Square sued over privacy issues; Banks eye Australia market

Wall Street Journal

Wrong number
Square is being sued by a California man who says the payments company violated privacy laws when it accidentally forwarded a digital receipt containing information about his medical history to one of his friends. The man “paid a bill in early May at a health-care provider that used a Square device to process credit cards. Shortly thereafter, Square allegedly sent a text message with information about the treatment he received to the friend, an act that his attorneys said was a breach of rules guarding patients’ confidentiality.” His lawyers are seeking class action status for the suit.

David Paul Morris/Bloomberg

“Misfired receipts issued by Square have ruined surprise gifts, spilled secrets, informed spouses of the spending habits of their significant others and unnerved consumers who wondered how stores got their contact information when they don’t remember providing it,” the paper reported last month. “The mishaps arise from the way in which Square links credit and debit cards with different individuals. Shoppers at small businesses that process payments through Square can opt to receive a digital receipt for their purchase by entering an email address or a mobile phone number into a Square-connected smartphone or tablet at the checkout line.”

New spots
International banks, including Wells Fargo and Standard Chartered, “have created new chief financial officer positions in continental Europe to satisfy regulatory requirements that will kick in once Britain leaves the European Union. Regulations and frameworks that currently govern the U.K.’s financial sector — including the system known as passporting that lets U.K.-based banks offer their services across Europe — will no longer apply once the U.K. has left the bloc. That has prompted financial services firms that manage their European operations from London to apply for new banking licenses or expand their business on the continent in preparation for Brexit.”

The ties that bind
Bank of America agreed to lend $90 million to one of the largest private prisons over the next five years, shortly before it announced it would end lending to the industry. The incident demonstrates that “cutting ties with entire industries has proven complicated. Bank of America’s announcement last week followed pledges to stop lending to some fossil-fuel companies and gun manufacturers. But because of pre-existing relationships, the bank is on course to provide credit to some of them for years to come.”

Financial Times

Opportunity down under
Australia’s Big Four banks “face an unusual threat to their cozy oligopoly: cashed-up foreign rivals.” HSBC, ING, Rabobank and Citigroup — “which has built up A$14 billion in assets since becoming one of the first foreign banks to be granted a banking license in the mid-1980s” — are among the banks looking to establish a foothold there.

“This comes as Australia’s big four — Commonwealth Bank of Australia, National Australia Bank, ANZ Bank and Westpac — are struggling to grow or are even shrinking … as they struggle to rebuild their reputation after a Royal Commission inquiry that exposed widespread misconduct.”

At the same time, the Big Four, which control more than 85% of the market in nearby New Zealand, may be forced to sell their subsidiaries there, “scale back investment or increase the cost of loans if the Reserve Bank of New Zealand moves forward with a plan to dramatically increase the amount of capital they must hold.” The Reserve Bank has proposed requiring banks to “hold enough capital to withstand a once-in-200-years crisis, putting them among the highest-capitalized banks in the world.” The Australian banks “told the RBNZ that its plan could have dire consequences for the profitability of their local bank operations and the wider economy.”

Rethinking privacy
Central banks should issue digital currencies of their own in order to “protect financial stability, monetary policy and access to public money,” Jean-Pierre Landau, a former deputy governor at the Banque de France, argues in an op-ed.

The idea of a Central Bank Digital Currency “must be openly debated as the digitalization of money forces us to reconsider and rethink the place of privacy in our lives,” he writes.

The Bank for International Settlements is helping central banks develop their own digital currencies.

Elsewhere

Date set
Deutsche Bank’s supervisory board is scheduled to meet on July 7 to discuss “a major restructuring that may result in as many as 20,000 job cuts. In addition to the job cuts, Germany’s flagship lender is considering trimming its management board. The investment bank would be represented on the board by [CEO Christian] Sewing rather than having a seat at the table, as is currently the case.”

Quotable

“This is Citi’s golden moment. In the wake of the Royal Commission, the big four banks have a lot of change they need to go through. There’s structural change, process change, policy change, technology investment and all of these things take time. I can’t imagine how growth could be high on their agenda.” — Alan Machet, CEO of Citigroup’s consumer bank, about the opportunities present for foreign banks in Australia