When China’s ruler, Xi Jinping, began calling for “common prosperity” in 2021, he made investors nervous. The stated goal was to reduce inequality. But the term became wrapped up with something edgier: a morale-destroying campaign to browbeat billionaires into displays of charity, tighten regulations on big tech firms and curb what Mr Xi called the “disorderly expansion of capital”. More
Bunq, the Dutch digital bank, told CNBC it plans to increase its global headcount by over 70% in 2024.
It’s expected to help the fintech expand into new regions including the U.K. and the United States, where the company is applying for local licenses.
It comes as other companies, including PayPal and Klarna, have significantly reduced their workforces amid a tougher environment for fintech.
Dutch digital bank Bunq is plotting re-entry into the U.K. to tap into a “large and underserved” market of some 2.8 million British “digital nomads.”
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images
Dutch challenger bank Bunq told CNBC that it plans to grow its global headcount by 70% this year to over 700 employees, even as other financial technology startups have decided to cut jobs.
Bunq, which operates in markets across the European Union, is looking to expand into new regions including the U.K. and the United States, taking on the fintechs already in those countries, including the likes of Britain’s Monzo and Revolut, and American neobank Chime.
Bunq said it needs corresponding talent in those regions to support its global expansion ambitions. To that end, the firm said it plans to see out the year with 735 employees globally — up 72% from its 427 members of staff at the start of 2024.
“Bunq focusses on digital nomads who tend to roam the world,” Ali Niknam, Bunq’s CEO and co-founder, told CNBC via emailed comments.
So-called “digital nomads” are defined as people who travel freely while working remotely, using technology and the internet to work abroad from hotels, cafes, libraries, co-working spaces, or temporary housing.
“We’d love to be able to service our users wherever they go — given the regulatory environment we’re in, this results in us having to have a lot of extra people to make this happen,” Niknam added.
Bunq is currently in the process of applying for banking licenses in both the U.S. and U.K. Last year, the firm submitted an application for a federal banking license. And in the U.K., Bunq is awaiting a decision from financial regulators on an application to become a licensed e-money institution, or EMI.
The digital bank said it was actively looking to hire across sales and business development, product marketing, PR, affiliate marketing, and market analysis, as well as user support, development, and quality assurance.
Many of these positions will be part of a “tailored digital nomad” program that allows staff to work from anywhere in the world, Bunq said.
However, the firm stressed it’s not closing down office space and that many new hires would work in its offices, including in Amsterdam, Sofia, Istanbul, Munich, Paris, Dublin, Madrid, London, and New York City.
A contrast from jobs cuts at other fintechs
Over the past two years, one of the biggest stories in both the fintech and broader technology industry has been companies slashing jobs to cut back on the massive spending implemented during in the pandemic years of 2020 and 2021.
The operating environment for fintech firms has gotten tougher, meanwhile, with inflation knocking consumer confidence and higher interest rates making it harder for startups to raise money.
In January last year, cryptocurrency exchange Coinbase slashed 950 jobs. It was followed by payments giant PayPal, which reduced its global headcount by 2,000 people in early 2023, and then by another 2,500 jobs in early 2024.
Meanwhile, some fintechs are looking to artificial intelligence to take on a growing number of roles.
Swedish buy now, pay later firm Klarna, for instance, said last month that it was able to reduce its workforce from 5,000 to 3,800 over the past year from attrition alone. It added that it is looking to further cut employee numbers down to 2,000 through the use of AI in marketing and customer service.
“Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits,” the company said in first-half earnings.
Klarna said that its average revenue per employee had risen 73% year-over-year, thanks in no small part to the internal application of AI.
Bunq’s Niknam said he doesn’t see AI as a way to help firms reduce headcount, however.
“We’ve been deploying AI systems and solutions years before they became mainstream, [but] in our experience AI empowers our employees to be able to do better by our users, more effectively and efficiently,” he told CNBC.
Bunq earlier this year reported its first full year of profitability, generating 53.1 million euros ($58.51 million) in net profit in 2023. The business was last valued privately by investors at 1.65 billion euros. More
September is living up to its reputation as a volatile month, and this creates more challenges to the Big Tech trade. But one low-volatility ETF is still betting big on it.
Alliance Bernstein is behind the AB US Low Volatility Equity ETF. According to FactSet, its top three holdings include megacap winners Microsoft, Apple and Alphabet.
“Technology touches everything that we do in most facets of our life, but there are other industries in play,” Noel Archard, the firm’s global head of ETFs and investor solutions, told CNBC’s “ETF Edge” this week. “So, we’re continuing to see a lot of interest in investing broadly.”
For comparison, FactSet lists the top holdings for Invesco’s Low Volatility ETF as stocks that are traditionally more stable: Berkshire-Hathaway, Coca-Cola and Visa.
Archard notes there’s still a place for historically less volatile stocks such as consumer staples and financials. He sees them as “bumpers” that can help mitigate risk.
For example, FactSet shows that Alliance Bernstein’s low-volatility ETF also includes exposure in names including Procter & Gamble and Fiserv.
“You sort of forget about volatility until it’s there, and then all of a sudden it becomes very front and center,” said Archard.
The AB US Low Volatility ETF is up 16% so far this year as of Wednesday’s close.
Disclaimer More
Between early 2022 and mid-2023 the Federal Reserve tightened monetary policy at the fastest pace since the early 1980s, lifting America’s policy interest rate from 0-0.25% to 5.25-5%. When the central bank’s policymakers next meet on September 17th and 18th, they will almost certainly start cutting rates. Investors even wonder whether they will begin with a 0.5-percentage-point reduction, in response to cooler-than-expected economic data. More
Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024.
Warren Buffett’s Berkshire Hathaway offloaded another chunk of Bank of America shares, bringing its total sales to more than $7 billion since mid-July and reducing its stake to 11%.
The Omaha-based conglomerate shed a total of 5.8 million BofA shares in separate sales on Friday, Monday and Tuesday for almost $228.7 million at an average selling price of $39.45 per share, according to a new regulatory filing.
The latest action extended Berkshire’s selling streak to 12 consecutive sessions, matching the 12 consecutive sessions from July 17 to Aug. 1.
Berkshire has sold more than 174.7 million shares of the Charlotte-based bank for $7.2 billion, with 858.2 million shares remaining, or 11.1% of shares outstanding. BofA has fallen to the No.3 spot on Berkshire’s list of top holdings, trailing behind Apple and American Express. Before the selling spree, BofA had long been Berkshire’s second biggest holding.
Moynihan on Buffett
Buffett famously bought $5 billion worth of BofA’s preferred stock and warrants in 2011 in the aftermath of the financial crisis. He converted those warrants in 2017, making Berkshire the largest shareholder in BofA. The “Oracle of Omaha” then added 300 million more shares to his bet around 2018 and 2019.
BofA CEO Brian Moynihan made a rare comment about Berkshire’s sales Tuesday, saying he has no knowledge of Buffett’s motivation for selling.
“I don’t know what exactly he’s doing, because frankly, we can’t ask him. We wouldn’t ask,” he said during Barclays Global Financial Services Conference, according to a transcript on FactSet. “But on the other hand, the market’s absorbing the stock …. we’re buying a portion of the stock, and so life will go on.”
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Bank of America
Shares of BofA have dipped just about 1% since the start of July, and the stock is up 16.7% this year, slightly outperforming the S&P 500.
Moynihan, who has been leading the bank since 2010, praised the 94-year-old’s shrewd investment in his bank in 2011, which helped shore up confidence in the embattled lender struggling with losses tied to subprime mortgages.
“He’s been a great investor for our company, and stabilized our company when we needed at the time,” he said.
To illustrate how lucrative Buffett’s investment has been, Moynihan said if investors were to buy his bank stock the same day Buffett did, they would have been able to capture the low price of $5.50 per share. The stock last traded just under $40 apiece.
“He just had the guts to do it in a big way. And he did it. And it’s been a fabulous return for him. We’re happy that he gets it,” Moynihan said.
— CNBC’s Alex Crippen contributed reporting. More
José Luis Gutiérrez | iStock Photo
Why are September and October historically weak for stocks? For answers, I turned to Mark Higgins, senior vice president at Index Fund Advisors and author of the book, Investing in U.S. Financial History: Understanding the Past to Forecast the Future.
The answers have been edited for clarity.
What is it with September and October being weak months for stocks? Has this always been the case?
Yes. The most intense panics on Wall Street have tended to occur during the late summer and early autumn months. This can be traced all the way back to the 1800s. A few notable examples of exceptional panics include Black Friday of 1869, the Panic of 1873 and the Panic of 1907.
But why September and October?
It is a byproduct of an old weakness in the U.S. financial system. Prior to the reintroduction of a central banking system with the passage of the Federal Reserve Act of 1913, the U.S. was limited in its ability to adjust the money supply in response to market conditions.
The inelasticity of the U.S. currency made the late summer and early autumn months an especially precarious time, due to the agricultural financing cycle. In the 1800s, the U.S. economy still relied heavily on agricultural production. For the first eight months of the year, American farmers had a limited need for capital, so excess funds held on deposit in state banks were shipped to New York banks or trust companies to earn a higher rate of return.
When harvest time arrived in August, state banks began withdrawing their capital from New York, as farmers drew on their accounts to fund transactions required to ship crops to market.
The agricultural financing cycle created chronic shortages of cash in New York City during the autumn months. If these shortages happened to coincide with a financial shock, there was little flexibility in the system to prevent a panic.
How did the government respond to these panics?
The limited ability of the government to react was the primary impetus for the passage of the Federal Reserve Act of 1913. The Act granted the Fed the power to serve as a lender of last resort during financial crises. Prior to the Act, leading financiers (most notably J.P. Morgan) were forced to assemble ad hoc solutions that relied primarily on private capital. After the U.S. barely avoided a catastrophic collapse of the financial system during the Panic of 1907, there was just enough political support for the return of the third and final iteration of a central banking system in the United States.
Did the creation of the Federal Reserve provide more stability to markets?
Yes, and if one compares the frequency, intensity and misery of financial panics during the 1800s, this is plainly evident. In fairness, the Fed made a few mistakes along the way, with the most notable being its failure to stop the contagion of bank failures in the 1930s. But, by and large, the U.S. financial system has been much more stable since the Federal Reserve became operational in late 1914.
Still, the U.S. economy is not primarily agricultural anymore. Why are September and October still weak months?
People tend to fear things that have happened before even if they don’t remember the origin of the fear. It may be that the fall panics have repeated so many times that they have become a self-fulfilling prophecy. In other words, people expect them, and because they expect them, they behave in ways (i.e., reducing risk in late summer and early fall) that make them more likely. I know this sounds like a stretch, but it does seem like it may actually be real. More
Chinese artificial intelligence models may be at least half a year behind those made in the U.S., but Chinese AI apps will likely take off much faster, said Kai-Fu Lee, founder of the startup 01.AI and former head of Google China.
“Apps, I would predict, by early next year will proliferate in China much faster than in the U.S.,” Lee said, noting that the cost of training a good AI model has fallen significantly.
Kai-Fu Lee, chairman and chief executive officer of Sinovation Ventures, speaks during the HICOOL Global Entrepreneur Summit on September 11, 2021 in Beijing, China.
China News Service | China News Service | Getty Images
BEIJING — Chinese artificial intelligence models may be at least half a year behind those developed in the U.S., but Chinese AI apps will likely take off much faster, said Kai-Fu Lee, former head of Google China.
He was referring to large language models, which are trained on massive amounts of data that can process and produce text, images and videos.
The top Chinese companies’ LLMs are about six to nine months behind their U.S. counterparts, while less advanced Chinese models may lag the U.S. by about 15 months, Lee said. He was speaking at the AVCJ Private Equity Forum China on Wednesday.
Lee, author of “AI Superpowers: China, Silicon Valley, and the New World Order,“ is a widely followed commentator on AI, and is the founder of startup 01.AI as well as venture capital firm Sinovation Ventures.
“Apps, I would predict, by early next year will proliferate in China much faster than in the U.S.,” Lee said, noting that the cost of training a good AI model has fallen significantly.
“It’s inevitable that China will [build] the best AI apps in the world,” he said. “But it’s not clear whether it will be built by big companies or small companies.”
Lee, whose startup is focused on search apps right how, said it may take five to eight years to take generative AI consumer applications to the next level — a single “super app” that can perform multiple tasks.
The industry will likely need completely new devices versus existing smartphones, he said, adding “the right device ought to be always on, always listening.”
Major Chinese companies such as Alibaba and Tencent have released their AI models and business products. These companies and investors have also backed several AI startups.
Beijing-based ShengShu Technology, backed by Alibaba-affiliate Ant Group, announced Wednesday that its text-to-video model Vidu has introduced a new feature for improving how a main element or character in AI-generated clips can be portrayed consistently, without distortion. That can enable advertisers to create promotional videos for their products.
Vidu was released earlier this year and its basic tools are open to the public, with more advanced capabilities available via subscription. Co-founder and CEO Jiayu Tang told reporters Wednesday that several companies were interested in buying ShengShu’s services, and were not just exploring the tech. More
A top Federal Reserve official on Tuesday unveiled changes to a proposed set of U.S. banking regulations that roughly cuts in half the extra capital that the largest institutions will need.
Introduced in July 2023, the regulatory overhaul known as the Basel Endgame would have boosted capital requirements for the world’s largest banks by roughly 19%.
Instead, officials at the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. have agreed to resubmit the massive proposal with a more modest 9% increase to big bank capital, according to prepared remarks from Fed Vice Chair for Supervision Michael Barr.
A top Federal Reserve official on Tuesday unveiled changes to a proposed set of U.S. banking regulations that roughly cuts in half the extra capital that the largest institutions will be forced to hold.
Introduced in July 2023, the regulatory overhaul known as the Basel Endgame would have boosted capital requirements for the world’s largest banks by roughly 19%.
Instead, officials at the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. have agreed to resubmit the massive proposal with a more modest 9% increase to big bank capital, according to prepared remarks from Fed Vice Chair for Supervision Michael Barr.
The change comes after banks, business groups, lawmakers and others weighed in on the possible impact of the original proposal, Barr told an audience at the Brookings Institution.
“This process has led us to conclude that broad and material changes to the proposals are warranted,” Barr said in the remarks. “There are benefits and costs to increasing capital requirements. The changes we intend to make will bring these two important objectives into better balance.”
The original proposal, a long-in-the-works response to the 2008 global financial crisis, sought to boost safety and tighten oversight of risky activities including lending and trading. But by raising the capital that banks are required to hold as a cushion against losses, the plan could’ve also made loans more expensive or harder to obtain, pushing more activity to nonbank providers, according to trade organizations.
The earlier version brought howls of protest from industry executives including JPMorgan Chase CEO Jamie Dimon, who helped lead the industry’s efforts to push back against the demands. Now, it looks like those efforts have paid off.
But big banks aren’t the only ones to benefit. Regional banks with between $100 billion and $250 billion in assets are excluded from the latest proposal, except for a requirement that they recognize unrealized gains and losses on securities in their regulatory capital.
That part will likely boost capital requirements by 3% to 4% over time, Barr said. It’s an apparent response to the failures last year of midsized banks caused by deposit runs tied to unrealized losses on bonds and loans amid sharply higher interest rates.
Mortgages, retail loans
Key parts of the proposal that apply to big banks bring several measures of risk more in line with international standards, while the original draft was more onerous for things such as mortgages and retail loans, Barr said.
It also cuts the risk weighting for tax credit equity funding structures, often used to finance green energy projects; tempers a surcharge proposed for firms with a history of operational failures; and recognizes the relatively lower-risk nature of investment management operations.
Barr said he will push to resubmit the proposed Basel Endgame regulations, as well as a separate set of capital surcharge rules for the biggest global institutions, which starts anew a public review process that has already taken longer than a year.
That means it won’t be finalized until well after the November election, which creates the risk that if Republican candidate Donald Trump wins, the rules could be further weakened or never implemented, a situation that some regulators and lawmakers hoped to avoid.
It’s unclear if the changes appease the industry and their constituents; banks and their trade groups have threatened to litigate to prevent the original draft’s implementation.
“The journey to improve capital requirements since the Global Financial Crisis has been a long one, and Basel III Endgame is an important element of this effort,” Barr said. “The broad and material changes to both proposals that I’ve outlined today would better balance the benefits and costs of capital.”
Reaction to Barr’s proposal was swift and predictable; Sen. Elizabeth Warren, D-Mass., called it a gift to Wall Street.
“The revised bank capital standards are a Wall Street giveaway, increasing the risk of a future financial crisis and keeping taxpayers on the hook for bailouts,” Warren said in an emailed statement. “After years of needless delay, rather than bolster the security of the financial system, the Fed caved to the lobbying of big bank executives.”
The American Bankers Association, a trade group, said it welcomed Barr’s announcement but stopped short of giving its approval to the latest version of the regulation.
“We will carefully review this new proposal with our members, recognizing that America’s banks are already well-capitalized and … any increase in capital requirements will still carry a cost for the economy and must be appropriately tailored,” said ABA President Rob Nichols.
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