Raphael Stevens

IOT: Powering the digital economy

The head of sustainability research at Lombard Odier highlights the huge shifts taking place in the field of low and zero carbon technologies.
“We’ve seen past industrial revolutions, including past energy transitions,” Thomas Hohne-Sparborth says. “What we’re really seeing now is the complete transformation of our entire economy.”
According to the International Energy Agency, clean energy investment could be on course to exceed $2 trillion per year by 2030.

The pace of change in the modern world is often rapid and dizzying. Technologies that seem integral to our lives can, in what feels like an instant, become redundant and irrelevant.
Energy is one sector where innovation and new ideas matter a great deal, as countries and companies try to find ways to shift to a society based around renewables like wind and solar rather than fossil fuels like coal, oil and natural gas.

During a panel discussion at last week’s World Economic Forum in Davos, Switzerland, one analyst expressed his fear that the market did not seem to have learned from other technological revolutions.
Thomas Hohne-Sparborth, head of sustainability research at Lombard Odier, highlighted the huge shifts taking place in the field of low and zero-carbon technologies and, by extension, wider society.
“We’ve seen past industrial revolutions, including past energy transitions,” Hohne-Sparborth said. “What we’re really seeing now is the complete transformation of our entire economy.”
“The demand side of our economy, the way we power vehicles, the way we heat our buildings, the way we use energy in industry — all of that needs to be transformed.”
We were, Hohne-Sparborth said, “looking at investment needs in the trillions of dollars.”

When it comes to the energy transition, the sums being discussed are indeed significant. Last year, the International Energy Agency’s “World Energy Outlook 2022” report said clean energy investment could be on course to exceed $2 trillion per year by 2030, an increase of over 50% compared to today.

As the discussion in Davos — which was moderated by CNBC’s Joumanna Bercetche — progressed, Hohne-Sparborth was asked if clean energy was now affordable at the scale required.
The answer to that question was, he replied, “very rapidly shifting, and today I would say, yes, it has become the cheapest source of energy.”
“What I think the market at large is underestimating is simply the pace at which this transition is unfolding,” he added, explaining that lessons could be learned from history.
“We’ve done some work looking at past technological revolutions, whether it’s the adoption of steamships, of mobile phones — any piece of major sort of new technology of infrastructure.”
All such transitions had, Hohne-Sparborth argued, “tended to follow a very similar pattern. They unfold very slowly … and then the transition completes in a span of 10 to 20 years.”
“Yet if you look today at what the market is anticipating — how long it will take us to electrify our buildings, to electrify our vehicle fleets — the timeframes there are still much longer.”
For Hohne-Sparborth, it didn’t seem to be getting through that, “when a new, superior technology emerges, that becomes cost competitive, that rollout can happen very quickly.”
Dramatic change
Also appearing on the CNBC panel was Andrés Gluski, the CEO of energy firm AES.
“What we’re facing … is a dramatic change,” he said, adding that renewables now represented “the cheapest form of energy, in most cases.”
“The problem is capacity — how do you keep the lights on 24/7 — and that’s where you have to use lithium-ion batteries on a daily basis.”
Expanding on his point, he went on to emphasize the importance of adopting a variety of technologies.
“To really get to a complete decarbonization we’re going to need green hydrogen, we’ll probably need small modular nukes, etcetera.”
“And I also agree very much that what we need is for renewables to be more than just competitive — just better so that we lower costs, [and] equal in quality.”
“And that’s honestly what the corporate sector is demanding very much, and many consumers.” More

The QIA now owns 6.8% of Credit Suisse’s shares, second only to the 9.9% stake purchased by the Saudi National Bank last year as part of a $4.2 billion capital raise.
Combined with the 3.15% owned by Saudi-based family firm Olayan Financing Company, more than a fifth of the company’s stock is now owned by Middle Eastern investors.
Credit Suisse will report its fourth-quarter and full-year earnings on Feb. 9, and has already projected a 1.5 billion Swiss franc ($1.6 billion) loss for the fourth quarter.

The logo of Credit Suisse Group in Davos, Switzerland, on Monday, Jan. 16, 2023.
Bloomberg | Bloomberg | Getty Images

The Qatar Investment Authority is the second-largest shareholder in Credit Suisse after doubling its stake in the embattled Swiss lender late last year, according to a filing with the U.S. Securities and Exchange Commission.
The QIA — Qatar’s sovereign wealth fund — initially began investing in Credit Suisse around the time of the financial crisis. Now, it owns 6.8% of the bank’s shares, according to the filing Friday, second only to the 9.9% stake purchased by the Saudi National Bank last year as part of a $4.2 billion capital raise to fund a massive strategic overhaul.

Combined with the 3.15% owned by Saudi-based family firm Olayan Financing Company, around a fifth of the company’s stock is now owned by Middle Eastern investors, Eikon data indicates.
Credit Suisse will report its fourth-quarter and full-year earnings on Feb. 9, and has already projected a 1.5 billion Swiss franc ($1.6 billion) loss for the fourth quarter as a result of the ongoing restructuring. The shake-up is designed to address persistent underperformance in the investment bank and a series of risk and compliance failures.
CEO Ulrich Koerner told CNBC at the World Economic Forum in Davos last week that the bank is making progress on the transformation and has seen a notable reduction in client outflows.

The injection of investment from the Middle East comes as major U.S. investors Harris Associates and Artisan Partners sell down their shares in Credit Suisse. Harris remains the third-largest shareholder at 5%, but has cut its stake significantly over the past year, while Artisan has sold its position entirely.

‘Final pivot’

Earlier this month, Deutsche Bank resumed its coverage of Credit Suisse with a “hold” rating, noting that the strategy update announced in October and subsequent rights issue in December were the start of the group’s “final pivot towards more stable, higher growth, higher return, higher multiple businesses.”

“While strategically largely the right measures have been announced in our view, the execution of the group’s transformation requires time to lower costs, regain operational momentum as well as reduce complexity funding costs. Hence, we expect subdued profitability, below its potential, even by 2025,” said Benjamin Goy, head of European financials research at Deutsche Bank.
As such, he said that Credit Suisse’s valuation was “not cheap based on earnings anytime soon.”

‘More art than science’

Central to Credit Suisse’s new strategy is the spin-off of its investment bank to form CS First Boston, which will be headed by former Credit Suisse board member Michael Klein.
In a note earlier this month, Barclays Co-Head of European Banks Equity Research Amit Goel characterized Credit Suisse’s earnings estimates as “more art than science,” arguing that details remain limited on the earnings contribution from the businesses being exited.
“For Q422, we will be focused on what is driving the losses (we found it quite hard to get to c.CHF1.1bn of underlying losses in the quarter), whether there are any signs of stabilisation in the business, and if there is more detail on the restructuring,” he added.

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Wahed, a fintech startup backed by oil giant Saudi Aramco and French soccer player Paul Pogba, debuted its own retail presence in the U.K. Tuesday.
The branch resembles an Apple store and is positioned just opposite an HSBC bank branch on Baker Street.
It aims to provide the U.K.’s 3.9 million Muslims with advice on investments that comply with Sharia law.

Islamic fintech startup Wahed has opened its first physical branch on Baker Street in London. The glossy retail location is designed to look like an Apple store.

An investing platform backed by the likes of oil giant Saudi Aramco and French soccer player Paul Pogba is launching a novel proposition in the U.K.: a physical branch and bank accounts backed by gold.
New York-based Wahed, which describes itself as a “halal investing platform,” has opened a branch in the U.K. in a bid to target the country’s 3.9 million Muslims with a sharia-compliant investment management and advice service.

The glossy retail location has a similar design to an Apple store, with digital displays inside and a bright sign displaying its logo outside. It is located on Baker Street in central London, just opposite a branch of U.K. banking giant HSBC.
Khabib Nurmagomedov, the Russian former professional mixed martial artist, is a promoter of the firm and will be among those attending the branch opening Tuesday.
Wahed is also debuting a debit card that lets users deposit funds with an exchange-traded commodity that tracks the price of gold, meaning they can effectively pay for everyday goods via gold.
Investors will be able to redeem the gold in their accounts for physical bars. Junaid Wahedna, CEO and Co-founder of Wahed, said it’s a way for Muslim — as well as non-Muslim — consumers to beat currency fluctuations and the rising cost of living.
“[Muslims are] an underserved community as a whole,” Wahedna said in an interview with CNBC, referring to the market opportunity for digital Islamic finance. “It’s a minority community, there’s a lack of financial literacy.”

Banking startups such as Monzo and Revolut have flourished in the U.K. without physical bank branches, offering smartphone apps that help users manage all their finances. But Wahedna cautioned that this risks leaving behind Muslim consumers.
“In the United Kingdom, [the Muslim community is] actually one of the lowest socio-economic segments of the country,” Wahed’s boss said, with “low incomes or financial literacy.”
“They have trust issues,” he added. “And so they want to see a physical presence before they trust you with money.”
Wahed’s service aims to help clients adhere to the Islamic faith’s strict doctrines on financial services: sharia law forbids its followers from charging or earning interest on loans, or investing in firms that make most of their money from the sale of things such as alcohol and gambling.
Wahed prohibits investments in companies that make money from lending, gambling, alcohol and tobacco. An account with Wahed also doesn’t offer interest on savings, nor does it tout wild returns on risky crypto tokens. Instead, the value of users’ deposits tracks the value of gold, with the precious metal fluctuating in price depending on supply and demand.
“I think it really fits with the Muslim community and what their needs are,” Wahedna said. “Because otherwise, what happens is the Muslim community, because they’re underserved, they keep their money in cash under their mattress, or in something that’s very unsafe, and they lose their money every few years because there’s a scam in the community or someone takes advantage of them. And that poverty cycle just continues.”

CEO slams lending-focused fintechs

Junaid slammed the state of modern fintech companies, suggesting that the industry is too focused on consumer lending with the rise of Klarna and other hyped “buy now, pay later” services.
“All of their business plans are built around lending revenue, right? Even digital banks, it’s like, okay, I’ll start off being a new bank, but then eventually, I’m gonna get a banking license,” said Wahedna.

Wahed is debuting a debit card linked to a gold-backed spending account. The startup is backed by French soccer star Paul Pogba.

He said Wahed is focused on making money by charging wealth management fees, which charge users a percentage of their overall asset holdings. The startup, which was founded in 2017, remains lossmaking, but has hit operating breakeven in Malaysia and the U.S., he added. 
“I feel that fintech, like most of the finance industry, is very heavily geared towards lending,” Wahedna said. “In fact, I would say, it’s making the cost of living crisis, a debt crisis, worse with a lot of the products.”
“If you look at the buy, now pay later companies, people are struggling — that’s the worst type of innovation, you’re making it easier to get people into debt,” he added.
Wahedna stressed that the company is not only for Muslims and aims to serve followers of other Abrahamic faiths as well, including Judaism and Christianity.
Staff at its London branch will help customers open accounts, make investments and give guidance on wills and estate planning.
The firm is targeting high-net-worth individuals as well as less well-off consumers, Wahedna said.
Wahed has raised $75 million of total funding to date from investors including Saudi Aramco Entrepreneurship Capital, the venture capital arm of Saudi state-backed oil firm Saudi Aramco, as well as French footballer Paul Pogba, who is a practicing Muslim.
Islamic finance has achieved significant growth over the past decade and is expected to reach $4.9 trillion in value by 2025, according to Refinitiv’s Islamic Finance Development Indicator. A number of other fintech players are seeking to tap into the halal money space, including Zoya and Niyah.

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Crypto exchange Gemini will reduce its headcount by 10%, a spokesperson told CNBC on Monday.
Gemini joins a long list of crypto companies that have announced or deepened staffing cuts in the months after FTX’s Nov. 2022 bankruptcy protection filing.
It’s at least the third round of cuts in less than a year for the exchange, which was co-founded by twins Cameron and Tyler Winklevoss.

Tyler Winklevoss and Cameron Winklevoss (L-R), co-founders of crypto exchange Gemini, on stage at the Bitcoin 2021 Convention in Miami, Florida.
Joe Raedle | Getty Images

Crypto exchange Gemini will reduce its headcount by 10%, a spokesperson told CNBC on Monday.
It’s at least the third round of cuts in less than a year for Gemini, which was co-founded by twins Cameron and Tyler Winklevoss, and unlike many of its peers, is subject to New York banking regulation.

Gemini had 1,000 employees as of November 2022, according to PitchBook data, suggesting around 100 people lost their positions. TechCrunch reported that Gemini had previously trimmed its headcount by 7% in July 2022, following a 10% staff a month earlier.
Other crypto firms like Crypto.com, Coinbase, Kraken, and Genesis have eliminated positions since Nov. 11, the day that Sam Bankman-Fried’s crypto exchange FTX filed for bankruptcy. In early January, Coinbase slashed 20% of its workforce in a second major round of job cuts in an effort to preserve cash during the crypto market downturn.
“It was our hope to avoid further reductions after this summer, however, persistent negative macroeconomic conditions and unprecedented fraud perpetuated by bad actors in our industry have left us with no other choice but to revise our outlook and further reduce headcount,” wrote Cameron Winklevoss in an internal message obtained by The Information.
Gemini has endured a battle over customer funds in recent weeks. The exchange also faces a legal fight with the Securities and Exchange Commission over an alleged unregistered offering and sale of securities in connection with its partnership with Barry Silbert’s bankrupt company, Genesis.
Gemini has been embroiled in an intense spat with Silbert’s Genesis Trading, a crypto lending firm that generated rich returns for Gemini clients through Gemini’s high-yield lending product, which is known as Gemini Earn.

The relationship soured when FTX filed for bankruptcy. Genesis subsequently froze lending and redemptions shortly thereafter, leaving Gemini customers short an estimated $900 million. The chain of failures also forced the Gemini Earn product to quickly follow suit with its own temporary suspension.
In the months since the Earn product was halted, Gemini’s 340,000 customers have grown increasingly frustrated. Some have banded together in a class action lawsuit against the exchange.
Genesis filed for bankruptcy protection on Jan. 19. The filing lists the 50 largest unsecured creditors, with Gemini topping the list at $765.9 million — more than $300 million higher than the next creditor.

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