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Fineco Bank pulling out of the UK

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  • ivormonee
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    Another Brexit dividend.
  • friolento
    friolento Posts: 1,372 Forumite
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    ivormonee said:
    Another Brexit dividend.

    control are boarders :D
  • ivormonee
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    friolento said:
    ivormonee said:
    Another Brexit dividend.

    control are boarders :D
    Indeed. Anyway, in Fineco's email they said that the reason they're pulling out of the UK is because of the regulations resulting from Brexit. They're implying that they would not be pulling out of the UK if we were still part of the EU.

  • wmb194
    wmb194 Posts: 3,568 Forumite
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    edited 15 September 2023 at 8:46PM
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    ivormonee said:
    friolento said:
    ivormonee said:
    Another Brexit dividend.

    control are boarders :D
    Indeed. Anyway, in Fineco's email they said that the reason they're pulling out of the UK is because of the regulations resulting from Brexit. They're implying that they would not be pulling out of the UK if we were still part of the EU.

    That could just be a convenient excuse, though. It's just as likely that it's a sub-scale business that isn't making much money and they've decided to give up on it. It wouldn't be the first foreign bank to give up e.g., Citigroup has largely given up on its UK retail business. It isn't guaranteed that Chase won't disappear at some point either as it has been costing a lot and JPM's shareholders have been disgruntled about it.

    Edit: This is from the "2Q23 results presentation." As I guessed, very puny looking.

    https://about.finecobank.com/en/investors/risultati/


  • SouthLondonUser
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    Maybe Fineco would have been unable to scale the platform enough and would have left the UK even without Brexit

    Maybe many foreigners who would have used their multicurrency services left after Brexit

    None of this is sure.

    What is, however, factual and sure, is that Brexit has made it harder for foreign banks to operate in the UK.

    In summary, European firms are no longer able to passport their licence to the UK and must get a UK licence, which is more costly. So not everyone will.

    I would also add that I have strong reservations about banks from small countries raising deposits in much larger countries. E.g. Revolut is licensed in Lithuania (2.8m people, a GDP  which is about 2% that of the UK). The reason is that in these cases foreign depositors are protected by the deposit protection scheme of the small country. If that scheme can't cope, no politician of a small country is going to go to great lengths to bail out foreign depositors. This is exactly what happened with the Icelandic banks which had operations in the UK and Netherlands, like Icesave here. Look it up. The Icelandic scheme couldn't bail out foreign depositors, who ended up being bailed out by their local government. Would these governments do the same now? No one can know for sure. There was also litigation, where it was ruled that the UK and NL have to suck it up because the Icelandic government was under no obligation to bail out foreign depositors.

    I do not have particular reservations on banks from large countries operating in other large countries, especially if, like with Fineco, they can be used for things like trading in other currencies and to convert currencies, and not just for medium to long term deposits.



  • wmb194
    wmb194 Posts: 3,568 Forumite
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    edited 15 September 2023 at 9:30PM
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    Maybe Fineco would have been unable to scale the platform enough and would have left the UK even without Brexit

    Maybe many foreigners who would have used their multicurrency services left after Brexit

    None of this is sure.

    What is, however, factual and sure, is that Brexit has made it harder for foreign banks to operate in the UK.

    In summary, European firms are no longer able to passport their licence to the UK and must get a UK licence, which is more costly. So not everyone will.

    I would also add that I have strong reservations about banks from small countries raising deposits in much larger countries. E.g. Revolut is licensed in Lithuania (2.8m people, a GDP  which is about 2% that of the UK). The reason is that in these cases foreign depositors are protected by the deposit protection scheme of the small country. If that scheme can't cope, no politician of a small country is going to go to great lengths to bail out foreign depositors. This is exactly what happened with the Icelandic banks which had operations in the UK and Netherlands, like Icesave here. Look it up. The Icelandic scheme couldn't bail out foreign depositors, who ended up being bailed out by their local government. Would these governments do the same now? No one can know for sure. There was also litigation, where it was ruled that the UK and NL have to suck it up because the Icelandic government was under no obligation to bail out foreign depositors.

    I do not have particular reservations on banks from large countries operating in other large countries, especially if, like with Fineco, they can be used for things like trading in other currencies and to convert currencies, and not just for medium to long term deposits.



    I realise but the UK has lots of tiny building societies, banks and stockbrokers so it cannot really be that hard but the market is crowded and competitive. Let's also not forget that Fineco's website and app are... A tad difficult to use and very unintuitive. Also, for a bank, where was its savings account? There isn't one. It really didn't try as hard as it could have.
  • SouthLondonUser
    SouthLondonUser Posts: 1,427 Forumite
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    edited 15 September 2023 at 9:36PM
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    "I realise but the UK has lots of tiny building societies, banks and stockbrokers so it cannot really be that hard"

    But you are talking about small domestic banks. If a foreign bank wants to have a full UK licence, then it needs to set up key functions in the UK.

    E.g.   simplifying: Fineco doesn't have Treasury and Compliance functions in London, it relies on the Treasury and Compliance teams in Milan.

    Santander is authorised in the UK, and has UK-based Treasury and Compliance functions, it doesn't rely on the Madrid teams.

    Santander has a big presence in the UK it's obviously worth it for them to have a UK licence.

    For banks with small presence, it won't be worth it. The same points are mentioned in the page you linked: remaining with a branch (ie passporting the Italian licence)  a capital-light business model which relies on the Italian infrastructure

    It's a shame because there isn't a good offering of multi-currency banking and trading accounts. I guess there just wasn't enough of a market for that. Not that they have tried very hard, either.
  • eDicky
    eDicky Posts: 6,645 Forumite
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    Another factor could be the unusual UK environment of fee-free banking in general, which Fineco UK had to fit in with and offer in order to have any attraction, thus limiting their revenue possibilities.
    I'm banking with Fineco in Italy, who have significantly fewer than the myriad of charges imposed by the regular Italian banks with their physical branches everywhere, but they are not totally fee-free and currency exchange rates are not as perfect as those provided by Fineco UK.
    But I can well believe that regulatory difficulties in the Brexit disaster aftermath made the decision to quit more straightforward.
    Evolution, not revolution
  • wmb194
    wmb194 Posts: 3,568 Forumite
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    edited 16 September 2023 at 8:08AM
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    "I realise but the UK has lots of tiny building societies, banks and stockbrokers so it cannot really be that hard"

    But you are talking about small domestic banks. If a foreign bank wants to have a full UK licence, then it needs to set up key functions in the UK.

    E.g.   simplifying: Fineco doesn't have Treasury and Compliance functions in London, it relies on the Treasury and Compliance teams in Milan.

    Santander is authorised in the UK, and has UK-based Treasury and Compliance functions, it doesn't rely on the Madrid teams.

    Santander has a big presence in the UK it's obviously worth it for them to have a UK licence.

    For banks with small presence, it won't be worth it. The same points are mentioned in the page you linked: remaining with a branch (ie passporting the Italian licence)  a capital-light business model which relies on the Italian infrastructure

    It's a shame because there isn't a good offering of multi-currency banking and trading accounts. I guess there just wasn't enough of a market for that. Not that they have tried very hard, either.
    Yes, I realise, but if you think the market's is big enough you can set that up - the smallest BS complies and has just one branch and you could even buy a small British player. Trading212's annual report states that it only had something like eight employees. 

    The thing is, after years in the market Fineco UK *still* only has 23k customers and annualised 2023 revenues at the H1 run-rate of just c.€4m, and this has probably been boosted by the increase in base rates and the fact it doesn't pay interest on deposits. Its offering as a bank and a stockbroker is quite poor, though, and this is its fundamental problem.

    You know something is doing badly when in results presentation after results presentation it only talks about customer numbers and revenue but not profit. I'd imagine that it's actually running at a loss, though.
  • Zanderman
    Zanderman Posts: 4,746 Forumite
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    It's fine(co) with me! We have an account each with Fineco, opened for the incentive a few years back and never used since, partly because their website is so awful and partly as we had no need to use them.

    We were planning to close the accounts - and I think fineco don't make that particularly easy - but if they're going to close them for us that's fine(co)!.
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