FinTech Futures: Top five news stories of the week – 18 October 2024
Here’s our pick of five of the top news stories from the world of fintech this week, featuring Barclays, TD Bank, Klarna and more.
TD Bank hit with $3bn in fines over AML failures
TD Bank has received the “largest penalty ever imposed under the BSA”
Toronto-Dominion Bank (TD Bank), the sixth-largest bank in North America, is set to pay around $3.09 billion in fines following the resolution of investigations related to its US Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance programmes.
The total includes a record $1.8 billion penalty from the US Justice Department, described by Deputy Attorney General Lisa Monaco as the “largest penalty ever imposed under the BSA”.
Announcing the resolution, US Attorney General Merrick Garland says the bank “pled guilty to multiple felonies, including conspiring to violate the Bank Secrecy Act and commit money laundering”.
In a statement, the US DOJ says: “According to court documents, between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its US AML policies, procedures, and controls but failed to take appropriate remedial action.”
In its statement on the resolution, TD Bank says: “Plans are in place to address the requirements and limitations contained in the consent orders, including adjustments to the bank’s US balance sheet. These actions will provide the asset capacity required to serve and support US customers’ financial needs without interruption, now and into the future.
“TD has the financial strength, stability, and operational flexibility to deliver the required US AML remediation programme, continue to serve the financial needs of its more than ten million US customers, and invest to strengthen the business.”
SoFi secures $2bn deal with Fortress Investment Group to expand loan platform business
US consumer fintech SoFi has secured a $2 billion loan platform business agreement with Fortress Investment Group, a global investment manager headquartered in New York, to help fuel the company’s personal loan origination activities.
These activities include referring pre-qualified borrowers to loan origination partners and originating loans on behalf of third parties, which are currently delivered through SoFi’s loan platform business.
CEO Anthony Noto says the business’s planned expansion is part a strategy to “diversify toward less capital-intensive and more fee-based sources of revenue”.
Barclays signs agreement to become exclusive issuer of GM credit card programme
Barclays signs partnership agreement with GM
Barclays US Consumer Bank has signed a long-term credit card partnership agreement with General Motors (GM), through which it will become “the exclusive issuer of the GM Rewards Mastercard and the GM Business Mastercard in the United States starting next summer”.
The bank will replace Goldman Sachs as the issuer of the US automotive giant’s credit card programme. Financial terms of the deal have not been disclosed.
GM and Barclays say the bank will be “acquiring the card programme’s receivables from the current issuer next year”, with the deal serving to boost the bank’s credit card portfolio in the US as it looks to “build upon its growth strategy announced last February”.
Stripe reportedly in discussions to buy stablecoin infrastructure start-up Bridge in potential $1bn deal
US payments giant Stripe is reportedly in advanced talks to buy stablecoin infrastructure start-up Bridge in a deal potentially worth $1 billion, according to a report by Bloomberg citing sources familiar with the discussions.
Neither Stripe nor Bridge have officially confirmed the talks, and it remains possible that the transaction may not come to fruition.
Launched in 2022, Bridge operates an orchestration API that enables companies to store, move and accept stablecoins. This sits alongside an issuance API, which companies can use to issue their own form of stablecoin.
Klarna sells UK loan portfolio to hedge fund Elliott Advisors in £30bn deal
Klarna sells UK loan portfolio to Elliott Advisors
Swedish buy now, pay later (BNPL) fintech Klarna has signed a multi-year agreement with a subsidiary of funds advised by London-based Elliott Advisors (UK) Limited to sell “substantially all of Klarna’s short-term, interest-free product receivables in the UK”.
The agreement is expected to free up an estimated £30 billion in funds for Klarna, which will retain “all consumer-facing activities, including underwriting and servicing” upon the deal’s completion while, according to CFO Niclas Neglén, being able to “deploy shareholder equity more effectively”.
The agreement comes as Klarna continues to prepare for its highly anticipated stock market debut, which Bloomberg reports could occur next year.
