Business

VILNIUS — Thanks in part to Brexit, Lithuania is becoming a fintech hub as a growing number of UK-linked digital financial companies are getting licences there so they can continue to operate in the European Union.

The Baltic eurozone state with a population about a third the size of London is now leading the EU in fintech with over 230 companies, according to the Invest Lithuania government agency.

Some two dozen have links to Britain.

One of the first to come after the 2016 Brexit referendum was London-based Revolut bank.

"Lithuania is currently a hub for our European operations after Brexit," Virgilijus Mirkes, CEO of Revolut Bank in Lithuania, said.

"We opened our Vilnius office in 2017 after considering the fintech-friendly business environment," he said, pointing to a speedy licencing process and good local talent.

Invest Lithuania estimates that the sector employs more than 4,000 people in the country — an increase of more than 18 per cent in the past year.

"During the Brexit transition period, fintech companies began to search for an alternative EU harbour and thus Lithuania has become one of their primary options," said Jekaterina Govina, a senior official in charge of supervision at Lithuania's central bank.

'Continue to scale' 

Lithuania says it can process licence applications in as little as three months, more quickly than anyone else in the EU.

The central bank has granted a total of 118 fintech licences allowing companies to operate anywhere in the EU — far higher than Germany with 77 licences and France with 76, according to a report from Invest Lithuania.

Britain is still first by far with 610 licences.

Lithuania's central bank has also set up a "regulatory sandbox" — a framework to allow fintech companies to test out innovations.

"That was a lighthouse for companies searching for a cure for Brexit," Govina said.

While the capital Vilnius does not offer the big city attractions of London and getting there is tricky at the moment because of coronavirus restrictions, internet speeds in Lithuania are good and it has a tech-savvy workforce.

Revolut employs some 200 people in the country, including in product development and customer support, and Mirkes said the company would "continue to scale [up] our operations here".

Revolut started its operations in Vilnius in a gleaming glass-fronted office hub called Rockit, which is funded by Swedbank and provides workspace and industry events for some 30 member companies.

"Our hub helps to create a fintech community where foreign companies can easily find local partners," Rockit CEO Sarune Smalakyte told AFP during a recent visit to the space.

Need for 

firmer approach 

But the push into fintech also comes with risks.

Sergejus Muravjovas, CEO of Transparency International Lithuania, said "the ambition to become a fintech centre comes with a responsibility to take money laundering prevention to a new level.”

"There is a need for a firmer and more data-driven approach from monitoring the institutions involved," he said.

Govina said the authorities were "fully aware" of their responsibilities as a licence in the Baltic state opens the gates to the entire EU market.

Another company that has recently set up in Lithuania is London-based DiPocket Group, which has developed an e-money wallet app.

"Brexit was definitely the trigger event," said DiPocket CEO and co-founder Fedele Di Maggio.

He said he found the central bank "both strict and supportive" and described the local workforce as "generally English-speaking and with reasonable financial expectations".

WASHINGTON — Fears that inflation could spiral out of control due to a massive US stimulus package are overblown, IMF Chief Economist Gita Gopinath said on Friday.

Her argument contradicted critics of US President Joe Biden's proposed $1.9 trillion rescue package for the world's largest economy, who say the amount is excessive, and even those Democratic economists who have also raised concerns about price spikes.

Gopinath estimated that with the full amount of stimulus, inflation "would reach around 2.25 per cent in 2022, which is nothing to be concerned about", she said in a blog post.

Some economists, including former Treasury secretary Larry Summers, have urged caution saying excess spending could spark an inflationary spiral that the Federal Reserve (Fed) would find difficult to control.

Rising prices would erode purchasing power while higher interest rates to control inflation would send the cost of borrowing soaring in an economy already awash in debt amid the coronavirus pandemic.

Gopinath noted the "concerns about an overheated economy that could push inflation well above the comfort zone of central bankers". But she said "the evidence from the last four decades makes it unlikely." 

In the decade following the global financial crisis, US annual inflation barely cracked the Federal Reserve's 2 per cent target, and in December the rate was just 1.3 per cent.

Gopinath said the proposed government aid will push US gross domestic product up 5 to 6 per cent over three years, which would recoup the 3.5 per cent contraction in 2020.

The IMF has consistently supported a large US stimulus plan to recover from the COVID-19-induced recession that has left millions jobless.

US Treasury Secretary Janet Yellen repeated on Thursday the administration view that "the price of doing too little is much higher than the price of doing something big”.

Yellen noted that inflation has been very low for over a decade, and while it remains a risk "it's a risk the Fed and others have tools to address."

Market turbulence 

Yellen, like US central bank chief Jerome Powell, who succeeded her in the post, stressed that true unemployment in the US is close to 10 per cent — above the government's official rate of 6.3 per cent last month — and about nine million people remain unemployed, which she says justifies the size of the government aid.

But growing signs that the economy is coming back to life as businesses reopen amid an accelerating vaccination campaign have caused markets to begin to fret about impending price hikes.

The yield on 10-year Treasury notes, a benchmark for inflation expectations, has been rising sharply since October, and accelerated since the start of the year to around 1.3 per cent, the highest since before the pandemic.

Those fears got a boost from a spike in the producer price index, which showed wholesale inflation surged 1.3 per cent in January, the largest since the index was revamped in December 2009.

But Powell last week brushed off inflation concerns, saying after prices collapsed last year, some sharp increases are expected but would be unlikely to last.

In the current environment, "we want to see actual inflation," before the Fed would take any steps to raise interest rates or roll back the massive bond-buying programme, Powell said.

His colleague John Williams at the Fed's New York branch said he was "not really concerned about stimulus... right now being excessive”.

He said the central bank is not worried about Treasury yields and so far is not seeing any signs of excessive behaviour by businesses or households.

Gopinath, the IMF economist, acknowledged "the danger of market turbulence" due to temporary price swings, or bad news about new virus variants.

But she said that in the wake of the crisis "considerable slack remains in the global economy" which would dampen price pressures, and worldwide supply chains have largely not suffered disruptions, removing another potential source of rising costs.

PARIS — European aircraft giant Airbus said Thursday it was able to limit its losses last year, even as the airline sector collapsed in the wake of the coronavirus pandemic.

Airbus said in a statement that it booked a net loss of 1.1 billion euros ($1.3 billion) in 2020.

That was a slight improvement over the previous year's bottom-line loss of 1.4 billion euros, when Airbus was hit with a huge fine of 3.6 billion euros in a corruption scandal.

The company's US rival Boeing had a massive loss of $11.9 billion last year as the Covid-19 crisis played out, combined with getting its key 737 MAX aircraft back in the air.

"The 2020 results demonstrate the resilience of Airbus in the most challenging crisis to hit the aerospace industry," said chief executive Guillaume Faury. 

Group revenues plunged to 49.9 billion euros from 70.5 billion euros a year earlier, "driven by the difficult market environment impacting the commercial aircraft business with 34 percent fewer deliveries year-on-year," Airbus said.

A total of 566 commercial aircraft were delivered, comprising 38 A220s, 446 A320s, 19 A330s, 59 A350s and four A380s, compared with 863 aircraft in 2019.

Airbus said it saw no immediate improvement for the industry's prospects for now.

"Many uncertainties remain for our industry in 2021 as the pandemic continues to impact lives, economies and societies," Faury said.

WASHINGTON — The publisher of the Chicago Tribune, New York Daily News and other regional newspapers has struck a deal to be sold to a hedge fund with a reputation for aggressive cost-cutting at its media outlets.

Alden Global Capital said it would pay $650 million to acquire the shares it does not already own in Tribune Publishing, according to a joint statement on Tuesday on the latest deal consolidating the struggling US newspaper sector.

As part of the agreement, the companies agreed to spin off the Baltimore Sun to a nonprofit group formed this year called Sunlight for All Institute, which will operate the daily and its affiliates in Maryland. 

Tribune chairman Philip Franklin said that the publishing group's committee examining offers was able to negotiate "a premium, all-cash price, which the committee concluded was superior to the available alternatives".

The deal comes with newspapers across the United States facing a financial calamity worsened by the coronavirus pandemic, with several bankruptcies and consolidations in recent years.

The Alden deal drew fire from some media watchdogs concerned about the hedge fund's reputation for slashing costs at newspapers it has acquired.

News Guild President Jon Schleuss called the buyout "a terrible deal for the company, the workers, the shareholders and our democracy", adding in a tweet: "Alden is only interested in extreme short-term profits by cutting everything to the bone."

Vanity Fair media writer Joe Pompeo recently called Alden "the hedge fund vampire that bleeds newspapers dry," citing its downsizing of newsrooms at The Denver Post and other local newspapers.

Washington Post columnist Margaret Sullivan in 2018 called Alden "one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism".

The deal — subject to shareholder approval — would take Tribune Publishing private and include the Hartford Courant, South Florida's Sun Sentinel and Orlando Sentinel, Virginia's Daily Press and The Virginian-Pilot, as well as The Morning Call of Lehigh Valley, Pennsylvania.

LONDON — Bitcoin soared above $50,000 for the first time on Tuesday as an increasing number of corporate heavyweights back the world’s most popular virtual currency.

At around 12:35 GMT, Bitcoin hit an all-time high of $50,547.70, marking a 4.4-per cent gain since Monday.

Bitcoin, once the preserve of internet geeks and hobbyists, has since exploded in popularity and has now rocketed by almost 75 per cent in value so far this year.

“The crypto king has crossed the 50K price level for the first time as institutions are all over it,” said AvaTrade analyst Naeem Aslam.

“There is a lot of FOMO [fear of missing out] among traders as the price is going through the roof and we have limited supply.”

It later pulled back to stand at $49,080.30 at about 13:45 GMT.

“The rally has still a lot of power left and the move is going to continue towards the actual target of $100,000,” Aslam said.

“Of course, there will be some bumps but investors should consider them as an opportunity to bag some bargains.”

Bitcoin has been on a meteoric rise since March, when it stood at $5,000, spurred by online payments giant PayPal saying it would allow account holders to use cryptocurrency.

The unit blasted its way past $45,000 last week after Elon Musk’s electric carmaker Tesla invested $1.5 billion in the virtual unit.

In a further boost, Tesla also unveiled plans to accept the cryptocurrency from customers buying its vehicles.

Wall Street player BNY Mellon then jumped aboard the Bitcoin bandwagon, announcing plans to accept digital currencies.

The moves came after Mastercard also announced it would accept the unit, even as many regulators remain sceptical.

Adding further legitimacy, Twitter chief Jack Dorsey revealed last week that he and rap mogul Jay-Z were creating a fund aimed at making bitcoin “the Internet’s currency”.

Bitcoin, which was launched back in 2009, hit the headlines in 2017 after soaring from less than $1,000 in January to almost $20,000 in December of the same year.

The virtual bubble then burst in subsequent days, with bitcoin’s value then fluctuating wildly before sinking below $5,000 by October 2018.

However, strengthening corporate support has transformed the outlook this time around, commentators say.

“Growing corporate support for the crypto makes this a very different market to what it was in 2017,” noted Markets.com analyst Neil Wilson.

Bitcoins are traded via a decentralised registry system known as a blockchain.

The system requires massive computer processing power in order to manage and implement transactions.

That power is provided by miners, who do so in the hope they will receive new bitcoins for validating transaction data.