07/07/2016

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:00:00. > :00:09.This is Business Live from BBC News with Aaron Heslehurst

:00:10. > :00:13.Is Deutsche Bank the world's most dangerous bank?

:00:14. > :00:21.According to the International Monetary Fund it is.

:00:22. > :00:24.With its share price now hitting record lows could the German giant

:00:25. > :00:41.Live from London, that's our top story on the 7th July.

:00:42. > :00:48.Last week, the IMF said that, of all the banks big enough to bring

:00:49. > :00:56.the financial system crashing down, Deutsche Bank was the riskiest.

:00:57. > :01:00.As if that wasn't worrying enough its shares are now at a record low.

:01:01. > :01:03.Could one of the rocks of European banking now be in major trouble?

:01:04. > :01:17.The BBC understands that Tata Steel is going to pause the sale of most

:01:18. > :01:21.of its business, leaving thousands of workers uncertain about their

:01:22. > :01:23.future. Take a look at the European markets. They have opened higher!

:01:24. > :01:31.We're going to tell you why. As sterling takes yet another

:01:32. > :01:32.pounding post-Brexit, it's now hovering at

:01:33. > :01:34.a new 31-year low - on the winners and losers from a top

:01:35. > :01:39.currency expert responsible for exchanging billions of pounds,

:01:40. > :01:49.dollars and euros. And we want to hear your questions

:01:50. > :01:51.on the pound. For example, should you be getting your holiday money

:01:52. > :01:53.now, or waiting? The tide is going out,

:01:54. > :02:10.and it's time to see who's got As global markets continue to deal

:02:11. > :02:18.with the fallout of the Brexit vote, fears are now growing

:02:19. > :02:20.about the state of the European, Those fears have seen bank shares

:02:21. > :02:26.hit hard, and the bank that's been hit the hardest

:02:27. > :02:29.of all is Deutsche Bank. Yesterday the bank's shares

:02:30. > :02:34.hit a new record low, and its value is now down 25%

:02:35. > :02:37.since the referendum and 50% since the

:02:38. > :02:40.beginning of the year. Well, while the bank has assets

:02:41. > :02:48.of 1.64 trillion euros - - however, it also has liabilities

:02:49. > :02:59.of 1.58 trillion euros, which means the value of what it's

:03:00. > :03:03.owed doesn't need to move by much The problem Deutsche has -

:03:04. > :03:13.according to many analysts out there - is that it doesn't

:03:14. > :03:16.have a large, safe retail banking businesses to balance its bigger

:03:17. > :03:17.and riskier investment Artur Fischer is chief executive

:03:18. > :03:33.of the Berlin Stock Exchange. Really good to talk to you. Pretty

:03:34. > :03:40.scary numbers there. And a pretty damning assessment from the IMF,

:03:41. > :03:43.citing Deutsche Bank as the riskiest bank in the world- what do you make

:03:44. > :03:48.of that? Well, we have have to be careful. I do not want to sound self

:03:49. > :03:53.defending here but we have to be careful not to scaremonger.

:03:54. > :04:01.Obviously, there is always going to be a bank with the worst figures.

:04:02. > :04:04.Please remember, Deutsche Bank is in the middle of a restructuring,

:04:05. > :04:08.moving from being a major investment. The figures are not as

:04:09. > :04:14.good as they should be. And on top of it, we have the Brexit, which hit

:04:15. > :04:19.the banking sector very, very hard. Looking at the bank itself, what

:04:20. > :04:24.sort of capital buffers does it have? Here in the UK, the banks

:04:25. > :04:29.after 2018 were very good at building up their balance sheets -

:04:30. > :04:34.is Deutsche Bank in a similar position? I would compare Deutsche

:04:35. > :04:40.Bank from A to B ratio of 11% maybe with Barclays. I think they are at

:04:41. > :04:43.the same kind of ratio. But when you restructure a bank, you're losing

:04:44. > :04:48.some of the tools you need to organise your investment banking

:04:49. > :04:52.assets. In particular, when you change this kind of infrastructure,

:04:53. > :04:58.it becomes very difficult to manage your assets in an optimum way. It is

:04:59. > :05:02.Aaron here. During the financial crisis, we kept on hearing time and

:05:03. > :05:07.time again about certain is to Jewish and is, and the phrase was,

:05:08. > :05:15.too big to fail. The IMF can do the warnings, people can worry or not,

:05:16. > :05:21.but nobody will let Deutsche Bank fail, will they? Well, your guest is

:05:22. > :05:25.as good as mine. I do not have any privileged information about that.

:05:26. > :05:33.We do know that we had a clear statement some months ago. But at

:05:34. > :05:41.the end of the day, we have improved our safety net and we trust that it

:05:42. > :05:46.will work. What sort of faith do you have in the chief executive, who is

:05:47. > :05:51.described as a conservative, feet on the ground type, pragmatist - do you

:05:52. > :05:57.think he is the right man to have at the helm? Absolutely. We have

:05:58. > :06:02.somebody there who has been with the bank for many years, who has a very

:06:03. > :06:09.down-to-earth view and I believe is the right man for the job. Chief

:06:10. > :06:10.executive of the Berlin stock exchange, Artur Fischer, thank you

:06:11. > :06:19.for your thoughts. Germany's Chambers of Industry

:06:20. > :06:22.and Commerce has lowered its outlook for German exports to Britain,

:06:23. > :06:26.following the British decision The DIHK said it now sees a 1

:06:27. > :06:34.percent drop in exports In 2017, the body predicts

:06:35. > :06:43.that exports to Britain Great Portland Estates,

:06:44. > :06:52.a central London property and investment company,

:06:53. > :06:54.said it expected the Brexit vote to hit economic growth

:06:55. > :06:56.and confidencein the British capital, taking a toll

:06:57. > :06:58.on commercial property markets. The group has a property portfolio

:06:59. > :07:03.worth $4.8 billion. Commercial property has been one

:07:04. > :07:07.of the early victims of Britain's vote to leave the EU,

:07:08. > :07:11.with a number of property funds being suspended after investors

:07:12. > :07:17.linked up to ask Tata Steel is expected to announce

:07:18. > :07:32.on Friday that it will pause the sale of most of its UK business,

:07:33. > :07:34.including Port Talbot, However, it will proceed

:07:35. > :07:39.with the sale of its specialty steel-making business,

:07:40. > :07:43.which employs 2,000 employees in Hartlepool, Rotherham

:07:44. > :07:58.and Stocksbridge. And we want to bring you some more

:07:59. > :08:02.on that Tata Steel story, which is really big here in the UK. Simon

:08:03. > :08:08.Jack, our business editor, has and a really expensive extensive piece on

:08:09. > :08:12.this. It says that Tata is less concerned about the speed of the

:08:13. > :08:17.sale, due to rising steel prices and a raft of government incentives. Of

:08:18. > :08:22.course, steel generally is a story which we have spoken so much about,

:08:23. > :08:25.particularly against the Chinese, accusations of causing something of

:08:26. > :08:33.a glut in the international steel market. Just wondering, if and when

:08:34. > :08:38.the UK leads the European Union, if it changes the steel industry in

:08:39. > :08:44.some ways. I know we have still got global 40s to be reckoned with, but

:08:45. > :08:52.if it changes any rain in the UK. It will be interesting to see. It says

:08:53. > :08:56.the pressure has been reduced on the Indian owners to sell, hence the

:08:57. > :09:01.reason we are seeing this pause in the sale. Head online to see what

:09:02. > :09:03.Simon Jack has, and about that. Although, with the dropping of the

:09:04. > :09:05.pound, it will be cheaper now. Let's take a look round the world

:09:06. > :09:08.at what business stories Christine Hah is in Singapore

:09:09. > :09:12.and has been following The electronics manufacturer expects

:09:13. > :09:31.to post good profit figures, Yes, Samsung is saying that results

:09:32. > :09:36.for April to June, the second quarter, will be the best it has

:09:37. > :09:40.seen in any quarter for two years. It is forecasting operating profits

:09:41. > :09:44.to be up 17%, more than what analysts were expecting at this

:09:45. > :09:51.point. Official results will not be out until late July, but Samsung

:09:52. > :09:56.shares in Asia are up 2% on the back of those comments. Smartphone sales,

:09:57. > :09:59.still the main driver of growth, to ghillie from the Galaxy series,

:10:00. > :10:02.launched this year. It comes at a time when global smartphone sales

:10:03. > :10:07.are weakening and competitors are seeing slowing demand. Weather this

:10:08. > :10:11.spells a true turnaround for Samsung, after two years of slowing

:10:12. > :10:16.market share, we don't know. A lot of this is only product line-up and

:10:17. > :10:22.less marketing costs, not on innovation. -- a lot of this is on

:10:23. > :10:26.Lena product line-up. Well, let's stay in Asia,

:10:27. > :10:33.where share markets crept ahead on Thursday after some upbeat data

:10:34. > :10:36.out of the US showing that the service sector hit

:10:37. > :10:38.a seven-month high in June - took some of the sting out

:10:39. > :10:41.of the latest Brexit scare. But over in Japan, the benchmark

:10:42. > :10:43.Nikkei did slip slightly as investors seeking safety flocked

:10:44. > :10:46.to the yen, pushing it up against the dollar and making

:10:47. > :11:00.the country's exports Let's have a look at Europe. Is

:11:01. > :11:08.expected, it opened higher, breaking that losing streak in Europe. Some

:11:09. > :11:11.caution from the US Federal reserve over raising its interest-rate.

:11:12. > :11:16.And Samira Hussain has the details about what's ahead

:11:17. > :11:21.On Thursday, the precursor to Friday's jobs report comes out,

:11:22. > :11:25.with a look at how many jobs were added in the private sector.

:11:26. > :11:27.Expect to see that private employers probably stepped up hiring

:11:28. > :11:30.in the month of June, with some analysts estimating

:11:31. > :11:35.soft drink giant Pepsi will be reporting.

:11:36. > :11:40.is what potential impacts Pepsi may face in the wake of Brexit.

:11:41. > :11:45.Given the uncertainty in overseas markets,

:11:46. > :11:48.Pepsi is going to be focusing their efforts

:11:49. > :11:54.That means investors will also want to hear

:11:55. > :12:00.Joining us is Richard Hunter, Head of Research, Wilson King

:12:01. > :12:15.Good to see you, as ever. One of those markets is the FTSE 250,

:12:16. > :12:21.something we have been talking a lot about, the difference we are seeing

:12:22. > :12:25.between the benchmark FTSE-100, the blue-chip stocks, which is

:12:26. > :12:30.internationally focused, and everybody commenting on how robust

:12:31. > :12:35.it has been in the wake of the Brexit folk, compared with the FTSE

:12:36. > :12:41.250, which is more representative of how the UK is doing? You're

:12:42. > :12:45.absolutely right. There was a broad knock down across all of the markets

:12:46. > :12:49.after the vote. The FTSE-100 recovered quite quickly. You're

:12:50. > :12:55.quite right, in the subsequent days, we have seen that currency tailwind,

:12:56. > :12:58.in other words the weakness of the dollar, is playing into the hands of

:12:59. > :13:03.many FTSE-100 companies, who on a lot of their money overseas, and

:13:04. > :13:10.therefore the quality of those earnings has improved. FTSE 250 is

:13:11. > :13:16.more of a barometer for the UK, and that's where the pain is being felt.

:13:17. > :13:20.I'm going to put you on the spot, but you are a tele- tart, you can

:13:21. > :13:23.handle this - the fallout from Britain's decision to leave the EU

:13:24. > :13:30.will cost France, one of its biggest trading partners, between 0.1% and

:13:31. > :13:34.0.2 percentage points of economic growth, according to their budget

:13:35. > :13:37.minister. Is that any surprise, the UK leaving is going to have an

:13:38. > :13:44.impact on Germany and France? For sure. The proponents of the UK will

:13:45. > :13:48.be saying that in terms of trade with the European Union, they need

:13:49. > :13:52.us as much as we need them. So, a long way to go. It will be helpful

:13:53. > :13:56.when we know who is going to be negotiating on our behalf. But the

:13:57. > :14:00.UK is not necessarily in an extremely weak position. Despite

:14:01. > :14:06.lots of people saying that? Absolutely. A long way to go, and we

:14:07. > :14:07.are in a pretty good negotiating position as well. Really good to

:14:08. > :14:13.talk to you. Still to come: We're going to be

:14:14. > :14:17.talking about the drop in the pound, what it means for your holiday

:14:18. > :14:20.and why it's a bit of a mixed You're with Business

:14:21. > :14:29.Live from BBC News. All eyes are on how Brexit

:14:30. > :14:36.will affect the British economy. And there's one area that has been

:14:37. > :14:39.touted as potentially vulnerable The Halifax has just

:14:40. > :14:45.released its latest Most of this relates to the market

:14:46. > :14:53.before the vote on 23 June, for how

:14:54. > :14:56.buyers and sellers were behaving Joining us to discuss

:14:57. > :15:06.developments in the property market is Susan Emmet,

:15:07. > :15:20.research director at the real Is Aaron was saying, this survey was

:15:21. > :15:25.conduct before the 23rd of June, showing that house price inflation

:15:26. > :15:30.was dropping. Is it actually a period of a slowdown in prices, and

:15:31. > :15:33.is that a good thing for the market, it is actually a slowdown in

:15:34. > :15:38.activity which we do not want to see? Clearly at the moment there is

:15:39. > :15:42.a lot of uncertainty out there. The Brexit result took a lot of people

:15:43. > :15:46.by surprise. Over the coming weeks and months, we expect to see buyers

:15:47. > :15:52.posing for thought, taking a breath and seeing how the situation pans

:15:53. > :15:58.out. So, we are expecting fewer sales in the short term, and yes,

:15:59. > :16:01.that will have an impact on the market with and we are expecting to

:16:02. > :16:09.see a period of slower growth in house prices. Can I just ask you,

:16:10. > :16:12.over the last few days, we have seen the suspension of some of these big

:16:13. > :16:17.commercial property funds, but when you look at faces like London, I

:16:18. > :16:23.think we are already seeing a cooling of foreign buyers, but when

:16:24. > :16:26.you look at a place like London, isn't the dynamics, it is still

:16:27. > :16:32.supply and demand there is more demand than some fly?

:16:33. > :16:43.You are right, two factors have not changed. That is low supply and a

:16:44. > :16:48.low interest rate environment. So we are not expecting to see a one bunch

:16:49. > :16:54.of people rushing to sell or being forced to sell. That will underpin

:16:55. > :16:58.house prices. We are in for a slower market, but it is impossible to say

:16:59. > :17:09.more at this stage. We appreciate your time, short and sweet.

:17:10. > :17:15.You're watching Business Live - our top story:

:17:16. > :17:21.Deutsche Bank shares hit a new record low this week, and its value

:17:22. > :17:26.has halved since the beginning of the year. The International Monetary

:17:27. > :17:30.Fund, the IMF, also says that of the banks big enough to bring the

:17:31. > :17:32.financial system crashing down, Deutsche Bank is the riskiest. We

:17:33. > :17:34.will keep across all of that. A quick look at how

:17:35. > :17:55.markets are faring: The majority of the FTSE 100

:17:56. > :18:00.companies take the majority of their profit outside. The value of the

:18:01. > :18:02.pound is still under $1.30. And now let's get the inside track

:18:03. > :18:05.on the volatile world of currencies and in recent weeks, there's been no

:18:06. > :18:09.more volatile currency The UK's decision to leave

:18:10. > :18:16.the EU has continued to punish sterling, which yesterday

:18:17. > :18:19.fell to a new 31 year low As you can see here,

:18:20. > :18:32.the pound has now fallen by around 14% against the dollar

:18:33. > :18:34.since hitting $1.50 ahead It's been good news for many FTSE

:18:35. > :18:39.100 companies, who in total make around three quarters

:18:40. > :18:44.of their profits outside the UK. And it's also good news

:18:45. > :18:52.for exporters, because it means that their products become cheaper

:18:53. > :18:54.for foreign customers. But a falling pound also means that

:18:55. > :18:59.imports have become more expensive - leading to price rises

:19:00. > :19:03.on everything from food to TVs. Arguably, the biggest issue of all,

:19:04. > :19:08.though, is the impact that the drop has on confidence

:19:09. > :19:11.in the economy as a whole, with the UK already losing

:19:12. > :19:14.its triple A credit rating. Joining us now to discuss this -

:19:15. > :19:17.Jonathan Quin is the CEO and Co-Founder of the International

:19:18. > :19:31.money transfer company, World First. I would like to be a fly on the wall

:19:32. > :19:37.at your office at the moment. We will talk about the pros and cons in

:19:38. > :19:42.a minute, but at the end of the day, some will lose some will win. The

:19:43. > :19:46.traders will make money. Volatility is a good thing for people in the

:19:47. > :19:51.markets. We had our busiest period ever. As you mentioned before, the

:19:52. > :19:58.value of the pound is a two sided coin. This is great for exporters

:19:59. > :20:02.and also good that those who are considering exporting. It is great

:20:03. > :20:09.for exporters so long as the products they sell are priced in

:20:10. > :20:13.pounds. We have to be careful about saying this. If they sell these

:20:14. > :20:18.products in Euros or dollars and change the money back to sterling,

:20:19. > :20:23.they will still benefit. We were talking about the big FTSE 100

:20:24. > :20:26.companies. Again, we are flogging a dead horse, but that is why they are

:20:27. > :20:30.doing relatively well. They are going to make all those dollars

:20:31. > :20:36.outside, bring them back in and get more quid for them. Our client basis

:20:37. > :20:39.is importers and exporters, and we have a group of clients called the

:20:40. > :20:44.mini multinationals, who do lots of business internationally. Lots of

:20:45. > :20:52.them are doing well and there are some great stories. But we are a net

:20:53. > :20:59.importer as a country. So how are the import clients feeling? Some of

:21:00. > :21:01.them are feeling some pain. And some of the products will have gone up

:21:02. > :21:07.ten to 15%. So that will be difficult for them. However, some of

:21:08. > :21:12.those import something and sell it on and I might be an option for them

:21:13. > :21:17.to consider exporting something that they also sell. We have viewers

:21:18. > :21:22.around the world and in the UK who may be thinking of going to Europe

:21:23. > :21:29.or further afield to the US. Let's say they are using pounds. What is

:21:30. > :21:35.your suggestion? It is difficult to predict the future. If I were them,

:21:36. > :21:42.I would buy half now and if the rate goes up, you will do better. If it

:21:43. > :21:47.goes down, at least you have half. It is a classic hedge. There are so

:21:48. > :21:57.much risk at the moment. It is a tough one. Good luck! Many thanks.

:21:58. > :22:03.How many times have you ordered a take-away meal or and sat waiting

:22:04. > :22:07.for the roar of the moped bringing your delivery?

:22:08. > :22:10.In the near future, you could be hearing the clatter of the tiny

:22:11. > :23:26.It delivers food and it is a portable potty!

:23:27. > :23:28.What other business stories has the media been

:23:29. > :23:35.Joining us again is Richard Hunter, the Head of Research

:23:36. > :23:36.at Wilson King Investment Management.

:23:37. > :23:44.This one caught my eye. Apparently, Paris, under the guidance of promise

:23:45. > :23:50.a Manuel Valls and their finance minister, want to steal a march on

:23:51. > :23:57.London as the financial capital of Europe. Is that going to happen?

:23:58. > :23:59.Maybe not so much Paris. A more interesting story is the current

:24:00. > :24:08.situation in terms of the London stock exchange and merger. It seemed

:24:09. > :24:13.initially that the base would be in London in terms of the stock

:24:14. > :24:19.exchange. Now London isn't part of the EU, there will be pressure

:24:20. > :24:23.either to share the head office, or maybe pressure from Frankfurt to

:24:24. > :24:28.merge with Deutsche Borse. It is inevitable, and we have already seen

:24:29. > :24:34.it in terms of the clearing market, that parts of Paris, Milan and

:24:35. > :24:37.Frankfurt will be vying for some of the London business. How important

:24:38. > :24:41.is it that some of the European countries are pushing for Britain

:24:42. > :24:46.not to retain its passport rights? We keep hearing about the passport

:24:47. > :24:50.and financial services. This is the ability of banks to be able to

:24:51. > :24:55.continue to do business in Europe unfettered. Part of that is also the

:24:56. > :24:59.free movement of people, however, and that will be a sticking point.

:25:00. > :25:04.It is one of the reasons we have seen a lot of weakness in the UK

:25:05. > :25:12.banking share prices. That move on quickly. There was a lot of UK

:25:13. > :25:16.bashing going on in Le Figaro. But why hasn't anybody focused on

:25:17. > :25:20.Europe? I have served some experts say, keep your eye on Europe,

:25:21. > :25:25.because in a year, it will be in an absolute mess. It ain't a shining

:25:26. > :25:29.Brexit to one side, the euro zone Brexit to one side, the euro zone

:25:30. > :25:32.has been of concern for some years now, since the financial crisis. We

:25:33. > :25:38.are now at least talking about are now at least talking about

:25:39. > :25:40.potential growth. However, you have massively higher unemployment,

:25:41. > :25:43.particularly amongst the youth in some of the professional Europe into

:25:44. > :25:49.trees. We have the Greek situation and some question marks over

:25:50. > :25:54.Germany. The UK, by comparison, looks in a stable place. Richard

:25:55. > :25:57.Hunter, always a pleasure. There is more on our website if you want more

:25:58. > :26:03.business. See you later. Bye-bye.