27/04/2017 BBC Business Live


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This is Business Live from BBC News with Susannah Streeter


The US President tells Mexico and Canada he won't scrap their free


trade deal but will try to renegotiate it.


Live from London, that's our top story


With farmers amongst those under pressure we'll look at what keeping


NAFTA means for trade across North America as the Peso


As pharmaceutical giant Astrazeneca holds its annual meeting


will growing anger over boardroom pay lead to real change?


This is the latest situation on the markets at the moment, or down down


is likely because investors were disappointed by President John's


actions. The strike President Trump's actions.


Funding the enterepreneurs: We'll meet the man whose bank specialises


Rishi Khosla , the boss of OakNorth Bank will be here.


still trying to deal with the fall out from their overbooked flight,


will now offer up to $10,000 to give up your seat.


Hello and a warm welcome to Business Live.


We start with President Trump - because once again he's taken


The White House has confirmed it has told the leaders of Canada


and Mexico they WON'T be scrapping the North American


But instead they will seek to renegotiate the terms of it.


to pull out of the pact Bill Clinton signed in 1993.


In September he called it the "single worst trade deal"


In January he used an executive order to pull out


of the potentially huge Trans-Pacific Partnership


Financial markets were worried he was about to do


the same with NAFTA - with huge implications


for industries from agriculture to the auto sector.


The announcement to renogotiate rather than withdraw


from the North American Free Trade Agreement has sent the Canadian


Aaron. Good on you, Susanna. Those currencies liking that news.


Earlier I spoke to Marco Lopez - a former Arizona politician


who is now an International trade consultant advising US companies


I asked him whether this was a pleasant surprise.


Yes, a very good surprise indeed. We have been saying that, you know,


it's very difficult to try to go out and kill 6 million jobs that depend


on North American free to and that is exactly what he was proposing,


President Trump, throughout the campaign. So good news I think for


those American workers, 6 million of them that depend on trade with


Mexico, I think he finally figured it out in 100 days, it's much more


difficult to govern than it is to campaign. So this is a positive sign


for everyone and all those industries that you mention


especially the automotive industry, agricultural industry, e-commerce,


that depend on keeping that relationship between the US, Mexico


and Canada alive and well. Now I guess the focus goads towards


renegotiating this. I'm just wondering, does Mexico think that


has to be renegotiation and where will they try to renegotiate? I


think that after all the criticism that came from President Trump and


in my experience as director of the Arizona Department of commerce in


the state of Arizona, you know you realise that there are things that


occur throughout the period of 25 years that do need to be looked at


comic e-commerce is one, energy, trade facilitation is the second,


there are things in the agricultural space that might be strengthened, so


at least it's important to have that conversation and I think we are


getting to that place but I will tell you that even Congress is wary


of having to vote on any adjustments and after so this could be a long


process. We don't know exactly what shape this will take but it will not


be easy for sure. A long process, that should keep us busy. Lots of


at the moment. That's still at the moment. That's still


unnerving the financial markets. Let's look at something happening


here in London today where it's the time of year big companies


are holding their Annual It's their big chance


to face their shareholders and one of their major concerns is how much


the bosses get paid - Pharmaceutical giant Astrazeneca


holds its AGM today. The Chief Executive got a pay


increase of 68% last year And that's AFTER his


annual bonus was halved! Consumer goods maker


Unilever is also They will be voting on changes


to the way its bosses are paid - making more of it in shares


as a performance incentive. Unilever's CEO made 8.4


million euros last year. That was down 20% on 2015 -


but a lot of the fall is down to the weak pound -


his pay is set in sterling Leon Kamhi is Head of Responsibility


at Hermes Investment Management. Thank you for coming onto the


programme. I think these systems are fundamentally broken, if you look at


any chart like this this tremendous scatter. Sometimes you have to pay


with this high performance but in other areas know. Why is this, the


schemes are way too complex, we have multiple schemes with multiple


measures and the measures that we are using, some of the measurements


are too short-term and not working. And thirdly, I'd say, the reason why


pay structures are broken is, there's way too much in variable


bonus and not enough in fixed bonus. And yet we're not getting bad


performance. You mention the short-term. -- that performance.


Earlier I wondered why the investors are not more aggressive, it's


because they are part of the system! Is there an argument that these


investors want these CEOs to be incentivised to hit short-term gains


and they benefit from them? Maybe the targets need to be changed?


There is a strong case to say that the system works were short-term


returns. Why is that? Because you have the pension funds, they ask is


that managers who achieve returns and monitor that on the short term


basis. The acid managers then took to the company is about achieving


returns and soon the whole system reaches out for a short term


returns. So there is that case. This increased stewardship, responsible


ownership by asset managers to think more about the longer term. And part


of that is how we vote at remuneration. I would suggest that


as an industry as a whole we don't pull our punchers when we see


remuneration that is not right for shareholders and we do vote against


it. You have seen that. You saw it with Thomas Cook this year. You've


seen all the pressure before the vote has come to fruition with


credits Wiese and GS K. When you see CEO salaries which are rear free 140


times more than the average worker you do wonder what has to go. Thank


you for coming in to talk to us. We'll see you soon.


Let's take a look at some of the other stories making the news.


Deutsche Bank could move up to 4,000 jobs out of the UK


as a result of Brexit - nearly half its UK workforce.


The possibility was raised by the firm's chief regulatory


officer, and is the latest warning from a financial firm since the UK


Currently, UK-based companies can conduct business throughout Europe,


Listen to this. United airlines says it will offer passengers were


volunteered to give up their seats on overbooked flights up to $10,000.


That's in the wake of recent publicity problems, there they are


dragging that passenger down the aisle of the plane. The offer came


after rival Delta airlines outlined plans to offer $9,950 in similar


cases. United said it would act to reduce overbooking and improve


customer satisfaction. We had a quick tweet. Eric says, for


?10,000, I would wait for the next flight!


South Korean giant Samsung has reported its best quarterly


for three years thanks to memory chips and TVs.


Sharanjit Leyl is in our Asia Business Hub in Singapore.


It is looking good for Samsung, moving in the right direction. Yes,


with those results you would never guess it had battled a corruption


It's all due to demand for memory It's all due to demand for memory


chips for flat screen televisions and phones, it's given the company


its best quarterly profits in three years, a 48% jump in operating


profits to 8.8 billion for the period. It says it is relying on its


new Galaxy smartphones to rebuild its reputation after the Note seven


fiasco last year when it had to recall 2.5 million handsets after


some caught fire. On top of that sum is and remains mired in scandal with


its de facto head on trial over his alleged role in a corruption scandal


that brought down the president of South Korea. He denies all of those


charges which include bribery and embezzlement of shares in Samsung.


I've had a look, more than 70%. Thank you. A real difference from


the figures we saw from Higham day yesterday.


Let's check in with the financial markets now.


The Canadian dollar and Mexican peso bounced sharply


after President Trump said he would not scrap the Nafta


Tokyo shares fell snapping a four-day rally, taking the lead


from US markets after the Trump administration unveiled the outlines


of its tax plan which failed to inspire investors mainly due


How is Europe looking, slightly down following fat lead from Wall Street.


The rest of the news from Wall Street today. Two giants will be


reporting results on Thursday, alphabet and Microsoft. A big part


of Alphabet's revenue comes from advertising but it is looking to


diversify and focus on things like hardware and cloud business


computing. Where the company sees growth potential. Now Microsoft is a


clear example of a company that is benefiting from cloud computing. And


investors are expecting the bad part of the business will continue to


grow. Also reporting earnings is forward and after two straight years


of record sales for American's automotive industry investors are


bracing themselves for a dip in sales problems. And finally am as an


report on Thursday. The online retailer dominates e-commerce, and


continues to invest in data centres, warehouses and video content. --


Amazon reports. Justin joins us, always good to see you. Pleasure.


Big problems in Italian, I think they say. Alitalia was hoping on a


big rescue plan from Etihad, based in Abu Dhabi, it was its model,


buying stakes in other airlines. It was going to put in to 8.2 million


dollars. The Labour union voted no, thanks to cost-cutting problems,


Etihad said goodbye. Remember BA and Iberia had a similar issue, huge


amount of change so jobs had to go and they restructured it so it is


now profitable and operating effectively. They had to go through


that pain so they are now allowed to. Alitalia has always been a


basket case. Not only the unions, the entire structure in Italy of the


state and operations and pulling them away into the private world, it


doesn't work that easily. Virtually any other airline would have been


better. Etihad will be saying, I am Ofcom and find somewhere else to


fly. President Trump's tax plan has disappointed investors even though


it's been heralded as the biggest tax change in history. It was 250


words! Remember when Ronald Reagan came out with his plan, incredible


detail. There is no plan. It's just a concept, I thought. It's better to


travel than to arrive, the markets had expected a good tax boost and


they will no say, where, how, will that get through Congress? Because


people will ask, was going to pay for this. The Republicans don't do


borrowing. Justin, we will see related to talk about more stories


in the papers including united airlines and their latest offer for


overbooked passengers. That is still to come.


We will meet the man who started the bank by entrepreneurs for


entrepreneurs. Lloyds banking group has almost


doubled its pre-tax profit in the three months to March.


Boss Antonio Horta-Osorio, said the bank had delivered "strong


financial performance" after reporting profits


of ?1.3 billion Laith Khalaf is a senior analyst at Hargreaves


Good morning. This is really good news, isn't it, for Lloyds bank? It


certainly seems as though it has turned its fortunes around. Yet we


still have that 2% owned by the tax payer, which is good news for the


taxpayer, given the share price has gone up.


Absolutely. Pretty good set of results. Taxpayers still have some


money left in there. Taxpayers have broken even on the ?20 billion that


was injected during the financial crisis. Probably a good indicator


for the UK economy, as well. Lloyds bank is a canary in a coal mine, if


you think about all the things it has done. It is domestically focused


with mortgages and loans. The fact it has done well is probably a good


sign to the broader economy, as well.


Is it also a sign that the banking sector is moving away, once and for


all, from all of the crisis, the financial crisis, and abusing it


presented? Never say never when it comes to the


banks. If you look at RBS, that is still a long way from being in


private hands. 75% still owned by the government, still facing


problems. And with Lloyds bank we have PPI rearing its head again in


the last three months. It's probably a bit early to say we are totally


out of the woods but things are looking better for Deloitte and the


wider banking sector, as well. Low interest rates still a thorn in


their side, as well. -- looking better from Lloyds bank and the


wider banking sector, as well. In a press conference from the CEO


from Lloyds bank, he doesn't expect any rise in UK interest rates. Quite


tricky to predict. What do you do? The rest of the banking sector has


fallen, so that might have fed into that. Quite interesting.


That could be a good point. You're watching Business


Live - our top story: The US president, Donald Trump, he


has done it again, this time he has told Mexico and Canada that he wants


to renegotiate, not scrap, the North American Free Trade Agreement


despite during the entire campaign he said it was the worst trade deal


ever in he said it was the worst trade deal


ever in American history. Let's have a look at other markets


have been faring. There has been an impact from President Trump's tax


plan that he unveiled yesterday. His Treasury team did. Scant detail,


really come on what he is proposing. 15% corporate tax rate, but no real


idea on how to pay for it. Investors have reacted.


It takes an entrepreneur to spot an entrepreneur.


At least that's the philosophy of our next guest -


the man behind a challenger bank with a difference.


Rishi Khosla is a serial start-up entrepreneur, and so it's


perhaps only natural that he came up with the idea


of a bank for people who share his passion


So in 2015 he established a bank for entrepreneurs -


It's an online lender - and specialises loans to a range


of businesses from fast growing companies to property


Its loan book currently stands at around $576 million.


Rishi Khosla, the Founder and CEO of OakNorth Bank joins us now.


Thank you for joining us. How do you do this? What gave you the idea to


start up a bank like this? I started my previous business in 2002. I went


HSBC and Barclays to get a 100 K overdraft. They said they would only


do that by putting a mortgage on my house. After not taking a salary of


the two years, I was all in, I didn't want to give up my house.


INAUDIBLE It was a slow process. It typically


takes anywhere between six months for a no from a high street bank.


And six to nine months to actually get funding. Those timelines have


been extended because of Brexit. Now you have entrepreneurs who want to


build their businesses. The best entrepreneurs have been building in


this environment. Therefore we have found a good pool of strong


entrepreneurs coming to us. That is what has taken our loan book to over


half a billion today. That is since the referendum. The UK banking


sector needed a change. How have they looked upon... I'm wondering if


it is a bit of a club, a group of guys, little bit snobbish. We


focused on what we needed to do. We focused on helping entrepreneurs.


For us we don't spend time bothering about what other banks think of us.


We just focus on executing like any good entrepreneur does. Where do you


go from here? Are you hoping to expand? And how far?


Bricks and mortar? If you look at where we have come


from. We were zero 19 months ago, having that half a billion today,


and I think we will continue lending up to those levels. We will build a


book of several billion pounds over the next few years. The size of the


gap within the UK market is large in terms of business needs, that we


just want to become the go to thank for middle market growth companies


and house-builders. -- do go to bank. You know how important it is


to get the right funding at the right time. Absolutely. We will


continue to be over capitalised. I don't know why you are still


working. You invested in PayPal in 2000. These people who make money


always need to continue making money. Go and live on an island


somewhere with a boat. It is shaking up the industry. Do you think we


will see more of the likes... Hopefully, yes. I think the banking


market in the UK has been very much control for over 150 years. We need


better choice. We need better service for consumers and


businesses. Absolutely. It's good. Great to have you. Thanks very much.


Justin Urquhart-Stewart, Director of Seven Investment


10,000 grant to give up your seat. We put this out to Twitter. --


10,000 grand.


Kimberly said she would take an upgrade any day of the week. There


is an incentive. I'm amazed. They always used to make offers. These to


say we've overbooked, we have a problem, would you like to be


upgraded, would you like some money? I had a great one years ago. British


Airways made a mess of things. They said would you mind staying the


Concorde? I had to think about it Concorde? I had to think about it


for one second. It was a treat. Fantastic. Up to ?10,000. Airlines


cannot afford it. It depends if you are on the seat,


or at the check in desk. Exactly. United are saying we won't kick you


out, they want you on the plane, so that is where we have this problem


of them trying to get you out. The whole point of it was to get logic


into what was going on so people understand. And if you are offered


money to go somewhere else, so be it, why not? It is all about damage


limitation. After all that has happened to them and other airlines.


Other stories like this will be coming out. You think so? Yeah. We


had the Rabbit story yesterday. The giant bunny who died. For


unknown reasons. It might have been the food.


CHUCKLES Thank you very much.


Good morning. Milder weather is on the


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