21/12/2016 World Business Report

Now for the latest financial news with Sally Bundock And World

The bell tolls for the world's oldest bank.

Italy's Banca Monte dei Paschi di Sienna faces a deadline to raise

$5.2 billion from private investors today.

If it fails state intervention is unavoidable.

Living under a cloud - the millions in north-east China

stranded by extreme air pollution - we are live in Beijing

The clock is ticking for the troubled lender Banco Monte

The Italian bank is seeking just over $5 billion

in new investment to help it stay afloat -

today is the final deadline for existing investors and other

retail investors to purchase new shares.

The new Italian Prime Minister has sought Parliamentary approval

for an emergency bailout package worth some $20 billion

in the event that private sector assistance doesn't materialise.

This would prove contentious as investors who have already lent

to the bank will be penalised under EU laws which came into force

Poor quality loans are one of the biggest issues facing

In total, the country's lenders sit on around 370 billion dollars worth

This accounts for about 40% of all the non-performing loans

Ben Kumar is Investment Manager at Seven Investment Management.

Good morning, then. How this particular bank get into so much

trouble? As you say, bad loans are the focus. When you are the oldest

bank in the world, maybe your regulations, maybe the way you

assess loans, is a bit more of different to modern banks. It is

based on relationships, how long they have been going and if you have

been lending to a family or a business hundreds of years, the

credit checks aren't of the same quality as some of the newer banks.

The new banks have had trouble as well. Banca Monte dei Paschi di

Sienna this year has had a problem lending money to people who couldn't

afford to pay it back. It has been going on now for centuries. As we

know, for some weeks they have been grappling together to try and save

this bank. It has been reported that they managed to get around 500

million euros. That is nowhere near their target. Will they raise the

funds? Element they have a few ways to do it. Debt to equity swap, not

appealing. They have some big investors. One of the biggest

Italian insurers owes about 180 million of shares. -- owns. There

aren't many other big investors like that in the bond market who you can

guarantee will swap into equity. Explain why are swapping into equity

isn't an attractive option. You are kind of swapping a guarantee for

something that is not a guarantee. It is difference between a bond

where you get what you meant to equity way you go over 100 euros and

then you hope the bank doesn't go bust and you get some money back

when you can. You can see why that is not attractive to people who

thought bonds were stable. Let's assume they don't get that money

they need and required today. The ultimate deadline is December 30

one. It is not reached, the debt-to-equity swap is unwound and

no one has to go through it and the Italian government has to come

through and bailout Banca Monte dei Paschi di Sienna. A lot of investors

will find out their safe investment has become unsafe indeed. It will be

difficult for the relatively new Prime Minister who has only been

there since December 12. Thank you for coming in. As you know, we will

be across a story today as it developed.

US President Barack Obama has permanently banned new oil and gas

drilling in US Atlantic and Arctic waters, in one of his last major

environmental protection actions before leaving office next month.

Mr Obama invoked a provision of a 1953 law which will be

difficult for President-elect Donald Trump to reverse.

Volkswagen has struck a deal with the US authorities over some

80,000 VW, Audi and Porsche cars with 3-litre diesel engines.

The agreement is another step towards allowing the German car

maker to put the emissions cheating scandal behind it.

In June VW agreed to a $15 billion settlement for another 475,000

The new agreement will cost Volkswagen an estimated $1 billion.

Nike, the world's leading sportswear manufacturer,

has posted better-than-expected profits following a rebound

Profits rose 7.3% to $842 million in the three months to November,

while revenue jumped 6.4% to $8.18 billion.

Nike's basketball category and the Jordan brand accounted

for about 15% of Nike's wholesale revenue in 2016.

Adam Messinger who is Chief Technology Officer is leaving

just weeks after its chief operating officer resigned.

Twitter's shares have lost 23% this year, leaving the company

with a market value of $12.8 billion.

A strike by airport baggage handlers and check-in staff in the UK planned

for Friday and Christmas Eve has been called off.

More than 1,500 members of the Unite union employed by Swissport had been

due to walk out for 48 hours in a row over pay and conditions.

The strike was called off following talks

Swissport confirmed it had made a revised offer,

which the union would recommend to its members.

The Chinese capital Beijing has been blanketed in thick smog

since the weekend leading the authorities there to take

drastic action to minimise the pollution crisis.

Factories have been forced to slow down or pause production,

flights have been cancelled and highways closed

Yet, despite these red alert provisions the air pollution

Stephen McDonnell is in our Beijing bureau.

We can see behind you the live shot of the smog. This is pretty

debilitating and I know that business leaders I have spoken to

who are considering China are thinking they won't have offices in

Beijing for this reason. As you mentioned, the view here from the

bureau tells the story. Normally there is a park and the CBD which

you can see. We can't see it at the moment and that is because this huge

city is covered in this toxic veil of pollution. As you mentioned, the

provisions to try and reduce this. Good knows how bad it could have

been. -- goodness knows. You mentioned factory closures. We had a

look at that and apparently some 1200 factories were told to stop

producing. Cars have gone on to an odds and evens and numberplate

system which has cut the traffic in half and yet, pollution levels, if

we talked about PM 2.5 are still well over 400 in Beijing and much

worse in a nearby province when we are talking 600, 700. I think one

date even registered as 1000. What will the authorities do next? At the

moment, they are trying to worry about them getting through the next

few days. Many flights have been cancelled because of poor

visibility. Freeways shut down because of the same reason.

Schoolchildren have been told to stay at home. I think they are

hoping that all of this can reduce the problem but really, they just

need the wind to come along and clear this. In terms of long-term

solutions, well, it's closing down the most clapped-out factories, it

shutting down the worst of the coal-fired power stations here which

are still pretty terrible. Beijing has moved a lot of industry out of

the city area into other provinces and possibly that's why the problem

gets worse the further you get from the city but it poses a big problem

for people wanting to do business here. This is the centre of

government in Beijing. If you want to do business in China, you need to

come to Beijing and many large companies are based here for that

very reason. All right. They have huge problem to deal with. Banks

were your time and telling us what is going on. We will talk of that in

more detail. A quick look at the markets. The US and Europe had a

good session yesterday so Asia are riding on the coattails of that.

Japan is down slightly by one third of a percent. You up-to-date with

business stories. I will see very soon.

After the attack in Berlin, authorities throughout Europe,