EU watchdog sets out software capital relief for banks

LONDON (Reuters) – The safety buffers of banks in the European Union would swell by billions of euros under proposed rules that allow lenders to include the value of software investments like cybersecurity in capital calculations.

Currently a bank must deduct the value of software from its capital buffer upfront, adding 36 basis points to its core ratio or mandatory measure of stability.

The European Banking Authority (EBA) said banks will be allowed to “amortise” or taper the value of software for capital purposes over three years.

That would boost capital by about 20.2 billion euros in 2020 across a sample of 64 banks, and by 20 billion euros in 2021, it said.

“The proposed approach is designed to be simple to implement and applicable to all institutions in a standardised manner, as is the case today with the deduction treatment,” the EBA said in a statement on Wednesday.

EU policymakers had already agreed to soften the rule to help banks keep lending to pandemic-hit businesses, and the European Commission is expected to rubberstamp the EBA’s proposals for introduction this year.

It marks a big win for banks who have long argued that current rules put them off updating cybersecurity systems and innovating in digital services for customers.

“The existing approach also distorts the global playing field, particularly when compared to the U.S., where banks can treat software investments as tangible assets that do not have to be deducted from a bank’s capital ratio,” the European Banking Federation said in a statement.

The EBA told EU lawmakers last year to avoid hasty changes, saying software was likely to be worthless when a bank goes bust as it could not be sold separately.

UK regulators have spoken against including the value of software investments in capital ratios, noting numerous high profile

CHR launches website about capital punishment

The Commission on Human Rights (CHR) launched Rights to Life website, a database of jurisprudence, news articles and resources about death penalty, in an effort to “expose the ugly truth” about capital punishment. On the 18th World Day Against the Death Penalty on Saturday, which celebrates the victories won in the battle to abolish capital punishment, CHR commissioner Karen Gomez Dumpit said the human rights body “takes this time to take stock our responses to the challenge of its reintroduction by the current administration.” —Nikka G. Valenzuela

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Problem with BSE website; Anil Singhvi talks to Dharmesh Mehta of DAM Capital

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Vedanta Delisting Update: Today is the last date for tendering Vedanta shares for delisting bid but the bidders are unable to bid as there was a problem with the BSE website today. Zee Business Managing Editor Anil Singhvi talked to the advisor of Vedanta Delisting issue Dharmesh Mehta, MD & CEO at DAM Capital and asked whether they will ask for one more day for bidding. Mehta replied to Anil Singhvi that they have raised the issue with the BSE and final decision in this regard is vested with SEBI only.

On problem in the BSE site from today morning, Dharmesh Mehta told Anil Singhvi, “There is problem with the BSE website from today morning and it is not getting updated since 11:00 AM. We have raised the issue with the market regulator body SEBI and hopefully they will take proper decision in this regard.”

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On whether Vedanta will ask for one more day being given for the bidder on Monday to tender their Vedanta shares for delisting, Mehta told Anil Singhvi, “This is not in our hands. In fact, we have raised the issue with the market regulator and now SEBI will take decision in this regard. In they feel, they can increase the last date of bidding to Monday too. But we don’t have any role to play in it except raising the problems being faced by the bidders while bidding.”

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Anil Singhvi also asked Mehta that Vedanta delisting is taking place at BSE while

Why the CEO of a $1 billion startup chose debt capital over VC funding

  • In February, Quantum Metric CEO Mario Ciabarra was fielding calls from investors at a rapid clip and getting unsolicited term sheet offers that valued the company at $1 billion. 
  • The term sheets offers slowed once the coronavirus hit but his company kept booming, growing annual recurring revenue at 70%, he told Business Insider.
  • By June, VCs were calling again, but the valuations were lower, even though revenue-under-contract had grown, said Ciabarra. 
  • So he decided not to take on a new round of funding yet. Instead, he opted for a $25 million loan from Silicon Valley Bank until he could secure a venture funding round at the terms he wants.
  • Visit Business Insider’s homepage for more stories.

In February, Quantum Metric CEO Mario Ciabarra was fielding calls left-and-right from venture capitalists eager to pour funding into the company.

“We weren’t actually trying to raise any specific amount of money,” he told Business Insider. “Of course, we entertain conversations cause it’s great to get to know folks. And we started getting term sheets that were unsolicited.”

Investors were also valuing the young startup at roughly $1 billion, he said. That’s an eye-popping valuation for a company that launched in 2011, especially considering that Quantum Metric’s last funding round was a $25 million Series A just two years ago that pegged the firm’s worth at $125 million, according to an estimate from Pitchbook. 

In March, once the pandemic brought much of the globe to a grinding halt, those offers began to stop trickling in at the same pace. But then in June, when Quantum Metrics got a new round of solicitations, Ciabarra said the valuations weren’t as high.

This was particularly baffling to Ciabarra because he says business is booming in 2020. Quantum Metric is experiencing 70% growth in annual recurring revenue, an

Small software companies find a home with ESW Capital

ESW, short for enterprise software, is controlled by Texas billionaire Joseph Liemandt. Over the past couple of decades, the firm has bought more than 100 companies in deal sizes ranging from less than a million dollars to at least $460 million. ESW aims for at least 30 more acquisitions next year as the big companies that are its target customers rely ever more heavily on technology to get through the coronavirus pandemic.

Austin, Texas-based ESW has the infrastructure—managers, lawyers, recruiters, developers and sales professionals—that small companies struggle to afford. It also has the cash to allow early investors and founders to move to the next creative challenge.

Source: Court documents

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Source: Court documents

Andrew Einhorn co-founded media-intelligence company Synoptos in 2014 and sold the Virginia-based provider of real-time reputation-management software to ESW last year for an undisclosed sum. Synoptos had been growing steadily but its founders wanted it to expand faster, either by raising venture capital in exchange for partial ownership or by selling the company outright to a large company like ESW, he said.

ESW, Mr. Einhorn said, offered “founder-friendly” terms and, important for him, allowed Synoptos customers to tap into other software products as part of the subscription service. He is now chief executive of LevelFields Inc., a financial-technology startup that hasn’t come to market yet, and says he has no regrets about selling to ESW.

Instead of buying and selling companies the way private-equity firms do, ESW operates the software businesses it buys, increasingly through its Aurea Inc. unit.

Source: Court documents

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Source: Court documents

Technology created by the small businesses ESW has bought is often collected in a library of software tools for sales and marketing, collaboration and integration, and other business essentials. ESW sells access to the collected offerings under a subscription model.

The deal