17/11/2011 World Business Report

bail-out money. Those are the latest headlines from BBC World

News. Now the latest financial news with Sally and World Business

Hello and a warm welcome, you're with World Business Report. These

are the headlines: Contagion fears gripped Wall Streak.

UBS reveals its new strategy but will a shift away from investment

banking win back the confidence of Another day another stark warning

about the wider impact the eurozone debt crisis will have on the global

economy. Shares sunk on Wall Street after ratings agency Fitch said

contagion could spread to the US. The report out late on Wednesday

warns that while US banks have manageable exposure to Europe,

further contagion poses a serious risk to the US banking sector. That

was enough to wipe 200 points off the Dow in the last minutes of

trade. Morgan Stanley shares plunged 9%. Fiction is concerned

about distressed European countries's were used hitting the

banking system. They are concerned it is the troubles that have hit

Ireland, Portugal, and Spain spread to more nations it could put in

jeopardy America's banking system and its exposure to the eurozone.

In total that could be 50 billion US dollars. At the moment they say

that the US banking system's exposure to Europe is fairly

manageable but they are worried about the into Connectivity of

large global banks. That only piles on the were news for banks

including City crew, Bank of America, even JP Morgan Chase and

Goldman Sachs. It was enough to see the Dow Jones plunge, before the

reported was down 36 points, afterwards it fell 190. They may

only be pointing out some of the eurozone concerns that many people

are aware of. But their report The markets in Asia started their

days in a pretty dire way as you can imagine but things have calmed

down. We can go to recur in Singapore for the latest. It has

been a roller-coaster ride -- Rico. Indeed, roller coaster, very

volatile but so far in the early afternoon trading session regional

shares are still under pressure, led by the financial sector feeling

the heat and financial stocks in Hong Kong, Singapore, Japan, South

Korea, currently weakest after the rise in industry. That is the level

that eventually forced Greece, Ireland and Portugal to seek bail-

out programs. Asian investors will be watching closely the France and

Spain bond auctions, and the results are keenly awaited. Overall

analysts here don't really fear Asian banks being greatly affected

compared to the US counterparts because exposure they say is not

significant and minimal. But what they fear is the contagion from the

eurozone debt crisis, which will pull the major economies into

recession and intern impact of Asia's exports to Europe. Close to

20% of the region's outgoing shipments are sold to the eurozone

and this could impact the economies of the Asia-Pacific region. Thanks,

Rico. We can speak to David Buick, or some more analysis. This news

coming out just before the end of the day from Wall Street -- for

some more analysis. It does not take much now, everybody's very

neurotic. Things have fallen to a derisory new low. The markets move

very quickly. We have to cast our mind back to 2008 when the Treasury

Secretary said what many people thought was a logical, and he

pulled the plug on Leeman Brothers, which exacerbated the problems for

everybody because nobody knew how much money they might have lost

because it was not an orderly closure. You can never necessarily

organise something like this. But the problem with the euro debt

crisis is the inertia on a political basis. The worst option

is to do nothing and that is what they have chosen to. Is there a

real worry about the impact globally, because that is kind of

where Fitch is going. There is this underlying fear that they could be

another credit crunch. I think that's right. They have over-

reacted in the marketplace but as I said it does not take much. When

you look at the damage credit default swaps can do, it is not

just a piece of paper, the bond, that may have toxic losses on it.

It is the counter party that may have bought it because they have

problems and going down the line to them. It is like a pack of cards.

David, we will talk more to you when we look through the newspapers

in about ten minutes. But let's take a look at what is going on in

Italy where the new Prime Minister will be presenting his austerity

program to the Senate later today ahead of a confidence vote. On

Wednesday Mario Monti unveiled a Cabinet of technocrats, 18 he is

hoping will reassure investors and the Voges in Italy that he can get

Italian debt under control -- the voters in Italy. -- a team. John,

what is actually happening there today? It does sound very

reminiscent of the last week or so when we have austerity measures

being discussed and a vote of confidence. Yes that's true. There

have been heavy discussions up to last week. This week we spent some

time... actually the government spends some time trying to get Mr

Monti re-elected and a whole series of meetings with members of the

various parties and members of different interest groups. So the

week has gone by, basically doing some kind of formal meetings and

ritualistic meetings, which is kind of hard for the markets to

understand. But these meetings will continue, today he should be sworn

in, and getting a confidence vote on one of the Chambers, next week

will be the other one. I understand the markets are kind of inflation

find how, they are waiting to see the measures being taken --

impatient right now. Let's talk about those measures, sorry to

interrupt you because time is getting the better of us. When it

comes to the austerity measures, some of the big ones like sorting

out bureaucracy, they are not going to be in these meetings. There is a

big concern and everybody in Italy is concerned about that. I have

been talking to some politicians and they tell me that they like

Monti, they like what Monti is doing, but the question is is he

going to go to the Chambers and discuss the measures that need to

be taken? Or is he going to take a fast approach? Is he going to

implement the changes that need to be made? It seems the politicians

think it will be the second thing he will do. Especially because it

will come down the markets. Fang Q4 joining us. I am sure Mario Monti

is looking forward to rolling up his sleeves cast thank you for

joining us. Let's look at a presentation of a new strategy that

will shake up a Swiss bank and caused vital change but will it

deliver? The new chief executive is under pressure to prove he has the

right formula as shareholders' patience is running thin. In recent

years UBS has suffered a series of setbacks, the most recent the

embarrassing and costly rogue trading scandal. UBS spend 150

years building its business but it has plans to become a big player.

Today the new chief executive will outline a future where activities

like trading commodities or currencies are scaled back. It was

really pummelled by its over extension into the housing market,

property market in the US. And now private banking is under a lot of

pressure. One has to ask what is left, it is going to abandon

investment banking. They have already announced plans to cut more

than 3,000 jobs, half of them at its investment banking arm.

Investment banking has to be the smart banking operation because

there is not enough business to sustain them if it is just

investment banking. Retail banking is still growing, lots of people

are getting rich even though many people are getting poor, and that

is what they have got to focus on. Switzerland has traditional banking

secrecy took a dent two years ago - - Switzerland's. In September, UBS

and cover trading losses of $2.3 billion at its London operations --

uncovered. There is no doubt the new CEO will have to restore its