While the Friedrich Merz administration cited factors like a low price and concerns about the Italian bank’s “aggressive approach,” behind its rejection of the UniCredit’s proposal, Orcel, on June 18, ended up criticizing Germany’s banking ⁠sector.

“Germany is the market in Europe where customers are the least satisfied. ‌Some ⁠27% of Germans don’t like the services that banks give. It is the market with the highest penetration of fintechs ⁠and where American banks are gaining the most market ⁠share from the top down,” Orcel said during a business conference ⁠in Rome.

UniCredit, on June 15, accused Commerzbank of “misleading the public” over the merger talks. Hitting back at this, Orlopp said on the same day, “We have, of course, simply presented the facts, and ‌we ⁠will continue to do so, because we are the ⁠only ones who actually have access to ⁠them.”

The main bone of contention here has been the fact that UniCredit’s all-share offer comes with a discount that allegedly undervalues the German bank’s shares. As per Commerzbank, none of UniCredit’s institutional investors have tendered their shares. While reaching out to BaFin, Germany’s Federal Financial Supervisory Authority, with the request of investigating UniCredit’s take-up data, Commerzbank stated that the shares came from banks which, in most cases, are counterparties of UniCredit, which reportedly holds derivatives with Nomura, Citi, and BNP Paribas.

“Suggestions that the actual number of tendered shares is lower because these shares have been borrowed from UniCredit are false and without foundation. We have been compelled to clarify our position to set ‌the ⁠record straight because of the continued and relentless dissemination of inaccurate and misleading information, which was interfering with the offer process,” the Italian bank said in a statement, while attacking Commerzbank.

After saying ⁠its goal was to lift its stake just above 30%, UniCredit has so far secured around 40% of Commerzbank, enough to give the Italian venture control of shareholder resolutions at meetings. Despite that, UniCredit skipped Commerzbank’s last annual general meeting, stating that ⁠should it secure sufficient support at a future AGM, it would be in a position to appoint all shareholder representatives on the supervisory board.

“This would have responsibility for appointing the management board,” UniCredit said, adding that the move would have allowed it to ⁠implement a profit-boosting strategy it had previously promised for Commerzbank.

As of June 15, UniCredit’s take-up stood at 11.91% of Commerzbank’s capital, giving the Italian venture an overall holding of 41.9%, including a 26.77% equity stake it had previously built and another 3.22% in share-settled derivatives. UniCredit also holds 13.19% of Commerzbank in cash-settled derivatives.

With both banks digging in their heels in the months-long battle for control of one of Germany’s most important lenders, BaFin’s entry onto the battlefield has now made things complicated. Post-2008 global financial crisis, the German government started holding stakes in Commerzbank. While the ratio stands at 12% currently, the federal administration has been a vocal critique of UniCredit’s tie-up attempts.

“Accepting the offer was already not an option from a financial point of view, as it does not include an appropriate premium on the current share price of Commerzbank’s shares,” BaFin said.

Despite Berlin’s opposition, UniCredit could still win control of the German bank. However, the Merz administration’s 12% stake gives it seats on Commerzbank’s supervisory board, which appoints management and helps oversee its strategy.

BaFin, which also manages the government’s holdings, further supported Commerzbank’s independence, noting that the bank played a critical role in financing medium-sized Mittelstand companies and was an integral player in Frankfurt, the European nation’s financial ‌hub.

Frankfurt prosecutors, on the other hand, have reportedly begun a preliminary investigation into possible market manipulation related to UniCredit’s offer. In response, UniCredit said that it was aware of the matter and that the prosecutors’ response was “in line with protocol when such complaints are filed.”

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TookiTaki is an anti-money laundering software company. The latest funding round was led by Viola Fintech and SIG. In addition, Nomura through its venture capital arm Nomura Incubation Investment also participated in the funding. 

Tomer Michaeli of Viola Fintech, told the local media that, “We found TookiTaki’s approach to be very unique, its pragmatic way of creating an overlay on top of legacy AML systems helps increase accuracy and significantly lower operating costs for financial institutions. Moreover, its regulator-ready “glass box” solution shows an innovative approach and a deep understanding of the challenges in the modern AML solutions market.”

Funds from the extended Series A funding will help the company to develop its product offerings and boost technological innovation. It will also help to encourage further recruitment in Singapore, India and the US offices.

The company plans to aggressively expand its research and development team in the US, Europe, Singapore and India. It has appointed former LinkedIn director Subhas Samanta as vice president of research and development. 

TookiTaki uses machine learning models to analyse and arrive at sound decisions after a series of investigations. The company’s software has two models. The first one looks for suspicious transactions, while the other constantly updates money-laundering patterns categorising them as low, medium, and high-risks. This makes it easier for the company to carry out investigations in the future. 

The post Singapore AML regtech TookiTaki raises $19.2 mn to invest in R&D appeared first on International Finance.

IFM Correspondent 

June 22, 2016: The Indian government led by Prime Minister Narendra Modi made sweeping changes to foreign direct investment (FDI) norms announcing easier terms and conditions for investors in sectors ranging from civil aviation to pharmaceuticals. The government has increased sectoral caps, raised limits under the automatic route and relaxed mandatory requirements for FDI.

The move came a day after Raghuram Rajan, governor, Reserve Bank of India, announced his decision to return to academics at the end of his tenure in September and not seek an extension. The news had sent the equity and currency market into a frenzy with many economists saying that investors might lose confidence in India.

However, investors seem to have regained some of the lost confidence by the changes in FDI rules.

The measures that have been announced are:

1. 100% FDI under the government approval route for trading in food products manufactured in India.

2. FDI above 49% in the defence sector is now permitted through the government approval route. Previously, approval of FDI above 49% also required access to ‘state-of-the-art’ technology, a clause which has been dropped.

3. 100% FDI in broadcasting carriage services, under the automatic approval route.

4. 74% FDI in brownfield pharmaceutical projects under the automatic route and FDI above 74% subject to government approval. Previously, all FDI in brownfield projects was subject to government approval. For greenfield projects, 100% FDI is allowed under the automatic route, the same as before.

5. 100% FDI under the automatic route for brownfield airport projects. Currently, FDI above 74% in brownfield projects requires government approval. For greenfield projects, 100% FDI is allowed under the automatic route, the same as before.

6. 100% FDI in scheduled air transport service, from 49% earlier. FDI up to 49% will be under the automatic route and beyond that will be subject to government approval.

7. 74% FDI in private security agencies, from 49% earlier. FDI above 49% will be subject to government approval.

8. Relaxation of local sourcing norms up to eight years for single brand retail.

Many economists applauded the changes.

Craig Chan, research analyst, Nomura, says, “The announcement of FDI liberalisation measures should help ease investors’ concerns about India, as it should demonstrate that the government’s reform agenda remains in place despite recent uncertainty following the announcement of Rajan’s departure from the RBI.”

Girish Vanvari, head of the tax practice at KPMG in India, said the move will open up the country to global businesses. “The liberalisation of limits in defence, brownfield pharma, airports, private security services, food processing etc can be game changers and be a huge source of employment creation. The move to bring most sectors under the automatic route is a big mindset shift,” Vanvari said in a note.

The government has also decided to allow overseas entities — excluding airlines — to own 100% in domestic airlines as it seeks greater FDI inflows into the country.

But investor are unlikely to rush in soon, says Peeyush Naidu, partner, Deloitte India. “While the increase in FDI for aviation is welcome, as it will allow flexibility, we are unlikely to see investors suddenly rushing to invest in airlines just because the cap of 49% has been removed. Also remember that investment by foreign airlines is still capped at 49%. So it remains to be seen whether other investors, such as PEs and the likes, would have the risk appetite to make such investment,” says Naidu.

Paul Lyons, strategy director, International Bureau of Aviation (IBA), says, “The FDI news can only be seen as encouraging in terms of encouraging competition and stimulating M&A.  We would expect the Middle East carriers and those locations with a large Indian diaspora – such as the US, Canada and the UK – to be among the first to expand operations”.

There is good news for single-brand retail players like Apple Inc. They will now get a three-year blanket exemption from the 30% local sourcing norm. Additionally, there will be another five-year exemption if the company produces a product which is state-of-the-art and has cutting edge technology.

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