27/04/2017 BBC Business Live


27/04/2017

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This is Business Live from BBC News with Susannah Streeter

:00:00.:00:07.

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

:00:08.:00:19.

trade deal but will try to renegotiate it.

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Live from London, that's our top story

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

:00:25.:00:43.

NAFTA means for trade across North America as the Peso

:00:44.:00:46.

As pharmaceutical giant Astrazeneca holds its annual meeting

:00:47.:01:03.

will growing anger over boardroom pay lead to real change?

:01:04.:01:07.

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

:01:08.:01:18.

is likely because investors were disappointed by President John's

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actions. The strike President Trump's actions.

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

:01:29.:01:30.

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

:01:31.:01:34.

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

:01:35.:01:43.

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

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Hello and a warm welcome to Business Live.

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

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

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and Mexico they WON'T be scrapping the North American

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

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

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

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In January he used an executive order to pull out

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of the potentially huge Trans-Pacific Partnership

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Financial markets were worried he was about to do

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the same with NAFTA - with huge implications

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for industries from agriculture to the auto sector.

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The announcement to renogotiate rather than withdraw

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from the North American Free Trade Agreement has sent the Canadian

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

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Earlier I spoke to Marco Lopez - a former Arizona politician

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who is now an International trade consultant advising US companies

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I asked him whether this was a pleasant surprise.

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

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

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

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

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

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

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

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for everyone and all those industries that you mention

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

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that depend on keeping that relationship between the US, Mexico

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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are holding their Annual It's their big chance

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

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the bosses get paid - Pharmaceutical giant Astrazeneca

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holds its AGM today. The Chief Executive got a pay

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

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annual bonus was halved! Consumer goods maker

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Unilever is also They will be voting on changes

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

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as a performance incentive. Unilever's CEO made 8.4

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

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

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

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at Hermes Investment Management. Thank you for coming onto the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The possibility was raised by the firm's chief regulatory

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

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

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

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

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

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

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

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

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

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

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South Korean giant Samsung has reported its best quarterly

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for three years thanks to memory chips and TVs.

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Sharanjit Leyl is in our Asia Business Hub in Singapore.

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

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

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

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

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

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

:10:58.:11:01.

new Galaxy smartphones to rebuild its reputation after the Note seven

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

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

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

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

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charges which include bribery and embezzlement of shares in Samsung.

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

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the figures we saw from Higham day yesterday.

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Let's check in with the financial markets now.

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The Canadian dollar and Mexican peso bounced sharply

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after President Trump said he would not scrap the Nafta

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

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from US markets after the Trump administration unveiled the outlines

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of its tax plan which failed to inspire investors mainly due

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

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

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

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

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diversify and focus on things like hardware and cloud business

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

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

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

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

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of record sales for American's automotive industry investors are

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

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

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

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

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

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

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

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

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

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

:13:59.:14:01.

now profitable and operating effectively. They had to go through

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

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

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

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

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

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

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

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

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

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

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

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

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

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in the papers including united airlines and their latest offer for

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overbooked passengers. That is still to come.

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

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entrepreneurs. Lloyds banking group has almost

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

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

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financial performance" after reporting profits

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

:16:00.:16:02.

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

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

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

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taxpayer, given the share price has gone up.

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

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

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was injected during the financial crisis. Probably a good indicator

:16:41.:16:46.

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

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

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

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sign to the broader economy, as well.

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

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

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presented? Never say never when it comes to the

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

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

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

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

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

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

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

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

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

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

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

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

:18:13.:18:20.

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

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

:18:30.:18:34.

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

:18:35.:18:36.

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

:18:37.:18:40.

ever in he said it was the worst trade deal

:18:41.:18:40.

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

:18:41.:18:45.

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

:18:46.:18:50.

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

:18:51.:18:57.

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

:18:58.:19:01.

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

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It takes an entrepreneur to spot an entrepreneur.

:19:06.:19:07.

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

:19:08.:19:10.

the man behind a challenger bank with a difference.

:19:11.:19:17.

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

:19:18.:19:20.

perhaps only natural that he came up with the idea

:19:21.:19:22.

of a bank for people who share his passion

:19:23.:19:24.

So in 2015 he established a bank for entrepreneurs -

:19:25.:19:28.

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

:19:29.:19:33.

of businesses from fast growing companies to property

:19:34.:19:35.

Its loan book currently stands at around $576 million.

:19:36.:19:40.

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

:19:41.:19:45.

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

:19:46.:19:55.

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

:19:56.:20:02.

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

:20:03.:20:06.

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

:20:07.:20:09.

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

:20:10.:20:11.

INAUDIBLE It was a slow process. It typically

:20:12.:20:54.

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

:20:55.:20:59.

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

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

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build their businesses. The best entrepreneurs have been building in

:21:13.:21:17.

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

:21:18.:21:21.

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

:21:22.:21:27.

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

:21:28.:21:34.

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

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

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

:21:48.:21:50.

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

:21:51.:21:56.

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

:21:57.:22:03.

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

:22:04.:22:07.

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

:22:08.:22:13.

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

:22:14.:22:16.

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

:22:17.:22:22.

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

:22:23.:22:27.

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

:22:28.:22:31.

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

:22:32.:22:39.

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

:22:40.:22:43.

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

:22:44.:22:50.

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

:22:51.:22:54.

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

:22:55.:23:03.

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

:23:04.:23:07.

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

:23:08.:23:11.

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

:23:12.:23:18.

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

:23:19.:23:22.

better choice. We need better service for consumers and

:23:23.:23:27.

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

:23:28.:24:08.

Justin Urquhart-Stewart, Director of Seven Investment

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

:24:11.:24:20.

10,000 grand.

:24:21.:24:32.

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

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

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

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

:24:47.:24:50.

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

:24:51.:24:56.

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

:24:57.:24:59.

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

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

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

:25:15.:25:17.

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

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

:25:22.:25:25.

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

:25:26.:25:30.

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

:25:31.:25:34.

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

:25:35.:25:37.

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

:25:38.:25:43.

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

:25:44.:25:49.

unknown reasons. It might have been the food.

:25:50.:25:52.

CHUCKLES Thank you very much.

:25:53.:26:11.

Good morning. Milder weather is on the

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