Royal Bank of Scotland 'in discussions' with Facebook about Libra
Royal Bank of Scotland (RBS.L) has held talks with Facebook (FB) about its new cryptocurrency Libra and is exploring ways it could possibly work on the project.
Kevin Hanley, RBS’s head of innovation, told journalists on Tuesday: “We’re in discussions with Facebook around Libra and what it might be and where it might go.”
Hanley stressed that no immediate announcements were in the works.
“It has no punchline yet but we’d very much engage and see rather than wait and find out,” he said.
Royal Bank of Scotland is one of the UK’s “Big Four” banks. It has over 18 million customers and has a market capitalisation of £27.7 billion.
‘Their thinking is still early’
Facebook last month announced plans to launch a new global cryptocurrency, called Libra, in 2020. Facebook hopes Libra will help the estimated 1.7 billion people globally who are stuck outside of the banking system to access financial services. Facebook will build products for the cryptocurrency via a new business unit called Calibra.
READ MORE: Facebook's cryptocurrency project is called Calibra, will launch in 2020
Libra is backed by a consortium of 28 companies, including PayPal, MasterCard, Visa, Uber, and Spotify. Each have committed to pay $10 million to the non-profit Libra Association, which will govern and run the project.
However, none of the founding members of the Libra Association are banks, which has led to speculation that banks are avoiding the project.
“I think Facebook themselves were very keen in the original announcement that there wasn’t a bank in the original 20 odd that were there,” Hanley said. “You should ask Facebook. I think their thinking around Libra is still relatively early in its inception as well.”
READ MORE: Facebook's Libra could spark 'mass adoption' of crypto
When asked for comment by Yahoo Finance UK, a Facebook spokesperson pointed to a recent quote from David Marcus, the Facebook executive responsible for Libra.
Marcus said in an interview with The Information last week: “I want to absolutely and strongly deny the fact that we've approached banks and banks have said no.
“We have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this.”
‘Many forms and shapes’
Hanley didn’t rule out joining the Libra Association but said RBS’ could eventually be involved in other ways.
“The conversations with Facebook about our involvement take many forms and shapes,” Hanley said. “It’s not: do we want to put £10 million in and be a founding partner — it’s the least of everyone’s considerations.
“There’s all sorts of things that we can bring to the party, whether it be our foreign exchange capability, a whole load of merchant acquiring capability that they would be equally interested in, there’s a whole load of payment functionality that could be helpful to them.”
“We know the Facebook guys very well,” Hanley said. “Our relationship with Facebook goes back a long way.”
RBS, which also owns Natwest, was the first major organisation to adopt Facebook at Work across it organisation and Hanley said RBS has a dedicated team — known as the GAFAs — to deal with business involving Google, Apple, Facebook, and Amazon.
READ MORE: UBS on Facebook's Libra: 'We have more questions than answers'
“I think Facebook themselves are thinking about their ambition for Libra,” Hanley said. “The other members of that consortium are thinking about where they want to be, and how they grow the people that they want around the table, the assets that that group needs around the table to be successful. We want to be part of that conversation.”
The Libra Association has said it hopes to eventually grow to 100 members.
‘Carney’s response was spot on’
Facebook’s announcement of Libra sparked an immediate backlash from politicians and regulators around the world amid concerns about everything from monetary policy implications to data sharing and privacy.
Bank of England governor Mark Carney has been one of the most welcoming of the project. He said it could “substantially improve financial inclusion and dramatically lower the cost of domestic and cross border payments.” However, he said “the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”
READ MORE: Why politicians and regulators are already going after Facebook's Libra
RBS’ Hanley said on Tuesday: “I thought Mark Carney’s response was absolutely spot on. It could be really beneficial, it could help the underbanked — all sorts of regulatory concerns to go through.
“But again, rather than waiting two years and see where things go, I’d much rather be talking to the participants, and the regulator, and the participants and being part of that discussion and helping to shape it rather than just observe it.”
In a statement provided to Yahoo Finance UK, Dante Disparte, head of policy and communications for Libra, said: “Banks have an important role to play in Libra Association, and in the global economy writ large.
“As such, we very much welcome their participation. Our 28 founding members is very much a starting point and as we build up towards our target of 100 member organisations by 2020, we have every expectation that banks will be a part of this effort.”
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.