07/07/2016 BBC Business Live


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This is Business Live from BBC News with Aaron Heslehurst


Is Deutsche Bank the world's most dangerous bank?


According to the International Monetary Fund it is.


With its share price now hitting record lows could the German giant


Live from London, that's our top story on the 7th July.


Last week, the IMF said that, of all the banks big enough to bring


the financial system crashing down, Deutsche Bank was the riskiest.


As if that wasn't worrying enough its shares are now at a record low.


Could one of the rocks of European banking now be in major trouble?


The BBC understands that Tata Steel is going to pause the sale of most


of its business, leaving thousands of workers uncertain about their


future. Take a look at the European markets. They have opened higher!


We're going to tell you why. As sterling takes yet another


pounding post-Brexit, it's now hovering at


a new 31-year low - on the winners and losers from a top


currency expert responsible for exchanging billions of pounds,


dollars and euros. And we want to hear your questions


on the pound. For example, should you be getting your holiday money


now, or waiting? The tide is going out,


and it's time to see who's got As global markets continue to deal


with the fallout of the Brexit vote, fears are now growing


about the state of the European, Those fears have seen bank shares


hit hard, and the bank that's been hit the hardest


of all is Deutsche Bank. Yesterday the bank's shares


hit a new record low, and its value is now down 25%


since the referendum and 50% since the


beginning of the year. Well, while the bank has assets


of 1.64 trillion euros - - however, it also has liabilities


of 1.58 trillion euros, which means the value of what it's


owed doesn't need to move by much The problem Deutsche has -


according to many analysts out there - is that it doesn't


have a large, safe retail banking businesses to balance its bigger


and riskier investment Artur Fischer is chief executive


of the Berlin Stock Exchange. Really good to talk to you. Pretty


scary numbers there. And a pretty damning assessment from the IMF,


citing Deutsche Bank as the riskiest bank in the world- what do you make


of that? Well, we have have to be careful. I do not want to sound self


defending here but we have to be careful not to scaremonger.


Obviously, there is always going to be a bank with the worst figures.


Please remember, Deutsche Bank is in the middle of a restructuring,


moving from being a major investment. The figures are not as


good as they should be. And on top of it, we have the Brexit, which hit


the banking sector very, very hard. Looking at the bank itself, what


sort of capital buffers does it have? Here in the UK, the banks


after 2018 were very good at building up their balance sheets -


is Deutsche Bank in a similar position? I would compare Deutsche


Bank from A to B ratio of 11% maybe with Barclays. I think they are at


the same kind of ratio. But when you restructure a bank, you're losing


some of the tools you need to organise your investment banking


assets. In particular, when you change this kind of infrastructure,


it becomes very difficult to manage your assets in an optimum way. It is


Aaron here. During the financial crisis, we kept on hearing time and


time again about certain is to Jewish and is, and the phrase was,


too big to fail. The IMF can do the warnings, people can worry or not,


but nobody will let Deutsche Bank fail, will they? Well, your guest is


as good as mine. I do not have any privileged information about that.


We do know that we had a clear statement some months ago. But at


the end of the day, we have improved our safety net and we trust that it


will work. What sort of faith do you have in the chief executive, who is


described as a conservative, feet on the ground type, pragmatist - do you


think he is the right man to have at the helm? Absolutely. We have


somebody there who has been with the bank for many years, who has a very


down-to-earth view and I believe is the right man for the job. Chief


executive of the Berlin stock exchange, Artur Fischer, thank you


for your thoughts. Germany's Chambers of Industry


and Commerce has lowered its outlook for German exports to Britain,


following the British decision The DIHK said it now sees a 1


percent drop in exports In 2017, the body predicts


that exports to Britain Great Portland Estates,


a central London property and investment company,


said it expected the Brexit vote to hit economic growth


and confidencein the British capital, taking a toll


on commercial property markets. The group has a property portfolio


worth $4.8 billion. Commercial property has been one


of the early victims of Britain's vote to leave the EU,


with a number of property funds being suspended after investors


linked up to ask Tata Steel is expected to announce


on Friday that it will pause the sale of most of its UK business,


including Port Talbot, However, it will proceed


with the sale of its specialty steel-making business,


which employs 2,000 employees in Hartlepool, Rotherham


and Stocksbridge. And we want to bring you some more


on that Tata Steel story, which is really big here in the UK. Simon


Jack, our business editor, has and a really expensive extensive piece on


this. It says that Tata is less concerned about the speed of the


sale, due to rising steel prices and a raft of government incentives. Of


course, steel generally is a story which we have spoken so much about,


particularly against the Chinese, accusations of causing something of


a glut in the international steel market. Just wondering, if and when


the UK leads the European Union, if it changes the steel industry in


some ways. I know we have still got global 40s to be reckoned with, but


if it changes any rain in the UK. It will be interesting to see. It says


the pressure has been reduced on the Indian owners to sell, hence the


reason we are seeing this pause in the sale. Head online to see what


Simon Jack has, and about that. Although, with the dropping of the


pound, it will be cheaper now. Let's take a look round the world


at what business stories Christine Hah is in Singapore


and has been following The electronics manufacturer expects


to post good profit figures, Yes, Samsung is saying that results


for April to June, the second quarter, will be the best it has


seen in any quarter for two years. It is forecasting operating profits


to be up 17%, more than what analysts were expecting at this


point. Official results will not be out until late July, but Samsung


shares in Asia are up 2% on the back of those comments. Smartphone sales,


still the main driver of growth, to ghillie from the Galaxy series,


launched this year. It comes at a time when global smartphone sales


are weakening and competitors are seeing slowing demand. Weather this


spells a true turnaround for Samsung, after two years of slowing


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


less marketing costs, not on innovation. -- a lot of this is on


Lena product line-up. Well, let's stay in Asia,


where share markets crept ahead on Thursday after some upbeat data


out of the US showing that the service sector hit


a seven-month high in June - took some of the sting out


of the latest Brexit scare. But over in Japan, the benchmark


Nikkei did slip slightly as investors seeking safety flocked


to the yen, pushing it up against the dollar and making


the country's exports Let's have a look at Europe. Is


expected, it opened higher, breaking that losing streak in Europe. Some


caution from the US Federal reserve over raising its interest-rate.


And Samira Hussain has the details about what's ahead


On Thursday, the precursor to Friday's jobs report comes out,


with a look at how many jobs were added in the private sector.


Expect to see that private employers probably stepped up hiring


in the month of June, with some analysts estimating


soft drink giant Pepsi will be reporting.


is what potential impacts Pepsi may face in the wake of Brexit.


Given the uncertainty in overseas markets,


Pepsi is going to be focusing their efforts


That means investors will also want to hear


Joining us is Richard Hunter, Head of Research, Wilson King


Good to see you, as ever. One of those markets is the FTSE 250,


something we have been talking a lot about, the difference we are seeing


between the benchmark FTSE-100, the blue-chip stocks, which is


internationally focused, and everybody commenting on how robust


it has been in the wake of the Brexit folk, compared with the FTSE


250, which is more representative of how the UK is doing? You're


absolutely right. There was a broad knock down across all of the markets


after the vote. The FTSE-100 recovered quite quickly. You're


quite right, in the subsequent days, we have seen that currency tailwind,


in other words the weakness of the dollar, is playing into the hands of


many FTSE-100 companies, who on a lot of their money overseas, and


therefore the quality of those earnings has improved. FTSE 250 is


more of a barometer for the UK, and that's where the pain is being felt.


I'm going to put you on the spot, but you are a tele- tart, you can


handle this - the fallout from Britain's decision to leave the EU


will cost France, one of its biggest trading partners, between 0.1% and


0.2 percentage points of economic growth, according to their budget


minister. Is that any surprise, the UK leaving is going to have an


impact on Germany and France? For sure. The proponents of the UK will


be saying that in terms of trade with the European Union, they need


us as much as we need them. So, a long way to go. It will be helpful


when we know who is going to be negotiating on our behalf. But the


UK is not necessarily in an extremely weak position. Despite


lots of people saying that? Absolutely. A long way to go, and we


are in a pretty good negotiating position as well. Really good to


talk to you. Still to come: We're going to be


talking about the drop in the pound, what it means for your holiday


and why it's a bit of a mixed You're with Business


Live from BBC News. All eyes are on how Brexit


will affect the British economy. And there's one area that has been


touted as potentially vulnerable The Halifax has just


released its latest Most of this relates to the market


before the vote on 23 June, for how


buyers and sellers were behaving Joining us to discuss


developments in the property market is Susan Emmet,


research director at the real Is Aaron was saying, this survey was


conduct before the 23rd of June, showing that house price inflation


was dropping. Is it actually a period of a slowdown in prices, and


is that a good thing for the market, it is actually a slowdown in


activity which we do not want to see? Clearly at the moment there is


a lot of uncertainty out there. The Brexit result took a lot of people


by surprise. Over the coming weeks and months, we expect to see buyers


posing for thought, taking a breath and seeing how the situation pans


out. So, we are expecting fewer sales in the short term, and yes,


that will have an impact on the market with and we are expecting to


see a period of slower growth in house prices. Can I just ask you,


over the last few days, we have seen the suspension of some of these big


commercial property funds, but when you look at faces like London, I


think we are already seeing a cooling of foreign buyers, but when


you look at a place like London, isn't the dynamics, it is still


supply and demand there is more demand than some fly?


You are right, two factors have not changed. That is low supply and a


low interest rate environment. So we are not expecting to see a one bunch


of people rushing to sell or being forced to sell. That will underpin


house prices. We are in for a slower market, but it is impossible to say


more at this stage. We appreciate your time, short and sweet.


You're watching Business Live - our top story:


Deutsche Bank shares hit a new record low this week, and its value


has halved since the beginning of the year. The International Monetary


Fund, the IMF, also says that of the banks big enough to bring the


financial system crashing down, Deutsche Bank is the riskiest. We


will keep across all of that. A quick look at how


markets are faring: The majority of the FTSE 100


companies take the majority of their profit outside. The value of the


pound is still under $1.30. And now let's get the inside track


on the volatile world of currencies and in recent weeks, there's been no


more volatile currency The UK's decision to leave


the EU has continued to punish sterling, which yesterday


fell to a new 31 year low As you can see here,


the pound has now fallen by around 14% against the dollar


since hitting $1.50 ahead It's been good news for many FTSE


100 companies, who in total make around three quarters


of their profits outside the UK. And it's also good news


for exporters, because it means that their products become cheaper


for foreign customers. But a falling pound also means that


imports have become more expensive - leading to price rises


on everything from food to TVs. Arguably, the biggest issue of all,


though, is the impact that the drop has on confidence


in the economy as a whole, with the UK already losing


its triple A credit rating. Joining us now to discuss this -


Jonathan Quin is the CEO and Co-Founder of the International


money transfer company, World First. I would like to be a fly on the wall


at your office at the moment. We will talk about the pros and cons in


a minute, but at the end of the day, some will lose some will win. The


traders will make money. Volatility is a good thing for people in the


markets. We had our busiest period ever. As you mentioned before, the


value of the pound is a two sided coin. This is great for exporters


and also good that those who are considering exporting. It is great


for exporters so long as the products they sell are priced in


pounds. We have to be careful about saying this. If they sell these


products in Euros or dollars and change the money back to sterling,


they will still benefit. We were talking about the big FTSE 100


companies. Again, we are flogging a dead horse, but that is why they are


doing relatively well. They are going to make all those dollars


outside, bring them back in and get more quid for them. Our client basis


is importers and exporters, and we have a group of clients called the


mini multinationals, who do lots of business internationally. Lots of


them are doing well and there are some great stories. But we are a net


importer as a country. So how are the import clients feeling? Some of


them are feeling some pain. And some of the products will have gone up


ten to 15%. So that will be difficult for them. However, some of


those import something and sell it on and I might be an option for them


to consider exporting something that they also sell. We have viewers


around the world and in the UK who may be thinking of going to Europe


or further afield to the US. Let's say they are using pounds. What is


your suggestion? It is difficult to predict the future. If I were them,


I would buy half now and if the rate goes up, you will do better. If it


goes down, at least you have half. It is a classic hedge. There are so


much risk at the moment. It is a tough one. Good luck! Many thanks.


How many times have you ordered a take-away meal or and sat waiting


for the roar of the moped bringing your delivery?


In the near future, you could be hearing the clatter of the tiny


It delivers food and it is a portable potty!


What other business stories has the media been


Joining us again is Richard Hunter, the Head of Research


at Wilson King Investment Management.


This one caught my eye. Apparently, Paris, under the guidance of promise


a Manuel Valls and their finance minister, want to steal a march on


London as the financial capital of Europe. Is that going to happen?


Maybe not so much Paris. A more interesting story is the current


situation in terms of the London stock exchange and merger. It seemed


initially that the base would be in London in terms of the stock


exchange. Now London isn't part of the EU, there will be pressure


either to share the head office, or maybe pressure from Frankfurt to


merge with Deutsche Borse. It is inevitable, and we have already seen


it in terms of the clearing market, that parts of Paris, Milan and


Frankfurt will be vying for some of the London business. How important


is it that some of the European countries are pushing for Britain


not to retain its passport rights? We keep hearing about the passport


and financial services. This is the ability of banks to be able to


continue to do business in Europe unfettered. Part of that is also the


free movement of people, however, and that will be a sticking point.


It is one of the reasons we have seen a lot of weakness in the UK


banking share prices. That move on quickly. There was a lot of UK


bashing going on in Le Figaro. But why hasn't anybody focused on


Europe? I have served some experts say, keep your eye on Europe,


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


Brexit to one side, the euro zone Brexit to one side, the euro zone


has been of concern for some years now, since the financial crisis. We


are now at least talking about are now at least talking about


potential growth. However, you have massively higher unemployment,


particularly amongst the youth in some of the professional Europe into


trees. We have the Greek situation and some question marks over


Germany. The UK, by comparison, looks in a stable place. Richard


Hunter, always a pleasure. There is more on our website if you want more


business. See you later. Bye-bye.


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