(Bloomberg) -- HSBC Holdings Plc has written off its stake in software company Monese Ltd., two years after investing $35 million in the UK fintech that had once been touted as a potential “unicorn.”
Europe’s largest banking group “completely impaired” its minority holding in Monese in March and April, wiping out the remaining $5.86 million value, according to filings for HSBC’s investment subsidiary last month.
The writedown came as Monese worked on a restructuring and breakup to salvage the business. Its banking-as-a-service platform, which HSBC has used in a retail banking app, has now become a standalone business called XYB. The consumer banking arm is set to be sold to British payments firm Pockit Ltd., Reuters reported last month.
One of Monese’s biggest backers, Swedish tech investor Kinnevik, wrote off its own investment in the firm earlier this year, saying that while it thought there was still value in the business, its future was uncertain. Other investors have included PayPal Holdings Inc., Augmentum Fintech Plc, and International Consolidated Airlines Group SA.
HSBC had a 5.4% stake in Monese, according to corporate filings, and described its investment as a strategic partnership. A spokeswoman for HSBC declined to comment.
Monese was founded in 2015 by Norris Koppel, an Estonian who moved to the UK but had found opening a bank account difficult. It was the country’s first mobile-only app-based bank, though it was later overtaken by the likes of Revolut, Monzo and Starling.
In talks for a funding round in 2020, Monese had been aiming for a valuation above £1 billion ($1.34 billion), which would have turned the firm into a “unicorn,” according to the Financial Times.
Banking giants have invested heavily in technology over recent years in the hopes that new projects will turn into lucrative game-changers, though the fast-moving space comes with risks.
JPMorgan Chase & Co. paid $175 million in 2021 for financial-planning site Frank, in a deal that’s now the subject of a legal battle. Citigroup Inc. and other lenders partnered with Alphabet Inc.’s Google to offer checking accounts that never launched. In the UK, NatWest Group Plc developed its digital bank Bo only to close it months later.
HSBC had more success when it swooped for the UK assets of Silicon Valley Bank while its parent firm imploded in 2023, using the rescue deal to expand further into venture finance.
The London-headquartered bank has moved its business increasingly toward the faster-growing markets of Asia in recent years as part of a strategic pivot led by former Chief Executive Officer Noel Quinn. Quinn stepped down as CEO last month to be replaced by Georges Elhedery, the bank’s former chief financial officer.
Elhedery is examining his own restructuring of HSBC and is considering combining the lender’s commercial and investment banking arms, as part of a broader focus on cost-cutting.
(Updates from 11th paragraph with details of bank’s corporate restructuring)
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