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ALEX BRUMMER: Wise float focuses on fintech


ALEX BRUMMER: Wise float builds the UK’s reputation as a good place to start fintech companies

There’s a lot to like about the upcoming float by Wise. By choosing London for listing, it strengthens the UK’s reputation as a good place to start fintech companies.

Five years after the Brexit referendum, fintech has become a focal point of the city’s global ambitions.

Wise opts for direct listing on the London Stock Exchange to set the price rather than letting investment banks dictate the terms. The latter approach backfired at Deliveroo and Made.

Smart decision: five years after the Brexit referendum, fintech has become a focal point of the city’s global ambitions

Founder boss Kristo Kaarmann wants to deepen the relationship with private and business customers by encouraging them to buy shares and offers one bonus share for every 20 shares bought.

The founders are not shrinking violets. Kaarmann describes the behavior of the banks, which dominate the money transfer, as scandalous.

Customers may find the cost of a bank transfer of £ 5 to £ 10 reasonable. The reality is that banks are making huge, undisclosed profits on exchange rate differences.

Wise has a modest fee, doesn’t mind distribution, and employs faster, less clunky technology. It estimates it is eight times cheaper than the big banks and has a competitive infrastructure in the UK with 85 institutions allowing settlement in 88 countries.

Payment innovators like Wise are tolerated by the dominant banks. Businesses, a major Wise target, typically prefer one-stop shopping for banking services, and Wise has no credit facilities.

It operates debit and direct debit operations, but does not want to get involved in the regulatory hassle of lending.

The founders don’t like to talk about the possible valuation, despite the £ 9 billion discussion. If that’s the case, it becomes a big take-out bite.

Among the cornerstones of investors, Edinburgh-based Baillie Gifford believes that the two-class share structure will allow Wise to focus on customers. That should serve as a warning to marauders: hands off.

Purple mist

The prospects for Premier Inn owner Whitbread have been brighter since the hospitality experience after the lockdown was eased on Jan.

There is a tendency to think of Premier Inn as a business travel destination, but the confusion about vacation flights should be good for summer bookings.

The trouble is that the discussion on restoring the health of the underlying business under CEO Alison Brittain has been inundated by the split between investment advisory groups over bonuses.

The 35 percent dissident vote against the decision to carry over a canceled bonus payment for 2020 to the current year is an own goal for the Compensation Committee.

It is uncommon for the lofty legions of the investment company to turn down bonus agreements if the radicals at Pirc don’t mind.

The system remains flawed after decades of executive pay controversy stemming from the 1995 dispute over Cedric Brown’s salary at British Gas. Compensation reports are long and complex and crammed with obfuscation.

Without a doubt, the Danish Chairman of the Whitbread Pay Committee, Frank Fiskers, is a fine fellow with extensive experience in European hotels.

But it doesn’t take a genius to realize that it is naive to commit to a future bonus in a pandemic for a company that has made the necessary layoffs and has benefited from government subsidy programs.

Chairman Adam Crozier, who is at the center of many of his own pay series, should have recognized this.

One explanation for Brittain’s conferred award is that she lacks a long-term bonus plan. But whose fault is it?

The fundamental problem is the comfortable relationship between compensation committees and compensation advisors, most of whom are offshoots of the Big Four accounting firms.

Potential conflicts of interest are many and the ability of some bosses to play the system off and wreak unnecessary havoc among investors is all too easy.

Asset hunt

Another reminder of how British fintech lights up the city. JP Morgan Chase will launch Nutmeg digital fund manager, with 140,000 clients and £ 3.5 billion in assets, for numbers no less than £ 1 billion.

Nutmeg will complement the new UK digital bank Chase. The deal is both a compliment to the UK’s ingenuity and a disappointment as it ends up in foreign hands.

It rustles Chairman Jamie Dimon’s warnings about the city’s decline.

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