Top five stories of the week – 22 July 2022
Here’s our pick of five of the best news stories from the world of finance and technology this week.
Australia’s ANZ snaps up Suncorp Bank in $3.3 billion deal
Australian banking and finance company ANZ is 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 growth in its retail and commercial business “while improving the geographic balance of its business in Australia”.
The acquisition includes about $32 billion in mortgages, $30 billion in deposits and $7.5 billion in commercial loans.
ANZ says Suncorp Bank will “initially operate under its existing authorized deposit-taking institution license with no changes to the total number of Suncorp Bank branches in Queensland for at least three years from completion”.
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BNPL firms Zip and Sezzle agree to terminate the proposed merger agreement
Zip and Sezzle mutually agreed to terminate the merger
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 end the deal.
The merger was originally announced earlier this year with Zip looking to boost its global expansion plans, particularly its entry into the US market.
However, in an announcement to the Australian Securities Exchange (ASX), Zip cited “current macroeconomic and market conditions” as a reason behind the termination.
Despite this, the firm adds that the US “remains a core market and area of focus, and a significant opportunity for the business”.
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Starling withdraws Irish banking license application to rethink expansion
British challenger Starling Bank has withdrawn its application for a banking license in Ireland in a reassessment of its global expansion strategy.
The company had already completed the first phase of its license application with the Central Bank of Ireland, but has now decided that the move is “no longer a top priority”.
Starling says it will focus on “other expansion projects” instead, taking the 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).
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US regulators fine Bank of America $225 million for ‘improper payment’ of unemployment benefits
The CFPB has fined BoA $100 million
The Consumer Financial Protection Bureau (CFPB) has fined Bank of America (BoA) $100 million for “botching” the payment of government unemployment benefits at the height of the pandemic.
“Bank of America automatically and illegally froze people’s accounts with a flawed fraud detection program, giving them little recourse when in fact there was no fraud,” the CFPB says.
In a separate order, the Office of the Comptroller of the Currency (OCC) also fined the bank $125 million for “violations and unsafe or unsound practices related to the bank’s administration of a prepaid card program to distribute unemployment insurance and other government benefit payments.”
read more here
The digital challenger Varo Bank is laying off 75 employees in an attempt to cut costs
San Francisco-based digital bank Varo has laid off 75 employees as it looks to restructure in pursuit of profitability.
In an announcement on the bank’s website, chief executive Colin Walsh said the firm was “not immune to the effects of our current environment” and that the job cuts were an “extremely tough decision” taken to ensure Varo has sufficient capital to carry out its strategy and “the road to profitability”.
In addition to the job cuts, Varo has taken steps to reduce the burn rate, “including limiting hiring to the most critical roles and pulling back on marketing investments in the short term”.
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