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Message: <blockquote data-quote="Jaysen" data-source="post: 28287" data-attributes="member: 1">Monzo Interested in US Banking LicenseBy [USER=3115]@Ayah[/USER] The Story Monzo has taken a significant step towards its international expansion plans by applying for a US banking license from the Office of the Controller of the Currency (OCC). The London-based FinTech start-up launched in the US in June 2019 under a partnership with Ohio-based Sutton Bank, but currently lacks a banking license, which in turn restricts its product offering.The move to become a fully licensed bank will open up greater commercial opportunities and allow Monzo to further tap into the US market. Once licensed, Monzo can offer US customers lending products and fully insured deposit accounts. Monzo has reported it already has a waiting list of 20,000 US customers, signalling the significant demand for their services.The US Federal Deposit Insurance Corp (FDIC) recently began issuing banking licenses again after a plunge in approvals following the 2008 financial crash. Monzo expects its approval to be received within 18 to 24 months, having operated as a UK licensed bank for the past three years.What It Means For Businesses and Law FirmsMonzo has beaten ‘challenger bank’ rival, Revolut, in applying for a US banking license. Revolut similarly entered the US market in March 2019, likewise in partnership with an existing bank. The two have competed fiercely within the European market and submitting an application may allow Monzo to gain a solid foothold in the US banking market ahead of their main competitor. This is important given the number of new entrants and growth of competition within the online banking space; European competitor, N26 similarly entered the US market in 2018.Digital banks have experienced some decline in 2020. Monzo, Revolut, Starling and N26 have experienced a decline in growth from 18-36% within their native markets, due to coronavirus (Priori Data). Addressing coronavirus, Monzo is hopeful that “the majority of disruption will have passed by the time Monzo US is ready to launch the bank”. Yet, despite this apparent signal of confidence in the banks international expansion, Monzo has been impacted by the current pandemic. Several hundred staff in the UK were furloughed, and the CEO has announced he will forgo his salary for the next 12 months. Such moves into the US will hopefully allow for the creation of a more resilient business model in future.Furthermore, there are wider concerns that during tough economic times customers will return to traditional banks, where they feel their money is more secure. Given the recent increase in cybersecurity hacks, challenger banks must work harder to prove their viability if they have any chance of pulling in more income-generating consumers. Retailers Receive New Rent ProtectionsBy [USER=3460]@Alice Manners[/USER] The StoryAs reported in TCLA’s earlier April updates, the COVID-19 pandemic has caused many high street retailers and restaurants to withhold their rent payments, including Burger King, Boots and Malatan, due to cash flow difficulties.However, emergency legislation introduced by government, notably section 82 of the Coronavirus Act, implemented at the end of March, has prevented the forfeiture of commercial leases in response to non-payment of rent. This provided protection from eviction until at least the end of June. However, in recent weeks, landlords have trialled other methods of recovering debts owed to them, which has required the government to once again step in.Commercial rent protections have now been bolstered. New protections announced by the Business Secretary on the 23rd April prevent landlords from taking action using other “aggressive” methods, including the Commercial Rent Arrears Recovery (“CRAR”) process. CRAR involves landlords instructing agents to take control and sell tenants’ assets, to recover rent owed. Commercial landlords identified CRAR as a loophole in the earlier legislation, however it has now been banned until 30th June.A further protective step taken has been to ban winding up petitions, which allow unpaid creditors (such as landlords to whom rent is owed) to petition the courts to force an insolvent company into compulsory liquidation. Matalan was recently issued with a winding-up petition after failing to pay rent. Additionally, Intu Properties (who, if you remember from the earlier article, had said it neither able, nor willing to bankroll well-capitalised brands who withheld rent payments) threatened several of their tenants with statutory demands.Although the exact details are not yet known, it is understood that under the forthcoming Corporate Insolvency and Governance Bill, landlords will be temporarily prohibited from using any of the above measures until they are owed 90 days of unpaid rent.What It Means For Businesses and Law FirmsThe new protective measures introduced will impact businesses across a range of sectors. Prior to the ban, gym and health club operators, including Pure Gym and David Lloyd Leisure had received threats of CRAR action from their landlords.Although retailers are being asked only to “pay what they can,” many high-street businesses will still understandably suffer. Cath Kidston, Warehouse and Oasis are among the latest retailers to fall into administration since the COVID-19 lockdown.There remains little indication of how to prevent abuse of these concessions, commercial landlords will be working to cooperate with retailers, ensuring those that can pay rent are doing so. Law firms will be playing a continuing role in helping retailers and commercial lawyers navigate this time, with further difficulties likely arising after June when the current provisions are due to end.Law Firms in the COVID-19 crisis Shearman & Sterling are offering a voluntary leave programme – the option of sabbaticals for global staff and fee-earners, at 30% pay. The sabbaticals may last between three to six months. Participants’ salaries will be topped up to 40% if they engage in pro bono work during their leave (Law.com).Reed Smith deferred equity partner bonus payments. Equity partners will receive half of their bonus amount on the scheduled payment date, with the other half deferred until three months later. RS have already reduced partner distributions and deferred bonuses for other staff (Law.com).Travers Smith reduced monthly drawings for partners with immediate effect. Partner profit distributions have also been deferred. The firm has furloughed a “small number” of front of house, post room and hospitality roles, but not fee-earners (The Law Society Gazette).Mishcon de Reya announced that if market conditions worsen, staff will be asked to sign up to a reduced 3.5 day working week (Law.com).Pinsent Masons confirmed they are in discussions to implement a reduced working week, with a pro rata reduction in staff pay during this period (Law.com).Clyde & Co furloughed some business support staff, postponed salary reviews and promotions, alongside pausing certain recruitment processes. Partner profit distributions have also been placed on hold (The Lawyer, The Law Gazette).CMS announced the deferral of partner distributions from July until later 2020 (Law.com), however the firm has made hires elsewhere, hiring a new Head of Capital Markets (The Lawyer). ‘Business as usual’ – the deals which went ahead as usual this week:<ul> <li data-xf-list-type="ul">The management buyout of financially distressed retailer, Cath Kidston. Shoosmiths’ restructuring team is representing the current PE owners of the retailer (Baring Private Equity Asia), whilst Mayer Brown are advising on the pre-pack administration deal. </li> <li data-xf-list-type="ul">The acquisition of TI Media by media company, Future, was closed last week. The acquisition was made from PE firm, Epiris. Simmons & Simmons acted for the buyer and Macfarlanes PE, competition and M&A teams acted for the seller.</li> <li data-xf-list-type="ul">Several City firms have been instructed on the acquisition of another financially distressed retailer, Laura Ashley. DLA Piper is handling the restructuring, employment and pensions aspects of the transaction and Travers Smith is representing the administrators, PwC.</li> </ul></blockquote>

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