18/01/2017 BBC Business Live


18/01/2017

A look at the global business stories.


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This is Business Live from BBC News with Rachael Horne

:00:00.:00:00.

Weighing up the "wish-list", business leaders give us their take

:00:07.:00:12.

Live from London, that's our focus today on Wednesday, 18th January.

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Businesses have praised Theresa May for offering clarity with her vision

:00:33.:00:38.

of Britain's post-Brexit place in the world, but will she be able

:00:39.:00:42.

Also in the programme, Samsung in the dock.

:00:43.:00:49.

A court in Seoul is set to decide if it will detain the company's boss

:00:50.:00:53.

for offering millions of dollars in bribes to get approval

:00:54.:00:55.

And we have the latest on the markets after Tuesday

:00:56.:01:01.

when the pound enjoyed its best day since 2008.

:01:02.:01:08.

And we'll be live at the World Economic Forum in Davos

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to get the inside track on how the world's biggest institutions

:01:12.:01:14.

are dealing with the challenges of cyber security.

:01:15.:01:16.

The chief technology officer at Bank of America will be joining us.

:01:17.:01:21.

Also Cambridge University is recruiting a professor of Lego.

:01:22.:01:25.

So we want to know if the ubiquitous building blocks are now more

:01:26.:01:28.

Today, for the first time ever, a freight train from China

:01:29.:01:49.

It wasn't intended as a symbolic statement,

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but with the British Prime Minister now confirming the UK must leave

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the European single market, the train's arrival does illustrate

:02:00.:02:04.

that post-Brexit Britain may need to look further afield

:02:05.:02:06.

Theresa May used her much anticipated speech yesterday

:02:07.:02:13.

to announce the UK's priorities for upcoming Brexit negotiations.

:02:14.:02:17.

Leaving the single market means Britain will lose

:02:18.:02:19.

the right to trade with the European Union

:02:20.:02:21.

Despite this, the UK Prime Minister says the Government will negotiate

:02:22.:02:30.

for the best possible access to the trading bloc.

:02:31.:02:33.

Mrs May also said Britain will aim for a new customs union

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This would allow the UK to form new relationships

:02:37.:02:39.

with non-European trading partners, but it could impose higher costs

:02:40.:02:41.

The market reaction told another story with the value of the pound

:02:42.:02:54.

rocketing after Theresa May said she would allow Parliament

:02:55.:03:03.

Joining me now is Allie Renison, head of Europe and trade policy

:03:04.:03:06.

Good morning. So what is the institute's response to her speech?

:03:07.:03:16.

Well, I think, it is welcome she provided certainty and clarity

:03:17.:03:21.

around the number of scenarios, that potentially businesses have to plan

:03:22.:03:24.

for. It is to be expected to some degree, we have to take at face

:03:25.:03:28.

value, not only what the Prime Minister has been talking with

:03:29.:03:30.

respect to controls on free movement, but the EU leaders saying

:03:31.:03:34.

you can't be in the single market and have those controls and the

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concern was that given there is a two year time con trant with Article

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50, do you want to go down the road of trying to negotiate controls

:03:42.:03:44.

within the single market, find out you can't do it and then go to Plan

:03:45.:03:48.

B or do you want to start with Plan B in a sense right away? She was

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certainly talking tough and many would argue that that runs the risk

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of there being a bitter negotiating process between Europe and the UK

:04:00.:04:03.

and yet you've got David Davis today saying to the BBC, the Brexit

:04:04.:04:06.

Secretary, if you could describe him as that, there is so much common

:04:07.:04:10.

ground. There is so many reasons to do good trade between the UK and

:04:11.:04:13.

Europe. He's confident negotiations will go well. It is all about that,

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isn't it, how the negotiations go? We are in what some would call the

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fondy war period before we have started, the triggering of Article

:04:24.:04:26.

50. The hope is and this is what the UK is trying to play for is that

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economic and commercial interests become the order of the day very,

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very quickly as opposed to a focus from the EU side on political sort

:04:36.:04:39.

of protecting the unity of the 27 so to speak. In the meantime,

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businesses are probably going to prepare now, aren't they, for worst

:04:43.:04:46.

case scenario, ie, no access to the single market. If that's the case

:04:47.:04:49.

for the City of London, for the car industry, they have to make some

:04:50.:04:53.

serious decisions? Yes, I think that business particularly now with the

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single market ruled out the what the single market provides is that

:04:58.:05:01.

automatic predictability about single market access, you can get

:05:02.:05:04.

the same access, but it is subject to negotiation. I think what you

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will start to see is businesses put in place the contingency plans

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particularly if financial services, we have seen that Lloyds said they

:05:11.:05:14.

will begin opening up a subsidiary in other EU country and what

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business has to do is plan for the worst case scenario and hope for the

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best. What do you think the outcome will be and how long is this process

:05:22.:05:24.

going to take? Many are saying it will be much longer than the two

:05:25.:05:27.

years that we think it will take? Well, that's one of the big issues

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that comes away in terms of question marks from the speech yesterday is

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that we're glad to see from that there will be an implementation

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phase after the agreement is concluded, but what happens if the

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negotiation goes on beyond the two year window? I know I'll talk to you

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gun in the next few years. Thank you for coming in from the Institute of

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Directors. US regulators claim

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that the world's biggest producer of mobile phone chips,

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Qualcomm, forced Apple into an exclusivity agreement

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in return for lower fees. The Federal Trade commission

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is suing Qualcomm for unfair practices in the way it

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licenses its technology especially the processors used

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in cell phones and other devices. The company has denied

:06:13.:06:14.

the allegations saying Rolls-Royce has apologised

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unreservedly after being found to have conspired to corrupt

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or failed to prevent bribery by Rolls-Royce in China,

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India and other markets by the UK's The British engineering giant

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will pay $800 million to settle corruption

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cases with UK and US authorities One of Donald Trump's closest

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advisers has told the BBC that the US would win a trade

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war with China. Former Wall Street banker,

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Anthony Scaramucci, warned that if China chooses to retaliate

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when the Trump administration imposed tariffs on imports,

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it would cost them "way more" The comments comes as the Chinese

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president gave a staunch defence of globalisation

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at the World Economic Shall we have a look at the tablet?

:07:01.:07:18.

Yes. There are loads of great corporate stories on the tablet. I

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don't mean great news. Some are bad news. But stocks are on the move on

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the markets in London. So, that's basically illustrated here. Pearson

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shares down 20%. Premier Foods shares plunging. All these companies

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coming out with warnings today and we'll discuss them in more detail

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later on, but Premier Foods makes Bisto and it is warning that its

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profits will be 10% lower because food inflation costs are on the

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rise. Very interesting given what's going on with regards to Brexit,

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with regards to what we've discussed already in the programme and the

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inflation figure that came out yesterday in the UK. We'll talk some

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more about it later. The defacto boss of Samsung Jay Y

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Lee arrived at a South Korean court earlier today where a judge

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will decide whether he should be arrested over his alleged role

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in a major corruption scandal. Tell us more about what happened

:08:18.:08:30.

today and whether we have had a decision yet or not. Well, the

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hearing has ended and Jay Y Lee, the head of Samsung was seen leaving the

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courtroom as grim faced as he had arrived four hours earlier. He's now

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on stand-by as he and the public waits for the results later this

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evening. Prosecutors believe Samsung has committed bribery and has asked

:08:54.:08:58.

Jay Y Lee, the head of South Korea's largest company to be jailed for.

:08:59.:09:03.

The allegation is that Samsung gave millions of dollars in return for

:09:04.:09:08.

the votes of national pension fund in a big and contested restuck

:09:09.:09:11.

turing of the company. Last week Jay Y Lee was summoned as a suspect and

:09:12.:09:17.

was questioned for almost 24 hours. Investigators said on Monday that

:09:18.:09:21.

despite concerns, Mr Lee's arrest may have a negative effect on the

:09:22.:09:25.

economy, but establishing justice was more important.

:09:26.:09:28.

Thank you, Kevin. Asian markets are back up

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following losses on Tuesday. The dollar fell overnight

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against the yen, euro and the pound, partly

:09:42.:09:45.

because sterling strengthened during British Prime Minister

:09:46.:09:48.

Theresa May's speech about Britain's pending departure

:09:49.:09:50.

from the European Union, also the dollar was weakened

:09:51.:09:57.

by comments from US President-elect Donald Trump about

:09:58.:10:04.

the currency being "too strong". In Europe markets have opened

:10:05.:10:06.

and after the pounds Samira Hussain has the details

:10:07.:10:12.

about what's ahead More banks will be reporting

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earnings on Wednesday including Goldman Sachs and Citigroup. Like

:10:27.:10:29.

other big US banks Gold man's trading business is expected to have

:10:30.:10:33.

benefited from volatile markets around the US Presidential

:10:34.:10:38.

elections. And executive of Citigroup, the most international of

:10:39.:10:42.

banks, they will be asked about global trade prospects during the

:10:43.:10:48.

presidency of Donald Trump who said he will rework trade agreements. In

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non banking earnings news, if you are a fan of shows like The Stranger

:10:53.:10:58.

Things Or The Crown. You are likely to be contributing to the success of

:10:59.:11:02.

Netflix. Wall Street will be looking to see how many domestic and

:11:03.:11:06.

international customers the streaming service added in the last

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quarter. David Davis, who is the UK Brexit

:11:13.:11:18.

minister, if you want to describe him as that, has been talking to the

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BBCment this is what he had to say about the UK leaving the European

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Union. So basically, saying that we will, the UK, will seek a customs

:11:26.:11:29.

deal that's as frictionless as possible. Yes, he said frictionless!

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As frictionless as possible. That's another line from the David Davis

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interview that's under way at the moment.

:11:47.:11:47.

Joining us is Jane Sydenham, Investment Director,

:11:48.:11:48.

Every single detail is being picked up on at the moment as what does

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this mean, how will the process go? It is not easy to predict at all, is

:11:59.:12:03.

it? No, not at all. We are in unchartered territory really in

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terms of, we haven't been here before. We have got no reference

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pointment and normally investors can restore back to some historic

:12:13.:12:16.

precedent. David Davis saying we want it to be as frictionless as

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possible and yet you heard Theresa May saying if we don't get the deal

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we want, we're going to walk away. It is interesting, isn't it, the

:12:24.:12:30.

different angles? We would like it to be smooth, they are trying to set

:12:31.:12:34.

boundaries for the best outcome and the worst outcome and hoping that

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somewhere in the middle is the final outcome.

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It feels like for the last couple of weeks, every time we've talked about

:12:43.:12:46.

the markets, we have talked about politics, it is about Brexit and it

:12:47.:12:49.

is about Trump. Yesterday we had inflation figures out in the UK and

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it was higher than expected and maybe it is time we start to look at

:12:53.:12:55.

these indicators and move away from politics for a bit? I think that's

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right. There has been a transition taking place since July of last

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year. Inflation has been gradually ticking up. Partly in the UK that's

:13:03.:13:07.

because of currency weakness, partly because it is employment is fairly

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full and partly it is because energy prices are rising, but the impact

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that has on fixed interest investments and on the costs of

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borrowing, on how investors think about the stock market and which

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companies do well or badly, is changing quite dramatically. It is

:13:24.:13:27.

also having an impact on food prices. Premiere Foods saying we're

:13:28.:13:33.

going to make less. Its shares down 10% on the news, on its profit

:13:34.:13:37.

warning? Yes, whether companies are able to pass on the price rises to

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their consumers, whether they have to absorb them themselves and

:13:44.:13:45.

whether they can negotiate with suppliers, it is a much more

:13:46.:13:49.

uncertain world. There was the Marmite wars? Absolutely. Any

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cross-border trade is much more complicated than it was. All right,

:13:55.:13:58.

Jane, you will return later. We'll find out if Jane is a master

:13:59.:14:05.

builder. I think you are. I'm definitely a master builder!

:14:06.:14:08.

Still to come, Bank of America has over 210 thousand employees

:14:09.:14:11.

We're going to be asking their chief technology officer how she keeps

:14:12.:14:15.

them all safe from cyber attacks and what are her hopes

:14:16.:14:17.

You're with Business Live from BBC News.

:14:18.:14:24.

Mobile phone company EE has been fined ?2.7 million for overcharging

:14:25.:14:32.

The fine is for fundamental billing errors which included

:14:33.:14:37.

customers being overcharged by as much as ?250,000.

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Lindsey Fussell is the Consumer Group Director at Ofcom.

:14:43.:14:45.

She joins us now from our Westminster studio.

:14:46.:14:48.

Give us a bit of background into the fines. It is not just the fact that

:14:49.:14:55.

the customers were overcharged, but initially when you looked into it,

:14:56.:14:57.

EE weren't going to refund them? We all rely on big companies to do

:14:58.:15:08.

the most basic thing, get our phone bills right. During our

:15:09.:15:12.

billing rules, not just once but billing rules, not just once but

:15:13.:15:17.

twice that is why we have given out this fine, as well as requiring them

:15:18.:15:22.

to reimburse all the consumers affected. In terms of where the

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money goes, it goes to the Treasury. There were thousands of customers

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where it could not be figured out who they were. What happens for

:15:32.:15:39.

them? We are glad that EE after our intervention have tracked down the

:15:40.:15:43.

majority of customers. We are encouraging them to find every one

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of those customers and make sure they are refunded. We have seen some

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significant finds from Ofcom this month. Is the regulator flexing its

:15:53.:16:01.

muscles? We think that customers throughout the communication

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industry deserves the highest possible standards of customer

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service. That includes the most fundamental thing, people getting

:16:07.:16:10.

their bills right. We won't hesitate to step in and act on behalf of

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consumers, where we see things going wrong. Do you think we will get to a

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point where you do not need to dish out these huge fines to these

:16:20.:16:24.

companies? We would certainly hope so. We know that 90% of people, nine

:16:25.:16:31.

out of ten, are happy with their mobile phone providers. We'll soon

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know how crucial mobile phones are to the way we all live and work

:16:35.:16:38.

these days. Companies should be aware that where they get these

:16:39.:16:42.

fundamental things wrong they can expect to be on the receiving end of

:16:43.:16:46.

these kinds of hefty fines. Thank you no much were taking the time to

:16:47.:16:48.

join us this morning. Lots of corporate news today. Good

:16:49.:17:01.

news for Burberry as well as lots of profit warnings.

:17:02.:17:08.

A mixed reaction to the statement by Theresa May that Britain will not

:17:09.:17:18.

remain in the single market. She insisted the UK

:17:19.:17:19.

could not be half in, half out. More on the website.

:17:20.:17:24.

A quick look at how markets are faring.

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The European markets have been open for a little while. The FTSE is up a

:17:28.:17:35.

tiny bit. There have been some quite erratic falls by stocks. Look at the

:17:36.:17:43.

dollar/ pound. As we said, yesterday, it had its birthday on

:17:44.:17:46.

the currency market since 2008. We're all living a lot more

:17:47.:17:50.

of our lives online these days. But how secure do

:17:51.:17:53.

we feel about that? Hardly a day goes by without news

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of another major cyber attack - with hackers targeting everything

:17:56.:17:58.

from our emails to our bank accounts And big companies are ALSO

:17:59.:18:01.

in the firing line. The cost to the global economy

:18:02.:18:03.

is huge - approximately And that figure is expected

:18:04.:18:06.

to hit an astonishing That's caught the attention

:18:07.:18:10.

of one Donald J Trump - who says cyber-security will be

:18:11.:18:16.

a top priority when he gets So, how on earth do we keep

:18:17.:18:19.

up with the constantly Cathy Bessant is Chief Technology

:18:20.:18:25.

Officer at Bank of America Thank you very much for taking the

:18:26.:18:41.

time to join us this morning. Is cyber security something that keeps

:18:42.:18:47.

you awake at night? Absolutely. 24/7, we have to be on our toes,

:18:48.:18:52.

focused on protecting customers and our company. As you just said, we

:18:53.:18:57.

spend at a Mendis amount of resources and bring in a tremendous

:18:58.:19:02.

amount of talent to do that. It is critical for any organisation, but

:19:03.:19:06.

certainly for a bank. We could name several companies, big names, global

:19:07.:19:11.

names, which have become a victim of this. Information and data are

:19:12.:19:16.

certainly important to protect, no question about it. For a financial

:19:17.:19:26.

institution, a bank, we also want to protect the movement of money and

:19:27.:19:28.

the protection of our customers, depositors and investors cash. What

:19:29.:19:32.

do you think needs to be done? Do businesses need to do more question

:19:33.:19:37.

to governments need do more? I think we all have to do more. As

:19:38.:19:42.

individual consumers or companies, we have to protect ourselves as we

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access payments and financial systems. Banks have to protect their

:19:47.:19:51.

own capabilities but also work to protect customers and be on the

:19:52.:19:55.

leading edge of defensive technologies. And I think there is a

:19:56.:19:58.

real place for government in this mix. We need a legal structure that

:19:59.:20:03.

works, infrastructure and power grids are strong and protected. This

:20:04.:20:08.

is an ecosystem where we're only as strong as our weakest link. It is

:20:09.:20:16.

wide collaboration is the ball game. What is the obstacle to that

:20:17.:20:20.

collaboration? Our government is on-board enough? This is an

:20:21.:20:23.

international team effort that needs to be done here, isn't it? It really

:20:24.:20:29.

is. It does not work for one country to do it in a vacuum. The threats

:20:30.:20:33.

come from countries into other countries. Threats are really

:20:34.:20:38.

cross-border. It requires the highest level of cooperation. No

:20:39.:20:43.

individual department and any individual government but really

:20:44.:20:46.

cross department and cross-border governmental cooperation. It is

:20:47.:20:50.

tough. No question that we are trying to learn new ways of doing

:20:51.:20:57.

business together, protecting each other, protecting ourselves. That

:20:58.:20:59.

requires a new, social and commercial set of contract, if you

:21:00.:21:04.

don't mind the word. You are a regular at Davos. How was the

:21:05.:21:08.

atmosphere there this week? The Chinese premier has been out for the

:21:09.:21:12.

first time. No representative from the US administration. We have been

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hearing from two Reese eight about Britain's exit from the European

:21:19.:21:22.

Union. We had a conflict about detection is. What is the atmosphere

:21:23.:21:27.

like? I have been pleasantly surprised. There is an optimistic

:21:28.:21:32.

atmosphere, certainly in recognition of all of the challenges you

:21:33.:21:36.

mentioned. The spirit of cooperation, a spirit of ensuring

:21:37.:21:42.

that economic growth is pursued responsibly and equitably. The

:21:43.:21:45.

dialogue has a cautious optimism to it. A full recognition of the things

:21:46.:21:51.

we all face. I think a spirit of resilience that says these things

:21:52.:21:56.

can and must be worked through stop I have been very pleased with the

:21:57.:22:00.

calibre of the dialogue and the engagement. I believe our

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administration will step up in ways that make it a constructive part of

:22:05.:22:10.

the dialogue as well. In terms of the year ahead, this time last year

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we did not realise that the UK would choose to leave the EU. We did not

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realise that Donald Trump will become the next president of the

:22:19.:22:23.

United States. It is an uncertain period, isn't it question what it is

:22:24.:22:27.

difficult for business leaders to gauge what to do next. I think we

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have to be extremely focused on trust. Not just the trust of our

:22:34.:22:38.

customers and clients but the trust of the marketplace and communities

:22:39.:22:43.

as a whole. If anything, the last year has taught us. Last year we

:22:44.:22:48.

were talking about $30 a barrel oil price will do we have come a long

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way. If the last year has taught us anything, I believe it is that our

:22:53.:22:57.

institutions have to focus every day on the building of trust and the

:22:58.:23:01.

bridging of social and economic divide. All right. Thank you so much

:23:02.:23:07.

for joining as. Chief technology officer at Bank of America, who is,

:23:08.:23:10.

of course, in Davos. Jane has joined as again to talk

:23:11.:23:21.

about what is in the business news. We'll get to Lego in a second. China

:23:22.:23:26.

Daily on its front page has the president being at the World

:23:27.:23:30.

Economic Forum for the first time. Hopefully it will load up the

:23:31.:23:37.

pictures for us. It is almost ironic. The Chinese premier is the

:23:38.:23:42.

keynote speaker at Davos, which is all about capitalism and

:23:43.:23:46.

globalisation, and yet there is no one there from the United States.

:23:47.:23:51.

What a turnaround! I think it is the biggest delegation from China ever.

:23:52.:23:56.

In the last decade or so, China has put into place a lot of

:23:57.:24:00.

infrastructure for trade. Currency trading hubs in major cities, the

:24:01.:24:05.

bond market, access to foreign exchange will stop all of these

:24:06.:24:08.

building blocks will stop this is a great opportunity for them. They are

:24:09.:24:14.

seeing an opportunity here and making the most of it. Absolutely.

:24:15.:24:21.

Very interesting. We have had some really good tweets. Cambridge

:24:22.:24:27.

University is advertising for a professor of Lego. You have three

:24:28.:24:32.

more days to apply. Lego can inspire future architects and engineers,

:24:33.:24:36.

carpenters and make creators out of us all. It is relaxing fun. Tom says

:24:37.:24:41.

he thinks he chose the wrong degree and should have done Lego. I should

:24:42.:24:50.

have done Lego. So, Lego is sponsoring this professor of play at

:24:51.:24:58.

Cambridge University. I am applying, straight to the front of the queue.

:24:59.:25:05.

It is about investigating the effects of children in early years

:25:06.:25:10.

education and how that helps lateral thinking and so on. But, I am sure

:25:11.:25:15.

we can all benefit from play. Maybe company should have some Lego in the

:25:16.:25:20.

cafeteria is not just Coffey and fruit. I am sure that is on the

:25:21.:25:25.

minds of those who run companies like Google. Stop bouncing up and

:25:26.:25:32.

down on a space hopper. The Donald Trump effect is not so beneficial

:25:33.:25:37.

for Tiffany 's. Next to Trump Tower, sales are down for the people cannot

:25:38.:25:42.

get into the store either because of security reasons or protesters. A

:25:43.:25:48.

real economic effect of the new president.

:25:49.:25:51.

Good morning. Very little change on the weather front in the last 24

:25:52.:26:19.

hours. For most of us, once again it is to be a

:26:20.:26:20.

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