomy. Unrealistic forecasts or funding limits can look impressive, but will ultimately hinder firms and result in them failing before they even get going. In addition, it can take many years for these innovative firms to become profitable, but firms need to be mindful that the FCA and PRA have said they will not allow losses to continue indefinitely.
- Capital requirements: Firms need to plan for capital requirement increases, particularly when requirements are volume driven. These capital requirements are typically ring-fenced cash which is not usable for trading/growth.
- Regulatory landscape: The regulatory landscape is constantly changing to keep up with the dynamism of payment firms. These regulations can provide significant administrative burden on firms, with notable examples being requirements in relation to recovery and solvent wind down plans and AML governance. The supervision from the FCA and PRA is expected to increase given high-profile failures and general concerns in relation to the market.
- Client and e-money segregation: Other than contractual deductions, client and e-money balances must be protected and cannot be used for trading purposes (unlikely deposits). The protection of customers is of the highest priority to the regulator and firms cannot cut corners.
- AML and Fraud: The payment sector is a constant target for fraudsters and therefore the requirements to prevent fraud and money laundering and protect customers is extensive. Firms can be prevented from trading if their control and prevention frameworks are insufficient, even without any confirmed cases of criminal activity.
- Technology: The competitive landscape is fierce, with many firms claiming to have the best technology which is scalable, cost efficient, etc. This makes it hard for new players to stand out from the first movers, despite objectionably having a better offering. Once the technology is developed, it then needs to be invulnerable to attacks or downtime which may result in customers heading elsewhere.
SWDP and Solvency review
- The Firm is an FCA regulated e-money institution, which also offered access to cryptocurrencies.
- As a result of concerns over its AML control framework, the Firm was subject to regulator investigation and restrictions.
- We undertook a review of the Firm’s solvent wind down plan, including its medium-term cash flow forecasts, to understand whether the Firm could remediate its control framework or be wound up on a solvent basis.
- We also supported the Firm in its discussions with the FCA.
- The Group is a worldwide Bureau de Change business, which was impacted significantly by the collapse of international travel during the pandemic.
- We supported the Group in considering its options, including formal restructuring mechanisms and advised on a consensual rebasing of its rental obligations and exiting certain countries.
- We also supported the search for new investment and planning for a downside case involving the closure (via insolvency) of the majority of it its global business.
Bank & EMI Wind Down
- The bank’s parent company wished to exit the market. After an unsuccessful share sale alternative options will be investigated.
- Business comprised of personal unsecured lending, automotive lending, e-money cards and deposits.
- We led the assessment of the exit options under a range of scenarios including the sale of parts of the business and the wind down or share sale of the remainder. We also advised on the retention payments, supported the wind down and identified the stress test parameters for modelling the liquidity and regulatory capital.
- There were several international e-money books with some AML issues and blocked accounts which needed specific management through liquidation.
- We were appointed to advise the Board and provide assistance as and when required through the implementation and are now liquidators of the residual entity.
Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.
Teneo Financial Advisory (DIFC) Limited is authorised and regulated by the Dubai Financial Services Authority for the provision of Advising on Financial Products or Credit and Arranging Credit or Deals in Investment services
Specific information relating to our regulated entities which provide services to clients is detailed below:
|Registration Location and Reference
|Professional Indemnity Insurance
|Teneo Financial Advisory Limited
|England & Wales, 13192958
|5th Floor, 6 More London Place, London, SE1 2DA
|UK - ZA920639
|The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.
|Details of the professional indemnity insurer can be provided on request.
|Teneo Securities LLC
|Limited Liability Company
|USA - Delaware
|280 Park Avenue, 4th Floor, New York, NY 10017
|Financial Industry Regulatory Authority (FINRA) #151256. Securities and Exchange Commission (SEC).
|Details of the professional indemnity insurer can be provided on request.
Teneo Securities LLC’s Business Continuity Planning
Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.
The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm’s ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).
The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.
The Firm’s BCP specifically addresses the following areas related to Firm operations:
- Data back-up and recovery (hard copy and electronic);
- All mission critical systems;
- Procedures to test and determine the Firm’s ability to do business (i.e., financial and operational assessments);
- Alternate communications between customers and the Firm;
- Alternate communications between the Firm and its employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counter-party impact;
- Regulatory reporting; and
- Communications with regulators.
If you have questions about our business continuity planning, you can contact us (212) 886-1600.