Finance

Wefox, a Berlin, Germany-based insurance technology startup, announced Wednesday that it has raised $110 million from investors.
Of that sum, $55 million came in the form of a revolving credit facility from JPMorgan and Barclays.
The remaining $55 million was an equity investment led by investment management firm Squarepoint Capital.
Wefox maintained its $4.5 billion valuation from its previous round of funding, the company said.

Wefox CEO Julian Teicke.

German digital insurer Wefox said Wednesday it raised $110 million of fresh funding from backers including JPMorgan and Barclays.
The news marks a vote of confidence for the insurance technology space at a time when it faces tough macroeconomic headwinds.

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Wefox is a Berlin, Germany-based firm focused on personal insurance products, such as home insurance, motor insurance and personal liability insurance. Rather than underwriting claims itself, the company connects its users with brokers and partner insurance firms through an online platform.
Founded in 2015, it competes with the likes of U.S. digital insurer Lemonade and German firm GetSafe, as well as established insurance incumbents like Allianz.
Wefox said it raised the fresh funds through a combination of debt financing and fresh equity. Of the $110 million total, $55 million is in the form of a credit facility from banking giants JPMorgan and Barclays. A further of $55 million equity investment was led by Squarepoint Capital, a global investment management firm with $75.7 billion in assets under management.
“It’s a new type of financing for a growth company,” Julian Teicke, Wefox’s CEO and co-founder, told CNBC in an interview. “Risk investors, equity investors, they understand, they want to take risk.”
“Banks typically don’t, so for them it was really important to understand our path towards profitability and the maturity of our business,” he added.

The company said it maintained its $4.5 billion valuation from a July funding round — somewhat rare in today’s market, with many fintechs seeing their valuations slump drastically.
Wefox’s announcement comes as fintech and the technology industry as a whole grapple with a harsher economic environment, finding it more difficult to raise funding.
Higher interest rates have seen investors reevaluate growth-oriented tech businesses, with equity markets — and fintech in particular — taking a beating. In the public markets, U.S. firm Lemonade has seen its shares drop 23% in the past 12 months, though the stock is up 13% so far in 2023.
Layoffs have also plagued the fintech space. On Tuesday, money transfer firm Zepz told CNBC it was letting 420 employees go, or 26% of its total workforce, in the latest round of redundancies to hit the sector.
The collapse of Silicon Valley Bank, too, has darkened the outlook. The tech-focused lender collapsed earlier this year after its startup and venture capital clients fled in a panic due to capitalization concerns.
Despite the headwinds facing the wider tech industry, Teicke says he believes Wefox is “crisis-resistant.” In the first quarter of 2023, Wefox saw its revenues almost double year-over-year. The company anticipates it will reach profitability by the end of this year.
Teicke also said Wefox hasn’t faced the same pressures to lay off staff. Instead, it has shifted its priorities, he said, “doubling down on things that work and stopping things that don’t make sense.”
For instance, Teicke said Wefox was focusing on its broker partnership model and its so-called “affinity” method of distribution, where it sells its insurance software to other businesses for a subscription fee — for example, an online car dealer adding car insurance at the point of sale.
The fresh funds will go towards investing in Wefox’s affinity program and technology platform, the company said.
Teicke said Wefox is also investing heavily in artificial intelligence, which has become a hot area of tech recently following the rise of viral AI chatbot ChatGPT. Wefox mainly uses AI to automate policy applications and customer service.
The company has three tech hubs in Paris, Barcelona, and Milan dedicated to AI. More

The bank’s emergency acquisition of its stricken domestic rival for 3 billion Swiss francs ($3.4 billion) was brokered by Swiss authorities over the course of a weekend in March.
UBS also expects to offset this by booking a one-off $34.8 billion gain from so-called “negative goodwill,” which refers to the acquisition of assets at a much lower cost than their true worth.
UBS highlighted that the short time frame under which it was forced to conduct due diligence may have affected its ability to “fully evaluate Credit Suisse’s assets and liabilities” prior to the takeover.

Swiss authorities brokered the controversial emergency rescue of Credit Suisse by UBS for 3 billion Swiss francs ($3.37 billion) over the course of a weekend in March.
Fabrice Coffrini | AFP | Getty Images

UBS estimates a financial hit of around $17 billion from its emergency takeover of Credit Suisse, according to a regulatory filing, and said the rushed deal may have affected its due diligence.
In a new filing with the U.S. Securities and Exchange Commission (SEC) late Tuesday night, the Swiss banking giant flagged a total negative impact of around $13 billion in fair value adjustments of the new combined entity’s assets and liabilities, along with a potential $4 billion hit from litigation and regulatory costs.

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However, UBS also expects to offset this by booking a one-off $34.8 billion gain from so-called “negative goodwill,” which refers to the acquisition of assets at a much lower cost than their true worth.
The bank’s emergency acquisition of its stricken domestic rival for 3 billion Swiss francs ($3.4 billion) was brokered by Swiss authorities over the course of a weekend in March, with Credit Suisse teetering on the brink of collapse amid massive customer deposit withdrawals and a plummeting share price.
In the amended F-4 filing, UBS also highlighted that the short time frame under which it was forced to conduct due diligence may have affected its ability to “fully evaluate Credit Suisse’s assets and liabilities” prior to the takeover.
Swiss governmental authorities approached UBS on March 15 while considering whether to initiate a sale of Credit Suisse in order to “calm markets and avoid the possibility of contagion in the financial system,” the filing revealed. The bank had until March 19 to conduct its due diligence and return with a decision.

“If the circumstances of the due diligence affected UBS Group AG’s ability to thoroughly consider Credit Suisse’s liabilities and weaknesses, it is possible that UBS Group AG will have agreed to a rescue that is considerably more difficult and risky than it had contemplated,” UBS said in the Risk Factors section of the filing.

Though this is highlighted as a potential risk, UBS CEO Sergio Ermotti told CNBC last month that the Credit Suisse deal was not risky and would create long-term benefits.
The most controversial aspect of the deal was regulator FINMA’s decision to wipe out around $17 billion of Credit Suisse’s additional tier-one (AT1) bonds before shareholdings, defying the conventional order of write downs and resulting in legal action from AT1 bondholders.
Tuesday’s filing showed the UBS Strategy Committee began evaluating Credit Suisse in October 2022 as its rival’s financial situation worsened. The long-struggling lender experienced massive net asset outflows toward the end of 2022 on the back of liquidity concerns.
The UBS Strategy Committee concluded in February that an acquisition of Credit Suisse was “not desirable,” and the bank continued to conduct analysis of the financial and legal implications of such a deal in case the situation deteriorated to the point that Swiss authorities would ask UBS to step in.
UBS last week announced that Credit Suisse CEO Ulrich Koerner will join the executive board of the new combined entity once the deal legally closes, which is expected within the next few weeks.
The group will operate as an “integrated banking group” with Credit Suisse retaining its brand independence for the foreseeable future, as UBS pursues a phased integration. More

Horizon Therapeutics global headquarters in Dublin, Ireland.
Nurphoto | Nurphoto | Getty Images

Check out the companies making the biggest moves midday:
Horizon Therapeutics — Shares of the biotech firm fell 14.17% after the Federal Trade Commission sued to block the company’s acquisition by biopharmaceutical giant Amgen. The deal, worth $27.8 billion, was meant to strengthen Amgen’s drug portfolio as it faces several patent expirations over the next decade for key treatments.

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Vodafone — U.S.-listed shares of the British telecommunications company dropped 8.73% after Vodafone announced plans to cut 11,000 jobs. CEO Margherita Della Valle said the company’s performance “has not been good enough” and Vodafone “must change.”
Western Alliance Bancorp — Western Alliance shares jumped 2.7% after Bank of America reinstated coverage on the stock with a buy rating. Bank of America said it is confident in the regional bank’s business model. The firm said that “WAL does not share a ton in terms of business model and balance sheet characteristics relative to the three failed banks,” noting its above-average ratio of insured deposits to total deposits. Shares are down 46% year to date.
Capital One — Capital One’s stock gained 2.05% a day after securities filings revealed a new stake in the financial institution from Warren Buffett’s Berkshire Hathaway worth more than $950 million. Regulatory documents also showed Michael Burry’s Scion Asset Management picked up some shares during the first quarter.
RH — Shares of the luxury furniture retailer slid 8.77%. A regulatory filing posted late Monday showed that Warren Buffett’s Berkshire Hathaway dumped its stake last quarter. The Omaha-based conglomerate had owned 2.36 million shares of RH at the end of 2022.
Alphabet — The stock added 2.57%. On Monday, Bill Ackman’s Pershing Square Capital Management revealed in a securities filing that it opened a new position in Alphabet totaling nearly $1.1 billion during the first quarter. Dan Loeb’s Third Point also built a sizeable stake in the tech giant in the first quarter. 

Home Depot, Lowe’s — Shares of home improvement retailers Home Depot and Lowe’s lost 2.15% and 1.16% Tuesday. Home Depot reported the biggest revenue miss in more than 20 years earlier in the day, posting $37.26 billion while analysts forecasted by Refinitiv forecasted $38.28 billion. Lowe’s will report quarterly results on May 23.
Expedia — The travel booking site operator saw its shares rise 0.52% after Gordon Haskett upgraded the stock to buy from hold. The firm said concerns about its tech stack migration are overblown and that it sees a tailwind from traditional lodging offerings. It also highlighted the upcoming launch of its One Key program, which is expected to drive future share gains.
Seagen — Shares of the biotechnology company shed 5.97%. On Monday, Daniel Welch, a director at Seagen, disclosed the sale of 1,864 shares, a stake worth more than $370,000. Seagen and Pfizer also filed paperwork for their proposed merger to the Federal Trade Commission on Friday, just days before the FTC sued to block Amgen’s acquisition of Horizon Therapeutics.
Sea Limited — The consumer internet company dropped 17.74% after slightly missing expectations for first-quarter revenue. The company posted $3.04 billion, under the $3.06 billion consensus estimate of analysts polled by FactSet.
GE HealthCare — The medtech company’s shares gained 3.8% after Oppenheimer initiated coverage with an outperform rating on Monday. The firm said GE HealthCare is well-positioned to benefit from an aging population and rise in cases of chronic diseases. GE HealthCare separated from parent company General Electric earlier in 2023 and began publicly trading on the Nasdaq Jan. 4.
Etsy — The stock sank 5.31% after Morgan Stanley cut its price target to $74 per share from $79, implying 24% downside from Monday’s close. The Wall Street firm said it sees slower growth ahead for Etsy.
—CNBC’s Yun Li, Tanaya Macheel, Alex Harring, Samantha Subin, Hukyung Kim, Brian Evans, Sarah Min and Michael Bloom contributed reporting. More

JPMorgan Chase CEO Jamie Dimon said Tuesday it’s not likely that his bank would acquire another struggling lender after its government-brokered acquisition of First Republic.
The turmoil in mid-sized banks sparked by the Silicon Valley Bank collapse in March shows that merely meeting regulatory requirements isn’t enough, Dimon added.
Investors of the biggest U.S. bank by assets peppered Dimon and his managers with questions about the bank’s strategy, positions on hot-button political issues and use of AI tools including ChatGPT.

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled Annual Oversight of the Nations Largest Banks, in Hart Building on Sept. 22, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

JPMorgan Chase CEO Jamie Dimon said Tuesday that it’s not likely his bank would acquire another struggling lender after its government-brokered acquisition of First Republic.
“Unlikely,” was Dimon’s curt response to a shareholder who asked about acquisitions during the New York-based bank’s annual shareholder meeting.

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The turmoil in mid-sized banks sparked by the Silicon Valley Bank collapse in March shows that merely meeting regulatory requirements isn’t enough, Dimon added.
“Regarding the current disruption in the U.S. banking system, most of these risks were hiding in plain sight,” Dimon said of the interest rate risks that helped toppled SVB and First Republic.
Investors of the biggest U.S. bank by assets peppered Dimon and his managers with questions about the bank’s strategy, positions on hot-button political issues and use of AI tools including ChatGPT, among other topics.
JPMorgan is prepared for interest rates and inflation to remain higher for longer potentially, the CEO said. But “large geopolitical events,” cyber attacks and market turmoil are Dimon’s larger concerns, he added.
Dimon spoke on the same day that former Silicon Valley Bank CEO Gregory Becker and two ex-Signature Bank executives testified before the Senate. All three executives pointed to “unprecedented” factors that led to sudden bank runs at their institutions. More

A Home Depot store in Hyattsville, Maryland, on February 22, 2022.
Stefani Reynolds | AFP | Getty Images

Check out the companies making headlines in premarket trading.
Dish Network — The satellite TV provider added 5.2% in premarket trading after director James DeFranco disclosed the purchase of 3 million shares.

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16 hours ago

Home Depot, Lowes — The home improvement retailers lost 3.5% and 2.8% in premarket trading on Tuesday, after Home Depot reporting the biggest revenue miss in over 20 years. The company reported revenue of $37.26 billion against a Refinitiv consensus forecast of $38.28 billion. Lowes will report quarterly results on May 23.
Capital One — The firm gained 6.3% after a regulatory filing showed Warren Buffet’s Berkshire took a new stake in the firm worth over $950 million.
Seagen — The biotechnology company lost 4.5% in premarket trading Daniel Welch, a director at Seagen, disclosed the sale of 1,864 shares, a stake worth $371,961.
Nu Holdings — Nu Holdings popped 5.9% after the fintech firm topped analysts’ first-quarter earnings expectations. Nu reported adjusted net income of $182.4 million, greater than the consensus estimate of $113.4 million, according to FactSet. It posted revenue of $1.6 billion, compared to analysts’ forecasts of $1.40 billion.
Sea Limited — Shares shed nearly 8% after the Singapore-based technology company reported earnings before the open. Its first-quarter revenue came in at $3.04 billion, less than the $3.06 billion expected from analysts polled by StreetAccount. Sea Limited also reported GAAP earnings of 15 cents per share. However, it wasn’t clear if that was comparable to a StreetAccount forecast.
— CNBC’s Michelle Fox and Sarah Min contributed reporting More

Samsung said it has signed a memorandum of understanding with South Korea’s central bank to conduct technical research on a central bank digital currency.
Payments could be made between devices through the use of near-field communication technology, which is built into smartphones to enable contactless payments, Samsung said.
Countries from China to the U.S. are advancing their research and experimentation with so-called CBDCs in the hope that it could become easier for consumers to send money instantaneously.

A man walks past an ad for the Samsung Galaxy Z Flip4 smartphone at the company’s Seocho building in Seoul on Jan. 31, 2023.
Jung Yeon-je | Afp | Getty Images

Consumer tech giant Samsung is looking into launching a central bank digital currency in a collaboration with the Bank of Korea.
The South Korean electronics firm said Monday that it had signed a memorandum of understanding with the country’s central bank to conduct technical research on the digital currency.

Samsung said such a CBDC, which refers to a digital currency issued by a central bank, would work “offline” and could be sent between owners of its Galaxy smartphone and smartwatches thanks to a secure chip in the devices.
Payments could be made between devices through the use of near-field communication technology, which is built into smartphones to enable contactless payments, Samsung said.
Samsung said it developed a solution applying NFC technology to CBDCs last year. This allowed users to make a payment even when they had no internet connection, the company added.
In a press release Monday, Samsung said the firm, along with Bank of Korea, would look to “continue researching how to minimize security risks associated with offline payments, to support reliable transactions in emergency situations even without network connections.”
“We are very pleased to be the first central bank to develop offline CBDC technology in partnership with Samsung Electronics,” Seungheon Lee, senior deputy governor at the Bank of Korea, said in a press release.

“Through the establishment of this MOU, we hope that the Republic of Korea will continue to lead the way in the field of offline CBDC technology, a sector that is being actively explored by global central banks,” he added.

Won-Joon Choi, Samsung’s executive vice president of mobile experience, said: “This collaboration with Bank of Korea has allowed us to apply Samsung’s advanced security innovations to the digital currency field.”
“We expect our collaboration to make a valuable contribution to the advancement of global offline CBDC technology,” he added.
Countries from China to the U.S. are advancing their research and experimentation with so-called CBDCs in the hope that it could become easier for consumers to send money instantaneously.
China has already created a digital version of the Chinese yuan and is trialing its CBDC in numerous cities, while the U.S., too, is closely examining whether to roll out a digital version of the dollar, and how this would work.
The practicalities of issuing CBDCs has been called into question by some commentators, given how easy it is to make transfers with currently available methods such as online banking and money transfer apps, and cryptocurrencies.
Various privately developed digital currencies currently allow people to make near-instant payments too. But the vast majority of tokens like bitcoin are highly volatile. Stablecoins have been touted as a possible solution to this — although governments are wary of tokens issued by private companies.
Still, there remain clear headaches for businesses when it comes to instant settlements of transactions. The way the banking system is set up means that it can often take days for payments from merchants’ customers to actually settle.
This is a pain point private companies and governments are hoping to address through new technologies, including blockchain and digital currencies. More

People queuing outside Shake Shack in London. Latest Covid-19 lockdown slams UK business owners.
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Check out the companies making headlines in midday trading.
Shake Shack — The fast food chain’s stock jumped 7.8% after the Wall Street Journal reported that activist investor Engaged Capital is planning a proxy fight for three board seats at the company. Engaged Capital bought a 6.6% stake in Shake Shack, including swaps. The stock has rebounded more than 60% this year.

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Magellan Midstream Partners, Oneok — Magellan Midstream Partners jumped 13% after Oneok agreed to acquire the company for about $18.8 billion. Oneok shares slid 9.1%.
Western Digital — Western Digital advanced 11.3% in midday trading. A Reuters report, citing two sources familiar with the matter, said the firm is ramping up merger talks with Kioxia Holdings, Japan’s computer memory maker.
H&R Block, Intuit — Shares of the tax preparers dropped 2.8% and 0.3%, respectively, following reports of the potential creation of a government-run online tax filing program. The IRS is due to release the report this week, the Wall Street Journal reported. The agency has been looking into it as part of the Inflation Reduction Act.
Newmont — Shares of the gold miner added about 2.5% after it announced it would acquire Australian miner Newcrest. It is the third largest global deal so far this year, worth about $17.8 billion, according to Reuters.
Charles Schwab — The brokerage firm saw its shares climb more than 4.1% midday after Raymond James upgraded the stock and said it can rally almost 30%, as concerns about stability in U.S. banks have not affected Schwab’s ability to attract new accounts and assets.

Microsoft, Activision Blizzard — The European Union on Monday approved Microsoft’s proposed plan to buy gaming company Activision Blizzard for $69 billion. Activision shares added 1.2%, while Microsoft was up 0.2%.
SoFi Technologies — The firm lost nearly 5% in midday trading. Wedbush downgraded the stock earlier on Monday, over concerns SoFi may be nearing a ceiling with fee growth, which will push SoFi to raise capital to grow further.
Albemarle — Shares of the lithium company rose 4.1% following an upgrade from Baird.  The firm said that Albemarle is “a leader in catalyst products” and has potential for greater market share. To be sure, it noted that lithium prices have declined more than 40% year to date.
Dupont de Nemours — The chemicals maker gained 2.9% after Deutsche Bank upgraded shares to a buy rating. The Wall Street firm said shares trade at a significant discount to peers.
AerCap — The aviation leasing company added 3.1% on the back of an upgrade from Citi, which said demand should remain strong.
Lam Research — Lam added 4.8% after Citi added a positive catalyst watch on the stock. The bank said the semiconductor company has a “self-help” story amid an expansion in Asia.
Crocs — The shoe maker advanced 2.6% after Baird called the stock a fresh pick. Baird said it believes the company can meet or exceed guidance for 2023.
Tapestry — Shares rose 4.5% following an upgrade to outperform from market perform by Bernstein. The Coach and Kate Spade parent has a strong valuation and long-term investment case, the Wall Street firm said.
— CNBC’s Samantha Subin, Hakyung Kim, Michelle Fox, Yun LI, Brian Evans, Tanaya Macheel and Sarah Min contributed reporting More

America is once again in the throes of a debt-ceiling crisis. If Congress and the White House do not come to a deal, the government may run out of cash, and be on the brink of a sovereign default, in just a few weeks’ time. Most investors expect a last-minute compromise, thereby avoiding financial Armageddon, as during past crises. Yet positions on each side of the aisle look entrenched: Republicans want big spending cuts; Democrats are resisting. So the White House must consider its break-glass options. If there is no agreement, what would President Joe Biden do?There are two broad kinds of workarounds—one magical, the other messier and neither appealing—that the Biden administration could use to manage the fallout from a debt-ceiling disaster. Start with the actions that would render the debt ceiling moot—at least in theory. One that has captured the imagination of wonks, owing to its novelty, is a trillion-dollar coin. The Treasury can mint commemorative coins of any denomination. The suggestion, first advanced on a blog in 2010, is that it should mint a hugely valuable coin, deposit it in the government’s account at the Federal Reserve and draw on it to pay for everything from military salaries to scientific research. The government would no longer need borrowing approval from Congress. Indeed, it would no longer need to borrow from public markets.[embedded content]Another idea is that the White House could deploy the 14th Amendment of the Constitution, which states that the validity of American government debt “shall not be questioned”. The Biden administration could issue an executive order citing the 14th and directing the Treasury to resume issuing bonds. So long as upheld in court, the White House would, in effect, have branded the debt ceiling as unconstitutional, giving itself a free hand.A final magical solution would involve financial engineering. The debt ceiling specifically targets the face value of debt. At current yields, the Treasury can borrow money for two years at an annual rate of about 4%. But what if it offered bonds with coupons of, say, 100%? In this case it could issue a bond with a face value roughly 1/25th that of a bond with a 4% yield but raise the same amount of cash from investors (who would pay a giant premium to the face value, bringing the bond’s true yield in line with the market rate). As the Treasury rolled over existing debts into high-coupon, low face-value bonds, it would acquire plenty of room under the debt ceiling, allowing it to resume borrowing.These magical workarounds are all clever. Yet they also share the same basic defects. They are, to varying degrees, ruses and loopholes that do not seem befitting of American government bonds, the world’s most important financial asset. It would be unsettling to think that Treasuries—a benchmark for interest rates and a safe haven for investors the world over—could be underpinned by a commemorative coin. Janet Yellen, the treasury secretary, has dismissed the option as a “gimmick”.Although gimmickry would be better than the American government reneging on its debts, there is another objection to such magical solutions: each would be subject to legal challenge, sowing uncertainty in markets. Some experts think the administration could win a 14th Amendment case. But that is far from certain in a Supreme Court with a conservative majority. Legal proceedings could extend beyond the moment, perhaps early in June, when the government runs out of money. Stuck in litigation, the magical solutions would struggle to prevent market freak-outs.This would leave America with a messier, more painful workaround: the prioritisation of payments. The Treasury would set aside cash from its tax revenues to make interest payments. With whatever money is left over, it could meet some of its other obligations. Analysts at the Brookings Institution, a think-tank, estimate the result would be a cut of one-quarter in the government’s non-interest expenditures, which would represent a remarkably harsh dose of austerity. If the government were to aim for one additional layer of prioritisation—making social-security payments to retirees, plus covering its interest on bonds—it would have to cut other expenditures by about one-third.Officials at the Fed and the Treasury have already begun to plan for prioritisation, having drafted a blueprint during the debt-ceiling crisis in 2011. Even so, Treasury officials privately admit they are not confident prioritisation would function as intended. For the scheme to work, the government would have to continue to conduct regular bond sales, using the proceeds to pay off the principal from maturing bonds. This would require dealers showing up as frequently as four times a week to Treasury auctions, sometimes with billions of dollars on the line, and doing their part in the prioritisation tap-dance. What happens if they balk and deem that the environment is simply too uncertain?The politics would also be treacherous. Putting bondholders ahead of civil servants, pensioners and soldiers “might not prove to be sustainable”, as Bill Dudley, then president of the New York Fed, dryly noted during a planning discussion in 2011.Despite all the evident flaws, prioritisation will almost certainly be the initial fallback if Congress does not lift the debt ceiling in time. “A few days of prioritisation may be what is needed to get both sides to blink,” says Daleep Singh, a former economic adviser to the Biden administration. “It would have big costs and that would hopefully crystalise minds in dc, provoking a deal.” Whatever the outcome, one conclusion is clear: this is no way to manage the world’s biggest economy.■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More