20/04/2016 BBC Business Live


20/04/2016

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This is Business Live from BBC News with Ben Thompson and Sally Bundock.

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Airforce One is on its way to Saudi Arabia as we speak.

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With trade relations currently on the rocks, will the two sides be

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Live from London, that's our top story, today Wednesday, 20th April.

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President Obama is beginning a visit to Saudi Arabia today at a time

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of strained relations between the US and Gulf countries.

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So what can we expect from this 71-year-old US-Saudi

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Also in the programme, the world's largest computer chipmaker, Intel,

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has announced it is shedding 12,000 jobs as it seeks to reduce reliance

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Markets are downbeat. Shares in Mitsubishi Motors as the company

:01:00.:01:18.

admits that one of its models failed a fuel economy test.

:01:19.:01:22.

We'll get the inside track on the booming market for drones.

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From farming to filming, they're increasingly popular

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in the commercial world but at what cost

:01:38.:01:39.

So for fear of droning on - what do you think?

:01:40.:01:43.

Are drones great fun or a dangerous device that can

:01:44.:01:46.

You know what to do - just use the hashtag BBC Biz Live.

:01:47.:01:51.

President Obama lands in Saudi Arabia in around three hour's time.

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It will be his first visit to the country since King Abdullah's

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As well as security issues, the leaders of the two countries

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will also discuss their trading relationship including the key

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The US imports around 11% of its oil from Saudi Arabia, making it

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America's second biggest external source of oil.

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Saudi Arabia meanwhile is the biggest importer of US arms

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and has spent $95 billion on American hardware

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However that close economic relationship has been put

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Increasing supplies of US base shale oil have decreased America's

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That's been compounded by the Iran nuclear deal which helps

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to strengthen the economy of Saudi Arabia's key revel

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With me is Dr Stuart Thomson, public affairs expert

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at Westminster-based law firm Bircham Dyson Bell.

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Stewart, nice to see you. Good morning. Sally running through some

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of the issues there, just highlight for us

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what will be top of the agenda today between

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the talks with Saudi and the US, of course, Obama now on his way to

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Saudi Arabia? A number of issues, but particularly around the economy,

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Saudi Arabia's position in the region and of course, the fight

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against IS, a range of issues across all those three things and also the

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legislation which has been proposed in the States at the

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moment which, the so-called 9/11 Bill or the ability to challenge

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foreign countries that are involved in terrorism acts on US soil which

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is a big issue at the moment. Yeah and one of the key issues will be

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Saudi's place as you touched on in the world's economy and we know

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Saudi, of course, for its oil, but the picture is changing quickly.

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We've talked about their attempts to set-up a sovereign wealth fund for

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life after oil. What role does Saudi Arabia

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play if it is not in the oil market? Today's discussions with President

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Obama will start to tease out those issues, Saudi Arabia if it is a more

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open or closed society, it is based on the economy, its relations with

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Iran and others in the region, until you can get to the bottom of those

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issues, it is difficult to know what issues, it is difficult to know what

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it will do about its economy, any country that's alined with one

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particular industry to loosen itself is a huge challenge,

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so Saudi Arabia is not alone in that. On that issue of oil, it is

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likely to be tense when it comes to the discussions on fracking and

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shale energy because the US clearly pushing that, so it is less

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dependant on foreign oil, but at the same time Saudi Arabia made it known

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that they are willing for the price to stay low so they can push those

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producers out of business? There is a shift in the relations between the

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US and Saudi Arabia with America wanting it to be a more independent,

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not so utterly reliant country as it would see it on the States, but when

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it does, when Saudi Arabia does take a more independent role for instance

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in Yemen around Yemen and other issues as well, that America doesn't

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like that. These challenges aplay to the States as well as to Saudi

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Arabia itself in the future relationships. I have been to Saudi

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Arabia a few times and what strikes you when you go there is how slowly

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everything changes and we have seen this recently too

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in terms of the speed of changes starting to increase and by historic

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standards it is pretty fast and yet, there are still calls for Saudi

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Arabia to do more to open up its economy, to embrace the outside

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world, it is not quite happening yet, is it?

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It is not, but as you say, the pace of change has picked up, but there

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are still those that say that it needs to go faster. It needs to open

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itself up more quickly, but again, to bring a population along and to

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protect the position of the Royal Family there as well, that's going

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to be sometime before any of those things happen. Fascinating stuff. Dr

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Stewart Thompson, thank you, nice to see you from the Westminster based

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law firm. Malaysia Airlines is looking

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for a new boss AGAIN. Christoph Mueller was brought

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in to restructure the carrier and was the first first ever

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non-Malaysian to head the company. But now, less than a year

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into his three-year contract he's announced he's leaving

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for personal reasons. The airline say he will

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depart in September. Yahoo's results came in better

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than expected and shares actually The internet firm reported a loss

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of $99 million for the quarter, compared to a $21.2 million profit

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for the same time last year. Yahoo is still looking for a buyer -

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with US mobile giant Verizon Tata Steel's boss in Port Talbot,

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Stuart Wilkie, is to launch a management buyout

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for the company's UK operations. Mr Wilkie was one of the architects

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of a survival plan presented to the Tata board in India

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last month, but that was ultimately rejected

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and the firm put up for sale. The group says it could threaten

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London's eminence as a financial capital. The eight say it is the

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UK's decision alone where its future lies, but the US has a critical

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interest in the outcome. Leave campaigners accuse the men of double

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standards and belittling Britain's place in the world.

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Shares in the Japanese car-maker Mitsubishi have fallen sharply after

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It relates to fuel economy data for its cars in Japan.

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Tim McDonald is following this from our Asia Business Hub.

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Tim, what do we know about the emissions tests? As you

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mentioned shares took a tumbling, about 15% merely on reports that the

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Japanese car-maker conducted improper fuel tests. Now, we don't

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really know anything about the nature of the tests and

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how they were improper, but on the market reaction alone, it is a very

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bad day for Mitsubishi. If this all seems just a little

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familiar, it is probably because of another car maker, Volkswagen, it

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was hammered about six months ago when it emerged they installed

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emissions test cheating software into 11 million diesel engines

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worldwide and it affected the bottom line for them, VW is recalling

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millions of cars worldwide as a result

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of the scandal and they have set aside $7 billion to cover the costs

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and VW posted its first quarterly loss

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in eight years and Volkswagen isn't alone, another car maker

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agreed to pay penalties for overstating

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their vehicle ratings. Will it be a similar story for Mitsubishi? We

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don't really know. This comes a week before they release their full-year

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results for 2015 and it revised down estimates, but you know, of course,

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that won't apply to, you notion what happened today won't apply to last

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year's results, but we will hear in an hour or so, in half an hour,

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there will be a press conference that will shed more light on what

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it can mean for Mitsubishi and how serious these results are.

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close eye on that story. Tough times ahead for Mitsubishi.

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We did see the main market in Japan close

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on the day, but we saw significant losses in Hong Kong and China. It is

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a mixed day for markets around the world. Lots of issues, the oil price

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sliding again in Europe, we have I say the main markets, London,

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France and Germany all down on the day.

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The big losers are the energy stocks. As I haven't got any numbers

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to show you, I will move on. We will discuss the markets in detail in a

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moment, but let's talk you through the news from

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Intel, In the US, The tech giant Intel

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that is taking drastic action to boost its bottom line as it

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grapples with the swift decline The CEO admitted Intel missed a move

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to mobile wallet was dominating the business of making chips

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for personal computers. More of our technology was moving

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on to mobile phones and tablets. In the fastest-growing

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and most lucrative part And now it faces the daunting

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prospect of the next stage of the IT An increasing number

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of the electronic devices in our homes and offices

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are becoming Internet devices, It is already a sizeable market,

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but it is expected to get much That's why even though Intel

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is still a huge force in technology, it needs to restructure and quickly

:11:27.:11:32.

to try to dominate the market for Internet devices and the cloud

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just as it dominated the PC market. If it doesn't, many more jobs might

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be lost than the 12,000 it shed. Joining us is Manji Cheto,

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an analyst at London-based Good morning. Good morning. Let's

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talk markets because we touched on Intel and there was a lot of

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movement yesterday because we had the likes of Yahoo and Goldman

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Sachs. What's caught your eye today? I think, you know, the Yahoo story.

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That's been dragging on for a little bit.

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have been expecting a sale happening. I don't know if it is

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going to come, if it is going definitely considering actually was

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part of the Yahoo generation. We talked a lot about it on the

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programme yesterday and because clearly we are still waiting for

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details on a bid and the results coming

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in much better than expected, but it is hard to know which way the

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markets will perceive this in terms of their shares rising in after

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hours yesterday, but it is a temporary blip. Exactly.

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It is just because markets are anticipating that a sale will close

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soon and I'm not sure, you know, that we're there.

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The other thing as well, I mean, the actual numbers was a loss of $99

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million compared it a profit of $21 million the year before.

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But not as bad as was expected. How low can expectations be? The same

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with Goldman Sachs, the Goldman Sachs numbers were pretty awful and

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yet shares went up? Yeah. I don't know.

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I think we will see where things go with that. For now, you're going to

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talk us through the paper stories later,

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but for now, thank you. We'll get the inside

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track on the booming Capturing incredible

:13:26.:13:27.

shots like these has led to a boom in drones,

:13:28.:13:35.

but are they safe You're with Business Live from BBC

:13:36.:13:37.

News. Banking in the UK is still dominated

:13:38.:13:42.

by the so-called big four - Barclays,Lloyds,

:13:43.:13:52.

HSBC and Natwest. But what about those new challenger

:13:53.:13:58.

banks designed to break up that monopoly and give

:13:59.:14:01.

us all more choice? Well, one of those is Metrobank

:14:02.:14:03.

and it's just released its first quarterly figures since it floated

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on the stock exchange last month. It says 2016 saw record growth

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in deposits and lending. Vernon Hill is the Chairman

:14:09.:14:11.

of Metro Bank and joins us now. A good set of Figgs. The markets

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seem to like what they have seen and the first set of Figgs since you

:14:17.:14:20.

listed? Yes, this is the first public release after we listed in

:14:21.:14:24.

March. It is the outstanding quarter, growth as you said in

:14:25.:14:29.

deposits, loans and no accounts and the Metrobank model in Britain and

:14:30.:14:32.

London just keeps going from strength to strength.

:14:33.:14:38.

Having said that though, we are looking at ?11 million loss or

:14:39.:14:41.

$16 million, but your net lending is up 125%. Talk us through the numbers

:14:42.:14:52.

and what you are expecting next time because at the end of the day,

:14:53.:14:55.

shareholders want to see profits, don't they, eventually? Well,

:14:56.:15:02.

Metrobank is in its sixth year. We have under gone unbelievable growth

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in deposits and lending. Nothing like this has been seen in America

:15:07.:15:12.

or Britain. Our loss after when you deduct the special charge for the

:15:13.:15:18.

public offering was actually ?7.9 million and our losses are dropping

:15:19.:15:23.

and we expect to turn profit later this year. Metrobank is about giving

:15:24.:15:28.

the British consumers and commercial clients a real choice. It is

:15:29.:15:34.

different than the big four banks and the Brits have responded in a

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great way. But you are still a bank on the High

:15:37.:15:45.

Street and the trend would seem to be to have a bank on a smart device,

:15:46.:15:53.

so are you really a challenge? 100%. Our job is to deliver the best in

:15:54.:15:57.

consumer and business banking in every channel the client wants

:15:58.:16:02.

in-store or online or mobile. We deliver the best on every channel.

:16:03.:16:08.

unique service model works. We unique service model works. We

:16:09.:16:11.

appreciate your time. Our top story, President Obama is on

:16:12.:16:16.

the way to Saudi Arabia where trade relations have been tested thanks

:16:17.:16:28.

to a much lower oil price We will keep you posted on

:16:29.:16:31.

developments. Now let's get the inside

:16:32.:16:37.

track on drones. They've only been around for a few

:16:38.:16:41.

years but they're already fast While the sale of recreational

:16:42.:16:44.

drones has exploded in recent years, it's commercial drone sales that

:16:45.:16:48.

are transforming the way Commercial drone sales reached

:16:49.:16:51.

$261 million in 2015 but are expected to almost double

:16:52.:16:58.

to $481 million this year. More and more areas of business

:16:59.:17:02.

are taking advantage of UAV technology, with agriculture

:17:03.:17:07.

expected to account for 48% of all commercial

:17:08.:17:10.

drone sales this year. The filming opportunities that

:17:11.:17:15.

drones offer have allowed Airstoc have 5000 operators in over

:17:16.:17:17.

100 countries and sells drone-shot aerial footage of everything from TV

:17:18.:17:28.

shows to construction projects Giles Moore is the CEO

:17:29.:17:31.

of Airstoc and joins me now. You have brought a couple of your

:17:32.:17:44.

devices with you. People are getting increasingly familiar with what they

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are and how they work. Talk us through the more unusual

:17:49.:17:56.

applications. Agriculture? Used in a lot of different ways because of the

:17:57.:18:01.

detail it can produce. It might look at what content in a wheat field.

:18:02.:18:08.

Livestock control, crops are being, the detail is vast, which is why

:18:09.:18:13.

people are starting to use it for farming, construction as well. Do

:18:14.:18:22.

they round-up sheep? We have seen some of that on YouTube. What about

:18:23.:18:31.

the sheepdog? They are still around. One of the most interesting ones I

:18:32.:18:35.

have heard is someone trying to combat world deforestation with

:18:36.:18:41.

maths forestation and trying to plant trees with drawings. We have

:18:42.:18:50.

one on the desk, what you might call an entry level model. Costing about

:18:51.:19:00.

?1500. You have also brought in a much more industrial one in the

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corner, ominously staring at us. Talk us through what you would use

:19:06.:19:10.

that for. That is the commercial grade drone which would be used for

:19:11.:19:14.

media, for footage shown on television and cinema screens. Also

:19:15.:19:23.

for construction, thermal imaging. Viewers' comments, we asked on

:19:24.:19:28.

Twitter if people think they are great or dangerous. Someone says in

:19:29.:19:33.

the wrong hands they could be very dangerous and then needs to be a

:19:34.:19:38.

chord of conduct. We had a story about a drone hitting an aeroplane

:19:39.:19:45.

coming into at Heathrow. It is on the minds of everybody, the

:19:46.:19:51.

potential for good and bad. Yes, and the rules have been in place for a

:19:52.:19:55.

long time and do not have to be changed. They have to be enforced.

:19:56.:20:00.

What has happened with Heathrow and other incidents, it should be a mist

:20:01.:20:07.

to accelerate the education of drones. You have people who it is

:20:08.:20:13.

their passion and livelihood, consumers who want to fly at far

:20:14.:20:17.

away as high and fast as they can and that is the danger. There are

:20:18.:20:23.

specific rules and regulations about using them whoever you are.

:20:24.:20:31.

Absolutely. It is that part of the Margetts than needs to be targeted

:20:32.:20:35.

because the rules are in place and you can enforce them and people have

:20:36.:20:39.

to be made aware of the rules. You can put things in place in terms of

:20:40.:20:45.

technology, making it compulsory to register drones for accountability,

:20:46.:20:50.

but it comes down to common sense. If your next Heathrow the last thing

:20:51.:20:56.

you want to do is fly it 2000 feet in the hour. The industry is going

:20:57.:21:00.

to get bigger. We have spoken about Amazon on delivering parcels using

:21:01.:21:08.

drones. The air is going to get more crowded and it is going to get

:21:09.:21:15.

busier. How do you regulate something about there about who has

:21:16.:21:18.

commercial rights of way and recreational right-of-way and not

:21:19.:21:23.

least helicopters and planes who are up there as well? It takes a lot of

:21:24.:21:32.

time to get in place. The same when cars first came about, there was a

:21:33.:21:37.

lot of mess at the start. There is with the drones coming into play.

:21:38.:21:41.

Things like the livery will happen at some point, but it is a lot more

:21:42.:21:47.

in advance of what you can do when you get there. A lot of it is

:21:48.:21:51.

working together with the manufacturers to try to create the

:21:52.:21:57.

technology that can prevent issues happening. As long as the stories

:21:58.:22:13.

that come out, it is good. Thank you for your comments. I hope we have

:22:14.:22:21.

answered some of your questions. There are a lot of other stories.

:22:22.:22:29.

Coca-Cola is rebranding and trying to push its healthy credentials,

:22:30.:22:40.

calling itself the zero sugar. I wonder if the tax has anything to do

:22:41.:22:46.

with that. House-building, a national obsession. The first three

:22:47.:22:51.

months of the year delays and uncertainty related to be you

:22:52.:22:55.

referendum, it seems we are building fewer houses. You can stay ahead

:22:56.:23:07.

with all of the breaking business news. With insight and analysis from

:23:08.:23:14.

the BBC's team of editors around the world. We want to hear from you. Get

:23:15.:23:24.

involved on the web page. On Twitter and Facebook. Business Live, on TV

:23:25.:23:35.

and online, whenever you need to know.

:23:36.:23:43.

Now it's time for a look at the papers.

:23:44.:23:45.

The New York Times reports on a story we have been

:23:46.:23:48.

covering this morning, that Yahoo reported a $99 million

:23:49.:23:50.

quarterly loss, as it reviews offers from potential bidders.

:23:51.:23:52.

The Times meanwhile quotes the Grosvenor Group,

:23:53.:23:53.

which manages billions of dollars in property.

:23:54.:23:55.

They say the housing market looks like it will head downward

:23:56.:23:58.

We had an opposite report earlier this week.

:23:59.:24:07.

And the Huffington Post covers news that it may be more than a decade

:24:08.:24:10.

before there is a woman on the front of a US dollar bill.

:24:11.:24:13.

What other business stories has the media been

:24:14.:24:15.

Manji Cheto from Teneo Intelligence is joining us again to discuss.

:24:16.:24:19.

Banknotes. I am fascinated by how much of a political hot potato they

:24:20.:24:29.

are. We have had this debate already about the ?10 note. This is the

:24:30.:24:34.

American discussion. A lot of discussion about when a woman will

:24:35.:24:39.

finally appeared on a banknote. Women will have to appear until 2030

:24:40.:24:45.

to get their face on a banknote. Reading the story made me think I

:24:46.:24:49.

cannot believe we have had to wait this long to make it happen and it

:24:50.:24:55.

is that we have to wait until 2030. A little bit of a step back for

:24:56.:25:01.

women who have been campaigning. This is in the US specifically. If

:25:02.:25:05.

we end up with a female president things might change. Whoever gets

:25:06.:25:10.

the job I imagine we'll have other things on their mind. Do you live in

:25:11.:25:19.

London? Yes. I am waiting for the correction to happen. I am renting

:25:20.:25:30.

at the moment. I love the area that I live, Chiswick, and I cannot

:25:31.:25:35.

afford to buy. Hopefully that correction will happen across the UK

:25:36.:25:41.

including London. Why do they say a correction is coming? Stamp duty

:25:42.:25:46.

changes and the strength of the pound. Concern about the EU

:25:47.:25:51.

referendum and what happens to the markets.

:25:52.:26:13.

Tonnes of sunshine on the way today. Enjoy it if

:26:14.:26:15.

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