07/08/2017 BBC Business Live


07/08/2017

A look at the global business stories.


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

:00:00.:00:10.

Prosecutors in South Korea demand a twelve-year prison sentence

:00:11.:00:12.

That is our top story, live from London.

:00:13.:00:35.

Before his arrest, Jay Y Lee was gearing up to take over Samsung.

:00:36.:00:39.

He's now accused of bribing the country's former

:00:40.:00:43.

President and could face more than a decade in jail.

:00:44.:00:48.

Also in the programme, turning off the taps with 50

:00:49.:00:54.

dollar oil the new normal, are we in line for another

:00:55.:00:57.

Opec meets today. Asian markets are rising strongly off the back of that

:00:58.:01:12.

in good jobs News from the US. This is what Europe is doing in the first

:01:13.:01:13.

half hour of trading. We speak to the head of one

:01:14.:01:17.

of the world's oldest private exploration firms about keeping

:01:18.:01:21.

the lights on around the globe. And as New York based

:01:22.:01:30.

company WeWork annoucne a $500m expansion in Asia -

:01:31.:01:34.

let us know what do you love They very warm welcome. A lot to get

:01:35.:01:59.

through, including things you like or maybe do not like about the state

:02:00.:02:04.

of your office with the news that WeWork is expanding.

:02:05.:02:08.

Prosecutors in South Korea are demanding a twelve-year prison

:02:09.:02:13.

sentence for the heir to the Samsung business empire.

:02:14.:02:20.

Samsung covers all sorts of businesses, a conglomerate made up

:02:21.:02:26.

of different entities and is caught in the midst of a huge corruption

:02:27.:02:27.

allegation. the prosecution said

:02:28.:02:31.

he was the ultimate The corruption scandal brought down

:02:32.:02:34.

the country's former President. All sorts of details have emerged as

:02:35.:02:43.

part of the trial. Sarah Toms is in Singapore

:02:44.:02:45.

with the latest. Good to see you. The prosecutors

:02:46.:03:02.

deliberated most of today and came up with this 12 year prison

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sentence. Tell us more. South Korean

:03:06.:03:11.

prosecutors have been wrapping up closing arguments in a lengthy

:03:12.:03:17.

trial. This is in the trial of Samsun Electronics and prosecutors

:03:18.:03:23.

seek a 12 year jail term for the acting head, Jay Y Lee. He and other

:03:24.:03:29.

Samsung officials have been charged with offering more than $38 million

:03:30.:03:37.

to the President and her friend in exchange for support of a merger

:03:38.:03:41.

between two Samsung subsidiaries. The president was removed from

:03:42.:03:44.

office this year and is herself on trial. Mr Jay Y Lee denied bribery

:03:45.:03:52.

and embezzlement charges. The court ruling is not expected until late

:03:53.:03:58.

August. Which is when his arrest warrant is finished. The trial,

:03:59.:04:05.

above all, has put the issue of family control and big business

:04:06.:04:09.

under the spotlight. South Korea's newly elected president promises to

:04:10.:04:14.

bring in measures that could weaken their power. That is the big

:04:15.:04:20.

question in terms of how this will play out on whether we will see Jay

:04:21.:04:27.

Y Lee behind bars or not. Previously in years gone by, those

:04:28.:04:32.

running Samsun, they have been charged with various elements and

:04:33.:04:35.

were pardoned in the past and that is kind of how it used to roll.

:04:36.:04:41.

That is right. It is a surprise it is 12 years. From what I understood,

:04:42.:04:48.

they were thinking it would be more like five years, depending on how

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many charges. It just shows that the government means business over this.

:04:56.:05:01.

The big companies with so much power. They want to sort of stop

:05:02.:05:07.

this from happening, a repeat of this scandal, which basically has

:05:08.:05:12.

been on the headlines of every country in the world. Sarah, thank

:05:13.:05:19.

you. So much to discuss as far as that story is concerned. South

:05:20.:05:30.

Korea's society, and the relationship with government.

:05:31.:05:36.

Another story we are watching. Oil prices continuing to fall and Opec

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is meeting. For most of us a lower oil

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price is a good thing. But for the countries that sell oil

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lower prices is a real headache. What can Opec do, the 14 leading

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producers? They have been trying to push up prices.

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Today and tomorrow they're meeting in Abu Dhabi.

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Amrita Sen is chief oil analyst at the independent research

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We have talked about this a lot, can they raise prices, Opec, and they

:06:11.:06:23.

hope to? I think the meeting is more about compliance, which has been

:06:24.:06:27.

slipping and some of the usual offenders, Iraq... When you talk

:06:28.:06:30.

about compliance is whether countries are meeting the production

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levels. Everybody talks about Iraq not complying and wanting to raise

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production, some of the offenders on the list are like UAE, they have

:06:43.:06:46.

always been good about meeting targets. I think that is why Opec

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wants to say, let's come back together and see what we can do. If

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you do not comply, what are the consequences? That is the problem,

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there is not something that will say you will be kicked out of Opec,

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these are the costs, which is why Opec is tricky. If you can't, I

:07:06.:07:11.

always have an incentive to not do as much is required because I hope

:07:12.:07:18.

prices will go up because of the result of your clock. The price of

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oil is not going up. I got back from Houston last week and shale is

:07:30.:07:32.

definitely growing will grow strongly but I do not think shale is

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growing as much as more people feared. One of the things that came

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out was the gas to oil ratio is rising a lot. For every well you

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complete you are getting more gas now than oil. Some of that fear will

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probably subside. Right now, demand is phenomenal at these prices and

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one of the things you are seeing is it is a tighter market and the

:08:01.:08:06.

curves are flattening. It didn't is falling at a rate of 1 million

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barrels per day so it is happening. -- inventory is. That is why they

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cannot catch up. And the disparity between the watch country needs what

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prices to do with budget, where they will balance the budget. The list is

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long and in Venezuela, they need $120. Saudi Arabia probably find

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that 60s and 70s. We probably should not have double standards because in

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the west we do not balance our budget, so why should they have to

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balance the budget? What is important they are running through

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the foreign currency reserves which they need to replenish. They are

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packed to the dollar and need revenues. They will be fine, some of

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the GCC countries, not Venezuela and Iraq. Thanks for your perspective.

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Don't hold your breath for any big announcements from Opec but if there

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are, we will let you know. We have the debate on prices but

:09:11.:09:15.

they wanted as high as possible, so it makes them the most money.

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Keep it simple with Ben Thompson! Let's take a look at some of

:09:18.:09:19.

the other stories making the news: One of the world's largest providers

:09:20.:09:24.

of shared working space, WeWork, says it will invest $500m to expand

:09:25.:09:27.

in Southeast Asia and South Korea. The New York based firm is one

:09:28.:09:31.

of a growing number that provide flexible working spaces and offices

:09:32.:09:34.

used by freelancers, That is the Twitter question, get in

:09:35.:09:36.

touch about your work environment. Staff at Google have been caught up

:09:37.:09:46.

in a row about the company's gender It started when a male software

:09:47.:09:49.

engineer wrote that the firm needs to "stop assuming that

:09:50.:09:54.

gender gaps imply sexism". Many of his colleagues have been

:09:55.:09:56.

critical of the statement Google's head of diversity said

:09:57.:10:01.

diversity and inclusion are very South Korea says North Korea has

:10:02.:10:06.

rejected an offer to talk - to calm tensions over

:10:07.:10:11.

its nuclear programme. This weekend, the UN

:10:12.:10:12.

Security Council passed a resolution banning North Korean exports

:10:13.:10:15.

and limiting investments Within the last hour,

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North Korea has criticised the blockade and vowed to take

:10:18.:10:24.

what it calls "righteous action". Shares in Asia were higher

:10:25.:10:31.

at the start of the week - after those strong jobs numbers

:10:32.:10:38.

in the US. That's provided some relief

:10:39.:10:42.

for investors over the outlook Well, the dollar jumped to a one

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year high against the yen, that, In Europe it's a quiet day

:10:45.:10:54.

for corporate earnings and economic data -

:10:55.:10:57.

with holidays across the continent. If you're not on holiday we'll talk

:10:58.:11:00.

more about all you need to know - in a moment, but first

:11:01.:11:03.

Samira Hussain has the details Earnings continue this week

:11:04.:11:06.

with media companies like Time, That's the parent company

:11:07.:11:12.

to the social media app, Snapchat Now since the company went public

:11:13.:11:18.

in March of this year, its share price has hit some

:11:19.:11:23.

all time lows. Investors are worried

:11:24.:11:25.

about the company's ability to continue to grow its user base

:11:26.:11:28.

and still make money. But first, on Monday,

:11:29.:11:33.

the world's biggest hotel chain, It seems more travel

:11:34.:11:36.

is happening in the US, its biggest market,

:11:37.:11:42.

and that will help lift the Marriott, like its hotel industry

:11:43.:11:44.

peers, is really benefiting from an improved business sentiment

:11:45.:11:50.

following Donald Trump's election Joining us is Jessica

:11:51.:11:52.

Ground from Schroders. Give us your take on this week, a

:11:53.:12:09.

funny time of year and yet there seems to be quite a bit going on

:12:10.:12:13.

with markets bubbling up. Valuations are high. The data is showing a

:12:14.:12:22.

sustained although not dramatic global economic recovery. Volatility

:12:23.:12:27.

is low. We know when we look at past summers when everything like this

:12:28.:12:33.

looks fantastic, things can come to disrupt. People are feeling more

:12:34.:12:39.

relaxed. It does not mean you cannot have strange events. What could

:12:40.:12:46.

disrupt? Geopolitical is probably the one most likely. We have been

:12:47.:12:49.

talking about tensions with North Korea. The Middle East. Opec and all

:12:50.:12:55.

prices will be another area to watch. Both Brexit and the Trump.

:12:56.:13:10.

People have learned to live with uncertainty on that. We are at the

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point where markets are pumped up, will they stay there until people

:13:15.:13:20.

come back in September? What we have heard is a narrow leadership of the

:13:21.:13:24.

market with tech companies on stretched valuations. Other parts of

:13:25.:13:29.

the market look less stretch. The thing that has happened this summer

:13:30.:13:35.

is it feels like rate rises are kicked into the long grass, further

:13:36.:13:39.

into the future, and that is important because with interest

:13:40.:13:43.

rates low, it gives room for equity markets to move up high. I would not

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say everybody will come back in September and panic, but I think

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companies with high valuations will have to justify them with great.

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Lovely to see you. Still lots more to come.

:13:59.:14:01.

We take a look at the cost of delivery around the world,

:14:02.:14:05.

starting in Turkey which has the highest rate of

:14:06.:14:07.

You're with Business Live from BBC News.

:14:08.:14:21.

Britons could obtain more control over what happens to personal

:14:22.:14:24.

information under new government proposals later today.

:14:25.:14:28.

People will be able to ask for personal data, or information

:14:29.:14:30.

posted when they were children, to be deleted.

:14:31.:14:32.

Theo Leggett is in our Business newsroom.

:14:33.:14:40.

This is fascinating, the idea that adults could complain about what was

:14:41.:14:47.

posted when they were children. It shows the internet age coming of

:14:48.:14:50.

age. Because the data protection rules have not kept up with

:14:51.:14:55.

development of technology. This bill is based on the EU's data protection

:14:56.:15:00.

regulations that comes into force next year and coming into force

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quickly and the UK bill will make sure the same rules stay in place

:15:05.:15:08.

after we leave the EU probably in 2019. The point is, the data

:15:09.:15:15.

protection regulations at the moment were designed in the days before a

:15:16.:15:19.

company could gain information on who you are, where you live, what

:15:20.:15:24.

shopping you like, what places you visit, because you carry a mobile

:15:25.:15:29.

phone and they can store information and use it for marketing purposes.

:15:30.:15:34.

These proposals are designed to give people a certain amount of control

:15:35.:15:38.

back, such as people who posted things as children will be able to

:15:39.:15:44.

ask for that to be deleted and will have to give explicit consent to

:15:45.:15:48.

giving away information. At the moment it is often a tick box at the

:15:49.:15:53.

foot of a website or pages of terms and conditions and people do not

:15:54.:15:56.

really know what they are signing up to and the idea with this is people

:15:57.:16:01.

will have to give clear consent to data being used and people

:16:02.:16:04.

collecting it will have to say why they are collecting it. Our company

:16:05.:16:09.

is prepared? Some of them are, business groups say companies are

:16:10.:16:13.

starting to get used to the idea but many are not used to it and since

:16:14.:16:22.

the first stage, the EU regulation comes into force next year, they

:16:23.:16:24.

will have to hurry up. Because this regulation gives the Information

:16:25.:16:27.

Commissioner's office figure teeth, and they will be able to fine up to

:16:28.:16:33.

?20 million or 4% of a company's turnover, which ever is the greatest

:16:34.:16:39.

and at the moment the biggest fine is ?500,000. It is a big change and

:16:40.:16:40.

penalties are harsh. A story about pre-payment energy

:16:41.:16:51.

price cap will be tightened according to Ofgem. All the details

:16:52.:16:53.

are on the Business Live page. Our top story: Posecutors

:16:54.:17:02.

in South Korea are demanding a 12 year prison

:17:03.:17:07.

sentence for the heir to the Samsung business empire,

:17:08.:17:11.

Lee Jae-yong. This case has been rumbling for a

:17:12.:17:19.

long time, but 12 years is what the prosecution are calling for.

:17:20.:17:20.

A quick look at how markets are faring.

:17:21.:17:24.

In Europe we have been going for 15 minutes. Higher. Perhaps markets

:17:25.:17:31.

taking a breather following a couple of weeks of so much news in terms of

:17:32.:17:34.

earnings news from companies all over the world. So, a chance to just

:17:35.:17:39.

take stock now. The markets are having their summer

:17:40.:17:43.

holidays, I think, not us, we're still here.

:17:44.:17:45.

Its highs and its lows, but what about gas?

:17:46.:17:49.

Well, one of the world's oldest private gas and oil exploration

:17:50.:17:52.

firms in the Middle East is Crescent Petroleum.

:17:53.:17:54.

It was set-up in 1971 in the United Arab Emirates.

:17:55.:17:58.

While its first wells were for oil, it was an early adopter of natural

:17:59.:18:01.

gas, signing its first gas supply contract in 1985.

:18:02.:18:07.

Its total output now exceeds 125,000 barrels of oil equivalent per day

:18:08.:18:13.

and it's looking to expand into both North Africa and Iraq.

:18:14.:18:18.

Its gas deliveries help to provide electricity

:18:19.:18:20.

for four million people in northern Iraq.

:18:21.:18:22.

Majid Jafar is the Chief Executive of Crescent Petroleum,

:18:23.:18:24.

Welcome to Business Live. Nice to see you. Now, you've met before,

:18:25.:18:36.

haven't you? I have, when I was based out in Dubai with our other

:18:37.:18:40.

programme Middle East Business Report. We talked at the time about

:18:41.:18:45.

this push elsewhere because everyone imagines the Gulf as the place of

:18:46.:18:49.

oil and gas, but it is not only about exploring and extract, but it

:18:50.:18:54.

is making it useful. Expansion into North Africa and parts of Iraq and

:18:55.:18:58.

Iraq is the one that's got the oil and gas itself, but the difficulty

:18:59.:19:01.

and clearly after the war is getting it out of the ground. It is

:19:02.:19:04.

investment in infrastructure. How do you play a part in that? So as

:19:05.:19:08.

companies from the region, we take a different look at the risks. We take

:19:09.:19:13.

a long-term view and we try and different ate ourselves on

:19:14.:19:16.

understanding what the real local market needs are and trying to

:19:17.:19:20.

address them rather than focussing on export and by being nimble and

:19:21.:19:26.

partnering well with companies from the outside and delivering on

:19:27.:19:30.

projects cost effectively and time, which is key, and our region as a

:19:31.:19:35.

whole has half the world's oil and gas, but less than a third of the

:19:36.:19:38.

world's oil production and less than a sixth of the world's gas

:19:39.:19:42.

production so we're punching way below our weight. You talk about the

:19:43.:19:48.

region. It was described to me once that UAE is a real safe street in a

:19:49.:19:55.

really dodgy neighbourhood. When you talk about that long-term view of

:19:56.:20:02.

investment, how do you do it in a region that is notoriously

:20:03.:20:08.

unpredictable? Our problems aren't below the ground. We have the lowest

:20:09.:20:12.

cost of production above the ground. You mentioned budget issues, but we

:20:13.:20:19.

have got in some countries wars, instability, payment issues or

:20:20.:20:22.

respect for contract, fiscal terms and then overall policy. There are

:20:23.:20:25.

many countries in the region where there is a national oil company with

:20:26.:20:29.

a monopoly and little room for the private sector, but that's starting

:20:30.:20:32.

to change now. Something else as well that you really want to see

:20:33.:20:36.

change is social and economic development within the Arab world as

:20:37.:20:40.

it were and you're doing a lot of work with young people in particular

:20:41.:20:43.

and the issue of youth unemployment which is the highest in the region,

:20:44.:20:49.

isn't it, worldwide? Our biggest natural res source is our young

:20:50.:20:55.

population, not the oil and gas. Oil and gas employs less and less

:20:56.:20:58.

because it is becoming more and more hi-tech. We need to create 100

:20:59.:21:03.

million jobs over the next two decades across the Middle East and

:21:04.:21:09.

North Africa. We have 30% as an average youth unemployment and we

:21:10.:21:13.

need more private sector investment and education and skills that match

:21:14.:21:16.

the needs of the private sector because the governments can't keep

:21:17.:21:21.

employing the young people anymore. Female empowerment, you have got two

:21:22.:21:24.

daughters aged one and three and that's something you want to see a

:21:25.:21:30.

shift in? It is critical as a moral and social issue if we have got the

:21:31.:21:39.

lowest female in Parliament. That leads to higher birth rates which

:21:40.:21:42.

means we can't catch up with the employment issue. You have just sort

:21:43.:21:46.

of intertwined nearly everything we've talked about in our programme

:21:47.:21:50.

today. Thank you for coming in. We'd love to talk to you for longer, but

:21:51.:21:53.

we haven't got the time in this programme. So many issues.

:21:54.:21:57.

This week we're looking at the Business of Birth

:21:58.:22:00.

Around the globe, caesarean section rates have increased dramatically,

:22:01.:22:03.

even as a large amount of them are not medically required.

:22:04.:22:10.

Whilst the average rate is 28% amongst OECD countries,

:22:11.:22:17.

in Turkey more than half of babies are born by C-section.

:22:18.:22:19.

At this hospital, eight babies are born today.

:22:20.:22:23.

C-sections are rather popular in Turkey.

:22:24.:22:26.

Over 50% of babies are born not by natural birth,

:22:27.:22:29.

That rate is the highest amongst OECD countries.

:22:30.:22:40.

But why do so many expecting mothers go through these operations?

:22:41.:22:42.

The increase in C-sections are due to the rise in first births among

:22:43.:22:50.

older women and multiple births resulting from the IVF treatment,

:22:51.:23:01.

treatment, but all of these Caesareans medically justified?

:23:02.:23:03.

Five years ago, Turkey adopted a law making it the first country

:23:04.:23:06.

to punish elective Caesarean sections, but it has one

:23:07.:23:08.

of the highest rates of C-section among developed economies.

:23:09.:23:10.

Doctors say the reason for that are many,

:23:11.:23:12.

We don't earn more than when we do C-section as a cln i, as a doctor.

:23:13.:23:25.

The hospitals, yes, maybe, of course. But they don't push the

:23:26.:23:31.

doctors. Most Turkish women these days hope

:23:32.:23:35.

to give birth naturally, but of course, things don't always go

:23:36.:23:44.

according to plan. We will have more reports from

:23:45.:23:50.

around the world in our business of birth series. Dominic O'Connell

:23:51.:23:55.

joined us. Good morning by the way. There will be all sorts of articles

:23:56.:24:00.

marking the tenth anniversary of the credit crisis. Ten years? Ten

:24:01.:24:04.

yearsment people put it down to the failure of two hedge funds that were

:24:05.:24:08.

run by a French bank, but you could really actually put it down to any

:24:09.:24:15.

number of dates in 2007 and in January and February, HSBC warned

:24:16.:24:21.

about lending in the US from its Household Division and then in June,

:24:22.:24:25.

a bank closed two hedge funds. That could be another anniversary date

:24:26.:24:28.

the all the articles say, there were loads of warning signs, we knew it

:24:29.:24:34.

was comingment nobody did. Very few people, lots of people thought there

:24:35.:24:36.

were problems with individual institutions and individual funds,

:24:37.:24:39.

but not many people, some people did, but not many people said the

:24:40.:24:43.

system is on the vrge of collapse. So ten years on and we've had

:24:44.:24:49.

results from Lloyds and from RBS and others from Barclays and HSBC, it is

:24:50.:24:52.

so interesting when you see they are still paying the price? Particularly

:24:53.:24:57.

in the case of RBS and Lloyds, still paying for payment prosteks and

:24:58.:25:01.

Libor. RBS have got a giant fine to come from the US authorities in its

:25:02.:25:08.

role in packaging up the loans for the US housing scandal. Ten years

:25:09.:25:12.

on, the reckoning is still to come. How important to you is your work

:25:13.:25:14.

environment? Very important actually. The reason I get up every

:25:15.:25:28.

morning! But we're talking about a service offered to office workers.

:25:29.:25:35.

Is it a new version of Regis? It is very trendy. It is very of the

:25:36.:25:38.

moment. All right. Let's talk about what you think about this. Conrad,

:25:39.:25:42.

"I love the modern glass offices like mine are so light." I can't say

:25:43.:25:49.

we have the same experience. Another viewer says, "I hate people eating

:25:50.:25:55.

their smelly lunch at their desk. It's disgusting." Have a really

:25:56.:25:57.

good. See you soon. Bye-bye. Hi there. Good morning. Fur' looking

:25:58.:26:11.

for some hot summery weather, then unfortunately this forecast isn't

:26:12.:26:15.

going to give that to you because it will stay unsettled. There will be

:26:16.:26:17.

further

:26:18.:26:18.