31/07/2017 BBC Business Live


Similar Content

Browse content similar to 31/07/2017. Check below for episodes and series from the same categories and more!



This is Business Live from BBC News, with Sally Bundock and Ben Thompson.


HSBC splashes the cash on a share buyback as profits soar.


Live from London, that's our top story on Monday 31st July.


It looks like a towering success across the business but with Brexit


on the horizon and change at the top of HSBC can it


Apple is criticised for helping China censor the internet after it


It says it was just sticking to the rules.


We will be live in Shanghai. And we'll be talking to the winners and


losers. And who would you trust with your bank account. We will need one


London digital bank that promises a new way of managing your money. We


ask what would be the one thing you change about the bank you use,


cheaper loans, better interest rates, faster service?


Good to have you with us. Banking is dominating the programme today, get


in touch with your thoughts. We are talking about Europe's biggest bank,


HSBC. One of the world's biggest banks,


HSBC, has reported its latest set of earnings and if


you're a shareholder you are going to be very pleased


with what they have to say today. The bank made a pre-tax


profit of $5.28 billion in the second quarter of the year -


that's more than the $4.6 HSBC announced a share


buyback of up to $2 billion as it looks to make the most


of its huge cash pile. The move will effectively restrict


the supply of shares in the market and should lead


to the company's value rising. In the last 12 months


the bank has had a good run with its stock price almost doubling


in value as you can see here. Peter Hahn is a Professor of Banking


at The London Institute So many things to discuss when it


comes to things like HSBC. The results are better-than-expected,


beating pretty modest expectations. Yes, most banks have delivered a


message that they could beat so the banks have generally all exceeded


expectations, that is good news. We said managing expectations, didn't


they set the bar pretty low? I think they set it pretty low. There's some


good news in HSBC 's results. Its business mix is hitting more


across-the-board. It was more concentrated on one business before


so some of their weaker businesses have come back. The results also


show a greater dependence. They were stating that they were going more


towards Asia. Asia is more of the real money for Aegis PC. A lot of


change underway for the banks, we know it has been cutting costs, it


also has to split the retail and the investment is required by changes in


regulation. That has cost it quite a lot of money to put into place. Yes,


in the UK, in the statement they put out, they spent ?400 million, and


they had millions of people involved, when you mention splitting


their retail from their corporate business, it's a UK phenomena. I


think it is still an integrated bank and other places but the UK has


decided to take this route to separate. It solves some issues yet


probably creates more than it solves! Also management changes will


figure in this over the coming years. We've got some confirmed,


some not confirmed. Talk us through it. A new chairman is coming in,


Douglas Flint was the finance director before, and new chairman


has been named, his experience, significant in Asia, he was in Asian


insurance and for a short time had been finance director for HSBC. That


is telling about the focus of the bank. The Seoul government is


retiring so we'll see a change of chairman and CEO. The real question


for HSBC as they tried to determine the next CEO, Wilkie focus more


internally -- will he focus more internally or with the focus on


Asia, try to develop new business? If we look at many bank statements,


HSBC is not different from many. There's a lot of revenue growth in


this business, it is about control. Something we will be talking about


in future, I am sure, thank you, Peter. HSBC shares in London, one of


the leading winners on the FTSE this morning. Let's look at some other


stories making the news. The Chancellor, Philip Hammond,


suggested that the UK will not cut taxes and regulation after Brexit to


try to undercut European rivals. His interview with a French newspaper


contradicts what he said with a German newspaper earlier this year.


Shopper in the largest economy in the Eurozone, Germany, helped it to


see the biggest increase in retail sales last year, month by month


those retail sales rose by 1.1% all adding to the positive momentum


that's leading to a robust end to the second quarter of the year.


Official data from the Chinese government suggests


that the country's manufacturing sector, still the backbone


It is still growing though, propped up by a government-led


infrastructure push that's keeping construction humming


and propping up the world's second-largest economy.


Let's stay in China because Apple has been criticised after removing


some software from its app store in China that allows users to get


around tough restrictions on Internet access. The change comes


after the Chinese government announced a crackdown on what it


calls Virtual Private networks. What is a Virtual Private network,


it punches a tunnel from your iPod or your phone and allows you to see


what happens on the web. It is crucial in China because the


regulatory environment is so tough with so many filters and bands put


in place by the government on what you can see so if you want to look


at Gmail or Facebook you need a VPN. The government announced tougher


restrictions will come in next year so VPN providers will need licenses.


Apple which sells most VPN Dexter in China has moved quickly to remove


the VPN apps that don't have a license ready. Tim Cook, the CEO of


Apple, says he wants to continue to grow and invest in China. Apple gets


50 billion US dollars from China so China is very important to it.


Speaking to the rules it seems even more important. Interesting to see


how these relationships develop. Thank you, Robin.


A quick look at how markets are faring.


This is the Dow Jones on Friday. In general we have teams which we will


discuss in detail in a moment, if we look at the European markets, we


have commodities in general edging up, mining stocks are doing well and


so our energy stocks and that will boost the FTSE 100. A lot of those


are listed in London. Also among the winners HSBC. Rolls-Royce is the


biggest loser on the FTSE 100 today, coming up with their results


tomorrow. Let's keep an eye on them. We'll talk about their results


tomorrow. Heineken saw their sales rising in the first half by almost


6% so a lot of earnings coming through, we'll try to keep you up


with all of that, now looking ahead to


Wall Street with Michelle. Stocks are trading near record highs, will


the corporate earnings this week help to keep prices aloft? We are


more than halfway through reporting season, good results so far,


companies listed on track to increase earnings by more than 10%.


There's also some positive economic data last week pointing to faster


growth in the second quarter. Which names should we look forward to


keeping the momentum going this week? Perhaps the biggest is Apple,


which reports on Tuesday. The tech giant is expected to turn in a rise


in revenue for the third quarter thanks to stronger sales of its


iPhone seven and seven plus smartphone. Apple often releases its


latest iPhone in September but this year there has been speculation that


it might be until October. So investors will be looking for more


guidance from the company on this issue. Tesla, Pfizer and Craft of


the other companies do to turn in report cards this week.


Joining us is Lawrence Gosling, editor-in-chief of Investment Week.


I'm interested in the parent company of Snapchat,. Senior executives said


they would not sell any shares in the company floated on the US market


but now they can. How much stock do they sell if any. We had a rise in


the snap price when it floated and now it's drifting back down. Looking


like one of those classics were everyone asks, how do they make


money. This is when we seek a look at its true value, who is selling it


and who is buying, who is investing. It's kind of an artificial period.


When executives sell its a good indicator of how much they believe


in the future, so normally people like to take some money off the


table to pay their mortgages or school fees, I suspect we will not


see as much as we might if the price was higher. The oil price is heading


up the game, various issues on the market. Sanctions against Russia


announced by the US. And political unrest in Venezuela. Valenzuela has


the most oil in the world, more than Saudi Arabia. -- Venezuela. We


talked about Chinese growth figures, they are probably slightly better


than people thought, and the spending on infrastructure shows


more demand for oil. This is about supply and demand, demand is


slightly higher and supply slightly tighter. Opec keeping a close eye


because they are figuring out how to get used to the new normal. Trying


to keep an almost artificial price of $50 on the price of a barrel of


oil, it could go lower if all the supply came into the market. We love


giving them fancy names to make them more exciting, Thursday is Super


Thursday! It's a big Bank of England meeting. I'm not sure why it is


super, it is a quiet Thursday in August! The focus will be on whether


there will be an interest rate rise. Three economists out of 80 expected


a rise. Probably not that super by the time we get to lunchtime! Damp


is good Thursday! What is the one thing you would change about your


bank if you could. I went temporarily overdrawn through paying


some direct debits, I would like them to tell me that, because the


end of the month cash flow issue we get, get paid on one day and direct


debits go out a couple of days before, your banks know when your


money is coming in so if they could signal it and give you a couple of


days grace without charging the full's interest I would be very


happy. Good suggestion. Good to see you, Lawrence.


But would you trust Apple, Google and Facebook


Or do you rely on the age-old institutions?


You're with Business Live from BBC News.


In the UK, the Financial Conduct Authority has said


unauthorised overdrafts may be regulated.


It said charges for the overdraft were complex


and hard for customers to understand.


Theo Leggett is in our business newsroom


Theo, talk is through this. They might ban unauthorised overdrafts,


these can be very costly. In fact according to the FSA they can be


more costly than payday loans which are already regulated because they


were proving to be too expensive. Today they have said about


unauthorised overdrafts, "Based on the evidence we have to date, we


believe there is a case to consider the fundamental form of an arranged


overdrafts and whether they should have a place in any modern banking


market. We have significant doubts about whether any and arranged


overdrafts in their current form can continue in a well functioning


market." That leaves two options which can be consulted on,


potentially banning them or tightening the rules considerably.


What did they say of payday loans? Remember they've been capped for the


last two is because they were generating headlines about sky-high


interest rates trapping people in a vicious cycle of payday borrowing


we'll had to borrow one month to make it to the end of the month and


there was a lot of interest charges loaded onto next month you had to


borrow more and so on. Well, nowadays, they are capped so that


the total in terms of fees and interest charges you can end up


paying is equal to the value of the loan so you never pay more than the


value of the original loan plus that again. They say that this cap is


working. The FSA says the 760,000 borrowers are saving a total of ?150


million a year. Firms are less likely to lend to customers who


can't afford to repay. They will keep the cap in place until 2020 and


review it again. Thank you, Theo. More about that on our Business Live


page. Sales are down at Trinity Mirror. It


is a familiar tale. Pre-tax profits were down 11%. It is advertising


that's the problem for the print organisations.


You're watching Business Live. Our top story:


Shares in HSBC are up significantly in London on the news, it has seen a


big rise in profits in the second quarter and it has announced a about


billion share buy back. HSBC is boosting the FTSE 100. A


similar picture across Europe. Interesting times ahead. We were


discussing with Lawrence earlier about potential discussions of


interest rate rises and whether we will get one in the UK on Thursday.


The chances are it's not going to happen again.


Let's discuss the bank account you have got or the bank account you use


to do your money matters. When is the last time


you changed your bank account? Chances are you're still with


the same one you've had for years. And chances are it's one


of the big old institutions. So, the lack of competition


amongst banks has forced the government in


the UK into action. In 2015, UK authorities


launched an investigation It found that the four biggest banks


dominated the market with over It means few of us bother


to switch to a rival bank. A new breed of so-called challenger


banks have emerged as a result of the investigation,


many of these don't have high-street branches,


but use call centres Earlier this year it


received its full banking license meaning that it can now offer


conventional current accounts. Tom Blomfield is the Chief


Executive of Monzo Bank. Good morning Tom. Good morning. So


much to talk about when it comes to the changes in banking. It's


something we talked about before, but that idea of just shaking up the


entire market. We're reliant on the big old institutions that have


headquarters in the city and branches on the high street and


you're doing it differently? We are an app only smartphone bank. We


offer current accounts via an iPhone app or an android app. It strikes me


that you have got to be tech savvy to do that? It started out really


very focussed. 31-year-old males in Shoreditch. It has broadened out...


You're describing Ben. I don't live in Shoreditch. Most tend to be 20


and 40. We talk about the shape up in banking and there is some big


changes on the way. It is called open banking, it is part of the EU


directive that would allow the information that we have at our


banks to be freed up. So, actually, there may come a day and we said


this earlier, that the likes of Apple or Facebook or Google could


create an app that encompasses all our bank accounts so we don't have


to go into each individual one and that could be a big shift? That's


right. So in January of next year, this piece of regulation called PSD


2, it requires any bank offering a payment account to open up the data.


It is a message that says look, this data in your bank accounts could be


very, very valuable, but the banks are sitting on it and not doing


anything. It forces them to make that data available to their


customers. If you were a customer of HSBC or Barclays and you want to


take that data and share it with a third party, you will be able to do


so from January of next year. There is the need out there, the desire


for change. But given what happened in 2008, and you know the collapse


of Lehman Brothers and the run on the bank at Northern Rock, the fear


factor kicked in and suddenly you like the old-fashioned bank that's


been there for hundreds of years because you believe it will get


bailed out by governments if things go wrong and your savings will be


OK. But Monzo Bank maybe not? Well, the changes that were introduced as


a result of those two big to fail banks RBS and Lloyds, which cost the


taxpayer tens of billions of pounds in bail outs. The Government


responded by saying actually we want more banks with more competition so


if one or two fail, that's OK. That's a sign of a well functioning


market and the way we will protect consumers is the Financial Services


Compensation Scheme. So your deposits are guaranteed up to


?85,000. That's the hassle though. It is easier if you're bailed out by


the Government and your savings is not touched? I'm not sure as an


economy we can afford another ?47 billion bail out. I'm not suggesting


we go that way. We talked a lot about the UK and clearly with Europe


PDS 2 will change how we bank. What plans elsewhere? Is this being


repeated around the world or is it a European issue? It is very much


European for now. The FSA and the Bank of England are leading the


world, I think, in terms of pushing innovation and regulation to try and


drive competition and ultimately improvout comes for customers, so we


are at the fore front, but other countries will follow. Tom, it is


really nice to see you. Thank you for coming in. Best of luck. Keep us


posted. Ask Here is a tip from one of the


Chief Executives that we have been grilling.


Sukhinder Singh is the head of the Whisky Exchange,


one of the UK's largest online retailers of spirits and wines.


There can be nothing better than taking your


hobby or your interest and turning it into a business.


My brother and myself we grew up in the business


just surrounded by these interesting coloured bottles


and spirits and I guess it caught our imagination.


When your business is your passion, there is nothing more satisfying


than coming into work every day and living and breathing


Your staff can see, you know, the passion and the interest in you.


You still need an element of business acumen and a


You can't let your heart take over your mind.


I mean a business at the end of the day is there to make


money to, pay the bills, to pay for the staff.


We asked you what's the one thing you want to change about your bank?


One viewer said lower credit card interest rates. Adam, "Maintenance


of internet banking and early closing hours." These are the things


that annoy Adam. I have to agree the closing hours, the opening hours, I


guess that's a high street bank. Harry, I agree you, as a teenager,


watching teens, language to aid financial literacy. I don't know why


we don't teach more financial literacy in schools.


So the Financial Times, what's going on? MUFG is Japan's biggest bank and


it has decided to move its investment banking business, but set


up a new base in Amsterdam, it is part of the idea of City


institutions relocating out of the city of the London on to the


Continent in preparation for Britain leaving the European Union. What's


the competition? So Frankfurt, Paris, Amsterdam? The big winner has


been Frankfurt and Dublin. They have gone to Frankfurt and Dublin.


Luxembourg has done well for fund managers and Lloyds of London


surprised people by going to Brussels. Who is going to Berlin?


There is one going to Berlin, ush' right. The picture is of dispassion.


It is not that Frankfurt is suddenly overtaking the City of London or


Paris, some banks are going to Paris. Different companies are


choosing different locations, the idea that we were going to have a


new financial centre of Europe growing up to replace London doesn't


look to be true. How worried is the City of London? We don't know. It is


all around all this stuff, we don't know what the final trading


relationship between the UK and the EU will be. Once we know that,


that's when we will know how worried we have to be. Happy Monday. Enjoy.


We're back tomorrow. Are you back tomorrow? Yes. I'm back tomorrow.


Tune in. Bye-bye. Good morning.


It's the last day of July, but for some summer is temporarily on hold.


An unsettled week ahead summed up as sunshine and showers. Warm in


Download Subtitles