Corporate treasurers have barely had a moment to catch their breath. A pandemic, geopolitical conflict, rising interest rates, financial market volatility, bank collapses, and other major issues have caused a relentless amount of disruption.
But what some treasury teams might not yet be adequately grasping is that it is not a temporary state: volatility is the new normal and corporate treasury teams must adapt with urgency or risk getting caught unprepared if the next adverse event impacts their organization’s financial health even more directly.
In particular, corporate treasury teams must take steps to build their own safety net—not for “normal” fluctuations in operating conditions, but for a world where regular volatility is itself the norm. Doing so is key to ensuring alignment with the CFO and broader C-suite’s strategic goals in ever-changing conditions.
Don’t let past stability mislead you into overconfidence in your financial strength and flexibility. Effective corporate treasury planning and execution are challenging even in the best of times, and it’s become an order of magnitude more difficult given now-ubiquitous choppiness in virtually every industry.
Corporate treasurers and the office of the CFO can strengthen their organizational alignment and stability if they take proactive steps to adapt. Consider these three strategies for doing so.
- Refocus on the fundamentals.
Particularly within any organization that has not yet felt the effects of such regular macro disruption, it may be tempting to adopt an “if it ain’t broke, don’t fix it” mindset. But that risks ignoring the realities of the past three years. Instead, it’s time to proactively and holistically revisit and optimize treasury fundamentals, including a thorough understanding of your cash positions, your forecasting, and other core treasury activities.
Making an effort (now) to do this creates the foundation for fostering organization-wide stability, but it also empowers the business to more rapidly pursue new strategic opportunities or competitive advantages. To not do this likely means you’re not maximizing your working capital and operating from a position of strength.
The rising interest rate environment is a great example of the need for agility. There’s regular movement into and out of various asset classes as a means of chasing and optimizing yield, yet many organizations aren’t positioning themselves to take advantage. They can’t react quickly enough or do things like real-time payment transfers, which subsequently means they’re underutilizing their valuable capital.
2. Go beyond the basics.
In volatile capital markets and macroeconomic conditions, the basics—an ERP system, your bank portal, etc.—are no longer sufficient on their own. You need a comprehensive, single source of truth about your cash positions. Otherwise, depending on the specifics of your FI structure, you’re probably missing out on interest rate arbitrage opportunities. And if you’re a multinational business, your FX strategies are probably not working optimally.
The pandemic, in particular, underscored the need for systems that codify data and knowledge, so that when employees leave, there is minimal “brain drain” effect.
This is all the more crucial because volatility isn’t just a matter of macroeconomics. Big-picture conditions constantly intersect with a company’s microeconomics, and when the latter isn’t well understood by the people who need to know it best – the treasury team – then missed opportunities and major problems are more likely to happen.
Without actionable, visible knowledge, treasury teams can’t make decisions in real time. Recent bank failures are a stark reminder of the need to understand how macro conditions intersect with company specifics on a 24-7 basis. Corporate boards are asking more direct questions about the business’ cash positions, risk exposures, and organizational readiness to adapt in the face of significant disruption. Clear, actionable answers to those questions require clear, actionable information.
Sub-optimal interest rate hedge programs are a direct outcome of disjointed approaches to cash management and forecasting. Traditional hedging programs have focused too much on “easing” the CFO and other stakeholders into a changing rate environment. But what if the C-suite wants to act with urgency? That’s no longer sufficient in terms of how you manage risk in a volatile rate and FX environment.
If you’re still running the same generic program put in place a year (or more) ago, it’s time to revisit it.
3. Invest in automation and digitalization.
Underpinning all of this is a lack of digitalization and automation in the corporate treasury realm. Teams are relying on manual, legacy processes because that’s what has always been done, not because that is the best path forward.
True strategic alignment with the C-suite and board requires the visibility and nimbleness that comes with increasing automation and optimizing processes for the digital age. This is both a technology and culture endeavor of “the way we’ve always done things” can’t be treated as sacrosanct.
As Catherine Portman, VP, Treasurer at global cybersecurity firm Palo Alto Networks told me recently: “Automation has been critical to modernizing our treasury operations, and the improvements are stark. We’ve spent the last 18-24 months increasing our use and integration between our global Treasury systems, our banking partners, and ERP system. Instead of manual banking logs, downloading documents, and tracking balances across a myriad of spreadsheets, we’ve fully automated our process. This not only reduces manual work but ensures a more timely, less error-prone operation that can accommodate increased volume as the Company’s activity grows. These efforts align with our CFO’s vision to simplify, build systems to scale, and enable efficient global processes across the organization.”
The bottom line depends on accurate, real-time data. Boards demand it, C-suite leaders demand it—and corporate treasurers should, too. It’s the only viable way (especially given that treasury teams are being asked to more than ever with the same headcount) to ensure stability and strength.
By adopting automation and adapting processes for the age of disruption, treasury teams won’t just survive – they’ll thrive and help their businesses do the same.
Renaat Ver Eecke is the CEO at GTreasury, a treasury and risk management platform provider.
Shifting your employees to home working at the start of the pandemic may have been difficult, given the speed at which it had to happen and the less developed understanding we had of COVID-19 at the time, but going back to the workplace is even more complicated. It requires employers to balance a number of factors, which are outlined here.
You need to keep your employees safe
As an employer, you have a legal obligation to prioritise the health and safety of your employees. This is also important purely from a business perspective, especially if you’ve supported them during the furlough period, investing in the long term retention of talent. Healthy adults of working age have a low risk of dying from the currently active strains of the virus, but there is also a risk of them suffering long-term disability due to long COVID, developing chronic lung problems, or developing a mental illness or neurological problem – something found to affect one in three infected people.
You need to be ready to run a minimal-risk workplace
Before you bring employees back into the workplace, you will need to do an assessment to work out how you can best implement social distancing and additional hygiene measures across your premises. Current government guidelines are that every on-site worker should receive at least two lateral flow tests per week to reduce the chance of infection spreading between employees, and anyone who has been in contact with an infected person should self-isolate, which means it’s a good idea to keep home working as an option. These measures apply even to fully vaccinated individuals.
You need to consider the impact of lockdown
On the flip side of this, spending a long time in lockdown has had a negative effect on many people’s mental health, and getting your employees back to normal – as much as possible – can itself be important to their well-being. It will be all the more important to use drug and alcohol workplace testing because addiction rates have risen during this time. You may need additional training options to brush up on neglected skills, and a more relaxed approach to short breaks in order to help returning workers readjust.
One size may not fit all
If you have employees who are at high risk from the virus, or who live with people at high risk, equalities law may require you to let them keep on working from home. There are advantages to this which go beyond their well-being, as their absence can make it easier to accommodate workplace social distancing. Bear in mind that a lot of people have lost loved ones to the pandemic and some of those people may not feel able to return to the workplace yet but may be happy to work from home.
It’s probable that we never will quite go back to normal after all this, but that’s not necessarily a bad thing. Smart employers will take the opportunity to make positive changes to how they go about their work.
Finance Monthly hears from Giles Coghlan, Chief Currency Analyst at HYCM, on what UK investors should keep their eyes on as June approaches.
As pubs, restaurants, shops and gyms all over the country begin to re-open their doors, all eyes are on the UK’s post-pandemic economic recovery.
For one, there is a sense optimism throughout the country. The rollout of the COVID-19 vaccine is on course (half of UK adults have now had at least one jab) and social distancing measures are being relaxed. Unemployment has fallen at the start of 2021, while inflation is holding steady.
As with any major societal change, all these things are naturally impacting the financial markets. The construction industry, for example, is experiencing strong growth as a backlog of projects spark back into life, and we can expect to see similar trends in other sectors as more retail, hospitality and leisure establishments re-open.
With all this in mind, here are some key themes and developments that investors should watch in the months ahead.
Stock markets
Throughout the pandemic, the so-called FAANGs stocks of Facebook, Apple, Amazon, Netflix and Google have been central to the US stock market’s record bull run. As investors have pumped huge sums into global equities, the tech giants have been among the greatest beneficiaries of the stay-at-home economy.
Given that stocks have generally been on a great run higher since March last year, with record highs and strong returns, investors must now seriously consider just how sustainable this pace is. In particular, traders and investors should watch for a seasonal shift, which might mean that these stocks lose their bite. One possible scenario could see the old adage “sell in May and go away” ring true, with the arrival of the summer months prompting investors to exit their stocks.
As investors have pumped huge sums into global equities, the tech giants have been among the greatest beneficiaries of the stay-at-home economy.
Further, as more lockdown restrictions are removed, naturally, society at large will be less dependent on tech to go about our lives as normal. As such, it will be interesting to see how tech stocks will fare throughout this period, and whether they become a less appealing prospect to investors.
Meanwhile, traders should also monitor the performance of stocks in the retail, hospitality, retail and leisure industries as the UK progresses on its roadmap to ease the lockdown. Companies in these verticals could achieve impressive growth when life returns to something resembling normality.
Gold
As the US economy begins to awaken, US bond yields have been on the up, meaning that Gold Exchange Traded Funds (ETFs) have continued to fall. This is a trend that should please the Fed, and is reflective of a far more optimistic outlook.
Particularly as expectations of life as normal inch closer, should the US economy continue to improve, rising yields will no doubt put further pressure on gold, which has already seen one of its worst starts to the year in 20 years.
Ordinarily, the beginning of the year is a period of strong demand for the precious metal, with the Chinese New Year usually attracting gold buyers. From a seasonal perspective, for the past ten years, gold has been flat between April and June; with the 2013 taper tantrum, gold lost nearly 20% between March and September alone.
Consequently, traders should watch for a possible sharp sell-off in gold should the Fed begin to talk about tapering.
BTC and cryptocurrencies
There has been strong media attention on cryptocurrency in recent months, with talk of Bitcoin garnering significant headlines. This is unsurprising, given that Bitcoin’s market capitalisation is now valued at a remarkable $1.2 trillion, putting the cryptocurrency ahead of Mastercard, PayPal and Visa combined.
[ymal]
Even accounting for a recent blip, the crypto boom is noteworthy. It will be interesting to monitor how long these gains will continue.
In recent weeks, it is important to note that Bitcoin’s latest valuation came in at the same time as Coinbase launched an initial public offering – making it the first firm of its kind to do so. The arrival of Coinbase now offers many equity investors a straight bet into the cryptocurrency landscape, which could be met with strong gains in Bitcoin.
No doubt, this is a significant event in the busy cryptocurrency market – one that investors and traders should keep up with in the coming months.
The UK economy is predicted to grow at the fastest rate since the second world war this year, according to a widely cited economic forecaster.
The EY Item Club has upgraded its forecast for GDP growth during 2021 from 5% to 6.8%, which would mark the fastest annual growth since 1941. This comes in the wake of relaxing COVID-19 restrictions and optimism that rapid progress with the country’s vaccine programme will enable a swift return to business as usual.
Consumer confidence also increased at the fastest rate in a decade during the first quarter of 2021 on this vaccine-driven optimism. The EY Item Club added that the improved short-term outlook means that the UK economy is expected to return to its pre-pandemic peak by the middle of next year, aided by a surge in consumer spending as households saved during lockdown.
Elsewhere, analysts at Goldman Sachs have predicted a growth rate of 7.8%, stronger than that expected for the US, where President Biden is spurring economic recovery with a multi-trillion-dollar stimulus initiative.
Further pieces of data have added to observer optimism for the UK economy. Item Club analysts revised down their unemployment forecasts from 7% to 5.8% by the end of the year, and the HIS Markit/CIPS Purchasing Managers’ Index found that the service sector grew faster than manufacturing in April for the first time since the pandemic began.
"The UK is primed for a sharp snap back in consumer activity,” said Ian Stewart, chief economist at Deloitte.
[ymal]
"High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months."
The UK economy shrank by 9.9% in 2020, the worst performance among the G7 and the steepest annual decline seen in the country since records began.
The FTSE 100 rose on Wednesday, rallying after a mass sell-off led to a 2% fall in the previous session.
The index rose 0.6%, lifted by oil giants BP Plc’s and Royal Dutch Shell’s respective gains of 2.0% and 1.7%. The surge followed a report from Azerbaijan’s energy ministry said BP’s oil output reached 5.9 million tonnes in the first quarter.
Some stocks continued to slip, however. Just Eat Takeaway.com fell 4.2%, slumping to the bottom of the index, following news that rival Uber Eats plans to expand into Germany.
Meanwhile, data published on Wednesday indicated that inflation in the UK rose to 0.7% in March, in line with expectations.
The FTSE 100’s positive performance follows a sell-off on Tuesday that led to major indices in Europe and Asia closing as much as 2% in the red. US markets were also negatively affected, though not to such an extent; S&P 500 futures and Dow Jones futures were flat, while Nasdaq futures fell 0.1%.
The sell-off appeared to be triggered by anxiety over rising COVID-19 cases in India and elsewhere, and their implications for the economy. IAG dived by 8.1% on concerns over travel plans being scrapped, while hotel operators Whitbread and Intercontinental lost 4.8% and 4% respectively.
[ymal]
Overall, around £37 billion was wiped off the FTSE 100 on Tuesday.
While the London-based index rallied on Wednesday, Germany’s DAX and France’s CAC 40 respectively gained 0.2% and 0.4% by mid-morning.
China’s economy grew a record 18.3% in the first quarter of 2021 compared to the same period in 2020, new data has shown. Growth was also up from 6.5% in the fourth quarter of 2020.
The results mark the biggest jump in Chinese GDP since quarterly records began in 1992. However, the economy’s growth fell short of the 19% mark predicted by a Reuters poll of analysts.
China, which boasts the second largest economy in the world, was the only major nation to experience economic growth in 2020 amid a strong bounce back from the COVID-19 pandemic, maintaining high retail spending and exports.
European stocks were boosted by the news, with the FTSE 100 rising 0.5% after opening on Friday morning – rising above the 7,000 points level for the first time since February 2020. France’s CAC and Germany’s DAX also rose 0.2% and 0.3% respectively.
Asian stocks were also lifted by the news, with Japan’s Nikkei climbing 0.1% while the Hong Kong Hang Seng rose 0.6%.
US futures, however, saw a slump as European trading opened. S&P 500 futures were down 0.1%, Nasdaq futures were down 0.2%, and Dow futures were flat. The indexes’ gloomy outlook followed a day of near record highs as US economic data indicated a solid global recovery from the pandemic-induced recession.
[ymal]
“The national economy made a good start,” a spokesperson for China’s National Bureau of Statistics said on Friday, attributing the spike in GDP to “incomparable factors such as the low base figure of last year and increase of working days due to staff staying put during the Lunar New Year” holiday.
"We must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities,” the Bureau cautioned.
High streets around the world have been in decline for many years, with the likes of Amazon as well as other online retailers squeezing many high street vendors and retailers out of the market. Recently however, with people making the switch to home working, things may be changing.
All retailers have been susceptible to the huge rise of online shopping and the COVID-19 pandemic has only accelerated this.
Illya Shpetrik, a USA-based fashion and entrepreneur, has commented on this, saying: “Online retail, be it in fashion or otherwise is of course here to stay. However, people remain keen on their local high streets, which serve an essential purpose. The local high street has changed and adapted itself over many years and will hopefully be here to stay.”
Illya Shpetrik continued: “Online retail and physical stores and shops on the high street will ultimately learn to co-exist side by side. They will both always be there in one form or another. They also relate to certain value we all have. For example, growing up, in the Shpetrik household, we always went to our local grocery store for certain items but to the larger retailers for other goods. This is how high streets and online retail will likely learn to co-exist.”
With more people than ever working from home and with people’s savings and disposable income in the UK and around the world growing, there are billions of pounds and dollars waiting to be spent. Significantly, with people changing so many of their daily and work habits as a result of the changes to how and where we work, it is city centres which are feeling the greatest pinch.
City workers are not in town and city centres in anything close to the numbers they were throughout 2019. However, although many habits and practices have changed as a result of how we are all now working, hose who would go out daily in busy city centres to buy food and other items may still do so in their local high streets. Therefore, at least a portion of what they would otherwise have spent is being spent in local high street shops as well as online.
[ymal]
Many people have also seized the opportunity of having to work from home and changed their place of abode and work entirely. Co-living spaces, for example, are increasing in popularity, with many empty city centre premises being transformed into innovative co-living and co-working spaces. A key benefit of these spaces is that with micro-communities under one roof, work, business and leisure are combined conveniently in city and urban centres.
This is a significant shift in people’s work-life balance, with people turning to city and town centres to live as well as work in a way never seen before.
On this, Illya Shpetrik commented: “Everything has, in a sense been turned upside down. Previously, it was work in the city centre and live and relax in suburbs and in and around local high streets. This has however become skewed in recent times with co-living spaces for living and work springing up in city centres and shopping now taking place like never before, once again, on high streets.”
US stock indexes were set to rise on Wednesday following positive earnings reports from investment banks.
JPMorgan Chase & Co and Goldman Sachs Group Inc both beat analysts’ expectations for first-quarter profit.
Goldman saw its overall investment banking revenue jump 73% to $3.77 billion, the highest amount seen since 2010. The bank managed to effectively capitalise on record global investment banking activity, which Refinitiv data showed as reaching an all-time high of $39.4 billion in the March quarter.
Meanwhile, JPMorgan, the US’s largest bank, reported earnings as having leapt almost 400% in the first quarter of the year. Like Goldman, it saw immense growth in its investment banking revenue, which jumped 57%.
JPMorgan reported that consumer spending in its businesses had reached pre-pandemic levels and risen 14% above Q1 2019.
Shares in Goldman rose 1.5% on Wednesday, while JPMorgan’s shares fell 0.6% despite its almost quadrupled revenue. The share slip came as the bank released over $5 billion it had set aside in reserves against COVID-19-prompted loan defaults.
Goldman easily held on to its first-place ranking for global M&A advisory, while JPMorgan overtook Morgan Stanley as the world’s second biggest advisor.
[ymal]
It was also revealed on Tuesday that Goldman Sachs plans to expand operations to Birmingham this year. The bank expects to recruit “several hundred” people across the divisions it builds, beginning with an engineering department that it will fill through a combination of new hires and employee transfers.
Finance Monthly hears from Menzies LLP business recovery partners Simon Underwood and John Cullen on how owner-managers can overcome restart anxiety.
During the pandemic, a £407 billion support package has enabled many UK businesses to maintain a healthy cashflow and survive to fight another day. However, with the end of Government support on the horizon, many owner-managers may be experiencing ‘restart anxiety’ and be putting off the important decisions needed to future proof their businesses.
By spotting financial red flags and conducting effective scenario planning, owner-managers can take steps to turn their fortunes around and improve their chances of performing successfully when they reopen. They should also investigate their eligibility for the Government’s new Restart Grant, which could provide them with a much-needed cashflow boost over what may be the final few months of lockdown restrictions.
Owner-managers that fail to prepare for the end of coronavirus business support measures could be facing a cliff-edge scenario in a few months’ time. Being able to spot key signs of business stress is essential, allowing them to take action to improve their financial position and rebuild a stronger business.
For example, if owner-managers seem to be spending more time worrying about the business than they do running it, have noticed a dramatic drop in revenues or have paid dividends without sufficient reserves to cover them, action might be needed before it’s too late. Other signs of trouble could include a lack of communication with creditors or an inability to pay debts on time.
Scenario planning can help owner managers to get back on the road to recovery by planning for a number of ‘what if’ scenarios. Three-way cashflow forecasting involves combining a business’ profit and loss accounts, balance sheets and cashflow. In the current uncertain economic environment, this tool can help to facilitate informed decision-making about the business’ future by improving the visibility of costs across the company. This type of cashflow management can also help to convince creditors to flex their payment terms by providing them with greater confidence about when payments can be expected.
Scenario planning can help owner managers to get back on the road to recovery by planning for a number of ‘what if’ scenarios.
To understand if they will be able to operate sustainably once Government-backed support such as grants, loans and the furlough scheme come to an end, business owners must be able to assess their long-term viability. To do this, they should ask themselves questions across four key areas; cashflow, innovation, communication and protection.
For example, questions around cashflow might include asking whether there is enough cash in the bank to pay any outstanding bills and whether there are any outstanding debts that could be called in. ‘Innovation’ should include a consideration of areas such as whether the business is doing enough to adapt to the new normal for its marketplace and take advantage of areas of demand, such as eCommerce. Key questions around communication might include asking how regularly owner managers are keeping in touch with key customers and suppliers, and whether the business is reaching out to lenders if it’s experiencing cashflow difficulties. Finally, ‘protection’ questions might include whether the company has the right insurance cover, including unrestricted business interruption insurance, and whether the owner manager understands their options if the organisation is in cashflow difficulty.
Announced in the Budget on 3 March 2021 and introduced from April, the Government’s new Restart Grant could provide around 700,000 UK business owners with an injection of cash during what is hoped to be the final stage of lockdown restrictions. Replacing the monthly Local Restrictions Support Grant, which closed at the end of March, the grant is aimed at helping businesses that have had to close as a result of lockdown restrictions during the pandemic through to 21 June – the date currently in place for the lifting of lockdown restrictions in England.
Under the scheme, non-essential retail businesses can claim up to £6,000 per premises to help them reopen, while those in hospitality, accommodation, leisure, personal care and gyms can receive up to £18,000, depending on rateable values.
To be eligible to claim under the scheme, businesses must be based in England, occupying property on which they pay business rates and must have been required to close because of the national lockdown from 5 January 2021 onwards, or between 5 November and 2 December 2020. The business must also have been unable to provide its usual in-person customer service from its premises. Owner managers can apply for the grant by visiting their local council’s website.
[ymal]
In order to see the true picture of their business’ cashflow, it is vital that owner-managers have the key numbers at their fingertips. By having access to accurate profit and loss balance sheets and other core management data they will be in a better position to make important decisions about their business’ future. Owner-managers should also consider seeking the support of experienced insolvency practitioners, who can help owner managers in assessing the business’ viability and talk through its options for getting back on the road to recovery.
While the rollout of the COVID-19 vaccination programme is creating a light at the end of the tunnel for the UK business landscape, the pandemic is far from over and it’s crucial for owner managers to ensure they’re cash-ready for the end of Government support measures. By carefully assessing their financial position and viability, scenario planning and investigating their eligibility for the Restart Grant, owner managers can take back control and prepare for a successful restart.
Non-essential shops and services have reopened across England and Wales as lockdown rules are eased across the UK.
Gyms, hairdressers and zoos can now reopen, while pubs and restaurants are able to host customers in outdoor areas. Prime Minister Boris Johnson has urged people taking advantage of the eased restrictions to “behave responsibly” and continue to exercise advised steps to reduce the likelihood of contracting or spreading coronavirus.
Non-essential shops have been closed since 5 January when a third national lockdown was announced in England and similar measures imposed across the devolved nations. This new easing of restrictions coincides with the relaxing of Northern Ireland’s stay-at-home orders and other restrictions in Scotland and Wales.
58% of small businesses predict that their performance will improve this quarter as a result of these slackening restrictions, the highest proportion since the summer of 2015. Conversely, fewer than 24% anticipate a fall in sales.
“We’ve seen a phenomenal increase in bookings since the government confirmed restaurants can open on Monday,” said Patrick Hooykas, managing director of TheFork, formally known as Bookatable. “This week alone we’ve seen an 88% uplift in bookings.”
The pound also opened the week holding steady following heavy losses in the days prior. The GBP/EUR exchange rate fell over 2% over the past week before settling at €1.1514 on Friday.
[ymal]
As of 05:16 UTC on Monday, GBP/EUR was trading -0.03% at €1.1509.
More than 32 million UK residents have now received a first dose of a COVID-19 vaccine. Last Sunday saw a reported seven deaths within 28 days of a positive COVID-19 test, the lowest daily total since 14 September.
Pablo Castillo, Cyber Threat Research Analyst at Constella Intelligence, offers Finance Monthly his insight into the cyber threats facing the financial services sector in 2021.
Unsurprisingly, financial services firms and their troves of sensitive data were a big target for threat actors in 2020. The rapid shift to remote work, coupled with insufficient budgets and a lack of training and awareness to mitigate attacks, led to an increased risk for many sectors. Despite the need for cybersecurity and the cost savings it can bring over the long haul (breaches are expensive, especially for financial organisations), businesses prioritised other functions and operations which more directly affected their bottom lines this past year.
Hacker groups took full advantage of these uncertain times. According to VMware Carbon Black, in the first half of 2020, banks faced a 238% surge in attacks. Further, Keeper Security recently revealed that 70% of financial services organizations reported experiencing a cyber-attack in the past year, with a majority of the 370 UK IT respondents suggesting that COVID-related conditions contributed to the increase in severity of attacks.
US Financial Services Subcommittee Chairman Emanuel Cleaver (D-Mo.) explicitly stated back in June 2020, “criminal actors [are] redoubling their efforts to target families, financial institutions, and even governments.” Below, I’ll highlight some of the notable threats these criminal actors pose, specifically as it relates to financial institutions.
Phishing
Last September, it was reported that one in four Americans received a COVID-19-related phishing email. That number has only risen as we’ve made our way through 2021. The marked increase in phishing scams this past year even led to the American Bankers Association launching the #BanksNeverAskThat campaign. Further, the Financial Crimes Enforcement Network (FinCEN) issued a notice in December alerting financial institutions about the potential for fraud, ransomware attacks, or similar types of criminal activity related to COVID-19 vaccines and their distribution – such as phishing schemes luring victims with fraudulent information about vaccines.
Last September, it was reported that one in four Americans received a COVID-19-related phishing email. That number has only risen as we’ve made our way through 2021.
Ransomware
Per FinCEN, “cybercriminals, including ransomware operators, will continue to exploit the COVID-19 pandemic alongside legitimate efforts to develop, distribute, and administer vaccines.” FinCEN warned financial institutions to stay alert to ransomware targeting vaccine delivery operations, as well as the supply chains required to manufacture the vaccines. There are a myriad of examples of ransomware affecting the fintech industry this past year, and it’s a significant threat to all businesses and individuals across the globe.
Business Email Compromise (BEC)
Another top threat, especially amid COVID-19, is BEC. Among Kroll’s cases impacting the FinServ sector, email compromises were the most observed threat. A July 2020 FinCEN advisory outlined the various ways threat actors are exploiting the pandemic and singled out BEC schemes. Threat actors look to convince banks and lenders, for instance, to redirect payments to new accounts, “while claiming the modification is due to pandemic-related changes in business operations.” Often, these sorts of schemes are preventable, but it comes down to training and awareness to combat social engineering.
Disinformation
According to Accenture’s 2020 Future Cyber Threats report, “disinformation and misinformation is not only a threat to efforts to manage COVID-19, it also impacts the financial sector.”
NASDAQ and Financial Industry Regulatory Authority (FINRA), to name a few, have warned of increases in market manipulation as a result of the pandemic. “Often, market manipulation involves elements of disinformation or misinformation directed at influencing unsuspecting investors to aid criminal actors’ objectives,” the report states. There are a plethora of examples, including a UK bank (pre-COVID, it should be noted) having to reassure its customers of its financial health after its share price dropped 9% due to false rumors spreading on WhatsApp that the bank was shutting down, calling for customers to empty their accounts.
“Disinformation and misinformation is not only a threat to efforts to manage COVID-19, it also impacts the financial sector.”
Mobile Banking Exploitation
The pandemic has accelerated the adoption of digital payments – the Internet Crime Complaint Center (IC3) put out a PSA stating that mobile banking usage has surged as much as 50%. Threat actors look to exploit these platforms, namely via app-based banking trojans and fraudulent apps, but the simple solution to combat these types of threats is to remain vigilant for suspicious activity and verify an app is legitimate before downloading.
Distributed Denial-of-Service (DDoS)
We are seeing a significant increase in DDoS attacks on institutions in banking and across a wide range of sectors, from healthcare to energy. DDoS attacks can, among other things, freeze the operations of financial institution customers. Not long ago, New Zealand’s Stock Exchange Market (NZX) faced a barrage of DDoS attacks, disrupting trading for four consecutive days.
Underground Markets
This past year, my organization also noticed a significant rise in the number of threads, items offered for sale, and hacking information related to COVID-19 on deep and dark web forums. This includes the sale of banking information and tools to exploit physical devices (e.g, ATMs for carding).
Financial organisations can stave off money laundering, account takeover, and identity theft attacks, but it requires a two-pronged approach. Organisations must proactively monitor, detect and uncover identity information found in open sources on the surface, social, deep and dark web. Understanding your digital footprint, as well as your adversaries, is important. However, human error also plays a major role in mitigating cyber threats. Simply training employees on cybersecurity awareness can make a world of a difference. Everyone should understand the signs of a scam and remain vigilant. As we move past the pandemic and transition back to “normal” life, we must not let our guard down – especially when it comes to COVID-19 or cyber safety.
[ymal]
Pablo Castillo is a Cyber Threat Research Analyst at Constella Intelligence – a digital risk protection company that works in partnership with some of the world’s largest organisations to safeguard what matters most and defeat digital risk.
Traders have always used penny stocks to take advantage of the volatility in stock markets. Traditionally, penny stocks can be defined as stocks priced under $5. But the make-up for penny stocks has changed since the COVID-19 pandemic because a lot of businesses came below the $5 threshold to sell-off in 2020.
Now that it is almost more than a year since the pandemic started, several penny stock values have risen drastically. Even though there are many eligible penny stocks to buy right now, reopening stocks can be a popular option.
Many companies are benefiting from the vaccine distribution and the reducing number of COVID-19 cases. Stocks or shares of some businesses affected the most by the pandemic are recovering extremely fast in the reopening economy. That is why reopening penny stocks are generating a lot of interest from investors, especially these five.
Rave Restaurant Group
Rev restaurants group is the owner and operator of several pizza franchises all over the world, including Pie Five Pizza, Pizza Inn, and Pizza Inn Express kiosks. The restaurant industry was one of the most affected during the pandemic. But now that restrictions are being lifted in several states, the stock shares of Rave have jumped up more than 25%.
Rave restaurants recently declared their financial returns for the second quarter of fiscal 2021. Their total revenue was $2.1 million, which was a mere $0.7 million less than the same quarter in the last fiscal year.
The company also announced a net income of $104,000 and a $0.01 increase per share for the second quarter of fiscal 2021. Investors are saying this is a good sign and betting that the company’s stock shares will soar in the coming times.
Stocks or shares of some businesses affected the most by the pandemic are recovering extremely fast in the reopening economy.
Enzo Biochem
The stocks for Enzo biochem soared by more than 50% when they reported second-quarter financial results for fiscal 2021 on March 15. The company reported total revenue of $31.5 million for the second quarter of fiscal 2021, which was almost 62% year-over-year.
The company also declared that its consolidated gross margin has increased by almost 50% more than last year. Their sound financial results in the second quarter of fiscal 2021 reflect the positive effects of their new business model that integrates diagnostic products and services.
The company made efforts to advance its GENFLEX diagnostic test platform further. It also made further efforts to shift the diagnostic platform to aid in the COVID-19 pandemic.
According to them, the diagnostic platform will be able to lower the costs dramatically for common molecular tests. It is one of the fastest-growing sectors in the clinical test market, which means the company's success would continue to rise along with its stock shares.
Seanergy Maritime Holdings Corp
Investors looking at strong reopening penny stocks should consider Seanergy Maritime Holdings Corp. Seanergy stocks have seen a lot of bullish force in the last few months. The need for shipment did not decrease during the pandemic because of the high e-commerce sales. That is why shipping companies have gained a lot of interest from investors in the present circumstances.
Seanergy offers bulk shipping services for dry goods and has 12 Capesize ships as of February 2021. All of the vessels are less than 12 years old, which means they are relatively new and would not incur costly repairs for the company.
[ymal]
The average cargo shipping capacity of these ships is more than 2.1 deadweight tons (DWT). The company announced to price $75 million common share offerings a few weeks ago, so now is the right time to invest in their penny stocks.
NewAge Inc.
Some consumer product companies like NewAge Inc. have also come into the spotlight as penny stocks start reopening. The company has adopted a multichannel approach for retail sales and focuses a lot on social selling.
Their approach is so efficient that it has beaten analyst estimates for the fourth quarter and full year of the 2020 financial results. NewAge Inc. declared revenue of $90.4 million, as opposed to an estimate of $81.2 million, which was an increase of almost 53%.
The company’s adjusted EBITDA was also higher than the analyst expectations and reached $2.9 million, which was the first positive adjusted EBITDA in over two years. The company achieved scalability and profitability from ARIX and four other companies that merged with them in November.
They have also made significant improvements to their management teams and operational capabilities, which has resulted in tremendous growth momentum for 2021.
Reopening trades or epicenter stocks have become one of the current trends with penny stocks. Some companies that were affected by the global economic downturn during the pandemic are showing tremendous turnarounds recently.
Therefore, investors are interested in stocks that are on the way to make a full recovery and trading much higher than last year. We feel that these four penny stocks are the ones to look out for in March 2021.
