Also this week:

• 😓 Stringent capital requirements

• ⚔️ State of Crypto

• 🧨 Use cases for Web3

😓 Stringent capital requirements

Following the financial crisis, increasingly stringent capital requirements have been introduced for banks. The Norwegian authorities have taken stricter action than in most other countries:

The largest Norwegian and foreign banks, so-called IRB banks, can use their own risk weights to calculate how much equity the bank needs to lend money. All other banks, so-called standard banks, must operate with a standard calculation, which means that for a mortgage, the interest rate will be around 0.25 percentage points higher for smaller banks to give the bank the same profitability as a major bank.

This could be why Bank Norwegian and Instabank were sold out of the country to Swedish Nordax and Danish Lunar: Foreign banks operating in Norway have lower capital requirements. DNB's acquisition of Sbanken also makes more sense when DNB can calculate the risk differently than Sbanken.

The current government has, however stated: "We will emphasize that the regulation of the Norwegian banking sector will not impose unnecessarily strict regulatory requirements on smaller banks.", but the banks are now announcing that change is needed as soon as possible:

• Nordic Corporate Bank despairs over "completely absurd" capital requirements in Norway Link

• Storebrand believes that differential treatment of Norwegian banks affects loan customers Link

📱 Apple launching Pay Later solution

Last week Apple had its yearly developer conference and launched Apple Pay Later, which splits your purchase into four payments over six weeks, with "zero interest and no fees." The service is available for any Apple Pay purchase without merchants or developers needing to enable it. Naturally, you would think Klarna would be pretty nervous getting the world's most valuable company going after their market, but the CEO of Klarna wish them welcome:

But the most interesting part of the announcement is not that Apple is providing credit; after all, they already have a credit card. It is that Apple has formed a wholly-owned subsidiary Apple Financing LLC to assess and issue the credit. The main reason for this might be that Apple users use Credit Cards and BNPL-services to buy Apple products, but it could also be a longer and larger play. Maybe equipment financing for Apple products for businesses? (Or financing for Apple Car? 🙈)

Simon Taylor from 11:FS has written a great breakdown on Apple Pay Later if you find the topic interesting.

⚔️ State of crypto

A16Z just released their first State of Crypto Report. A few interesting findings:

• It states that the crypto market develops in cycles and that we now are in the 4th crypto winter. According to A16z, this is a good thing because it's now new projects get built.

• Decentralized Finance has gone from nearly zero to over $100 billion in less than two years. 🤯

• Ethereum has the most developers, with ~4 000 monthly active developers. This is a surprisingly low number considering, for example Citigroup plans to hire 4 000 tech workers.

🧨 Use cases for Web3

That's it for this week 👋

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Marius Hauken, partner Stacc X