20/02/2018 BBC Business Live

This is Business Live from BBC News

with Ben Thompson and Sally Bundock.

Europe's biggest bank scores

a huge hike in profits.

So has HSBC finally put

its troubles behind it?

Live from London, that's our top

story on Tuesday 20th of February.

HSBC has paid a string

of fines for misconduct,

ranging from rigging exchange rates

to money laundering.

Now it's hoping for a fresh

start as it gets ready

for a change of leadership.

Also in the programme...

Britain's Brexit Minister

is about to address business

leaders in Austria -

he says there'll be no Mad Max-style

rush to deregulation

after leaving the EU.

Markets in Europe have started

trading, they are all headed higher

for now. We will talk you through

the winners and losers.

Savile Row is world-renowned

for its razor sharp

suits and classic style.

But in a world of fast fashion

how do the traditional

firms stay relevant?

We'll meet one man

on a mission to do just that.

And, as Uber's boss says flying cabs

will be commercially viable

in five to ten years,

we want to know -

would you hail a flying taxi?

Let us know - use the

hashtag #BBCBizLive.

Hello and welcome to Business Live.

As usual, it is jam-packed. Let's

get cracking.

Europe's biggest bank HSBC

has reported a big jump

in profits for last year.

But it's mainly because it's been

able to shake-off the huge costs

the company has faced

in restructuring after

a string of problems.

It means there will be a strong base

to build on when the new chief

executive John Flint takes

the reigns from Stuart

Guillver on Wednesday.

-- tomorrow.

The numbers show that HSBC made

a pre-tax profit of $17.2 billion

for the calendar year of 2017.

That's up a massive 141%.

However it's still

below expectations.

HSBC says adjusted pre-tax profit

of $21 billion gives

a better idea of how

the business is performing.

It excludes one-off items

and foreign exchange losses

and was up 11% on a year ago.

The banks desire to focus

more on Asia, including

expanding in China,

is paying off too with 75% of

profits now coming from the region.

With me is Peter Hahn,

a professor of banking

at the London Institute

of Banking and Finance.

Nice to see you. Let's look at the

figures, there is a lot of business.

They are the last from Mr Gulliver.

He has had it up job to try to turn

around the fortunes of the bank?

Yes, and the story started long

before his tenure. In 1998 there was

an emerging markets crisis, 20 years

ago. HSBC to the strategic decision

to really invest in the Americas, in

Europe, not a share. It missed the

point. -- the Americas and Europe,

not Asia. Since 2011 the decision

has been reversed, the bank has gone

back to its roots and found success

back in Hong Kong, Shanghai, it

shows you where the story is

connected.

The emerging markets

where the biggest potential returns

are, equally where many of the

biggest risks are. Some would say it

is a risky strategy focusing on some

of these markets, nonetheless one

that will pay dividends if they get

it right?

I do not know if it is

more risky. Emerging markets are not

all the same. HSBC, if I invest in

HSBC today I am investing in an Asia

story. Looking where the profits

came from it is almost 90% of their

profits came from Asia. If you

invest in shallow oil today, you are

betting in the long term on the use

of oil and the price of oil over

time. -- if you invest in Shah oil.

If you invest in HSBC, it is an Asia

story with others.

Mr Gulliver said

HSBC is a simpler, stronger and more

secure bank than in 2011. Is that

true?

Yes. They exited perhaps more

than 20 countries during that time,

substantially underperforming in

Brazil. He has beefed up in China

and it has done a lot better. There

is still work to be done. You

mentioned the litigation issues that

came up, it does not seem as many

major ones. Like many other bank

reports I read there are still

several pages of outstanding

litigation faced by HSBC.

I wanted

to get on but time is tight. Thank

you, Peter, as always.

Let's take a look at some of

the other stories making the news.

Hundreds of Kentucky fried chicken

restaurant in the UK remain closed.

They have been struggling to get

supplies since the delivery contract

with switch. Staff are encouraged to

take holidays but are not being

forced to do that.

An astonishing story.

The world's biggest mining comapny

BHP Billiton says profits were up

25% in the six months

to the end of December.

Underlying profits

hit just over $4bn.

Its chief executive says

the Australian firm was helped

by strong commodity prices and saw

returns on its investment

in new technology to

improve productivity.

It also increased its

dividend to shareholders.

The boss of Uber, the ride hailing

app, has said he see flying taxis

as being commercially viable in five

to ten years.

Dara Khosrowshahi was speaking

at an investor forum in Tokyo.

Back in November Uber said

it was working with Nasa to develop

the technology but some experts have

questioned whether it

will ever get off the ground.

I see what you did there!

The social media giant Facebook says

it's to send postcards in the US

mail in order to verify the location

of people requesting to buy adverts

for US election candidates.

Yes, snail mail!

The postcard would contain a code

which would be required

to complete the booking.

13 Russians have been charged

with interfering in the 2016

presidential election.

The indictment says they bought

political advertising and set-up

groups on social media

sites including Facebook.

I think that is astonishing that a

technology firm has to resort to

using snail mail, oppose cuts

through the mail.

Sometimes you cannot live without

the oldest tech.

Snail mail to verify someone's

location? All those apps and

technology and kit.

I love a real letter. You would

waste of the -- wait for the

postcard?

Absolutely.

Canada's Prime Minister Justin

Trudeau is on a visit to India.

And, despite speculation that he's

being given the cold shoulder

by the Indian government,

he's set to meet business leaders

in Mumbai in less than an hour.

Suranjana Tewari is in our

business hub in Mumbai.

Good to see you. Tell us a bit more

about his day, who he is meeting

with and how significant this is?

We

are not expecting any major

announcements from today, but Prime

Minister Justin Trudeau has been

meeting CEOs of prominent Indian

companies like Tata, Mahindra etc.

He will be meeting Indian business

leaders later. Representatives from

around 150 Canadian companies are

here to try to expand their business

all-star joint ventures with Indian

firms. Reminisced Trudeau is

expected to make some announcements

on what he wants Canada to do in

India, business and investment wise.

India and Canada already have a

strong trade relationship, around $8

billion worth of bilateral trade,

particularly in the agriculture

sector. Canada imports are lots of

beans and lentils into India. Canada

is a little worried about import

duties that India has put onto

Canada recently, about 40% import

duty. They will look for reassurance

that aren't some investment in

Indian infrastructure.

Thank you for

that, an interesting trip for Justin

Trudeau, I am sure.

That show you the financial markets.

Wall Street was closed on Monday and

will reopen today. So this is

Friday's end to a bumper week for

Wall Street. Because these markets

reopen today for the first end this

week there is a bit of treading

water in Europe, to a degree. HSBC

shares down in London when I last

look, I hope they will move on. HSBC

shares in Hong Kong, they were

trading earlier today, down over 3%

after the announcement of their

earnings. We will bring you the

European members a bit later,

hopefully on the screen. For now,

let's talk about Brexit Secretary

David Davis. He is to insist Britain

will not be plunged into what he

describes as a Mad Max style world

after it leaves the European Union.

In a speech to business leaders

in Austria this morning,

Mr Davis will also reject the idea

that Brexit will lead to a "race

to the bottom" in workers' rights

and environmental standards.

Our correspondent

Bethany Bell is in Vienna.

Outside the building where this is

all happening very soon, Bethany. It

looks extremely cold where you are.

Tell us a bit about the reception he

will receive, will it be warm or

not?

I think the entrepreneurs will

be gathering in the house of

industry right behind me when they

can get their way through the snow.

They will be listening very hard to

what he has to say. No one wants bad

relations with Britain after Brexit,

but they are very interested to hear

what it is exactly that Britain

wants. People here say there is not

clarity yet. David Davis will say

that he wants to continue to see

close cooperation when it comes to

regulation, that there will not be

this race to the bottom, as he calls

it. He hopes that will ensure

frictionless trade with the EU after

Brexit. There has not been an

official Austrian response so far to

his planche remarks, -- planned

remarks, but one analyst suggested

he will have questions which are if

you want to see things the same, why

are you leaving the EU in the first

place?

Many are asking that

question, and others. Thank you,

Bethany.

Joining us is Trevor Greetham,

head of multi-asset

at Royal London Asset Management.

Good morning. Staying with that

theme, investors will be looking at

this meeting very closely to see

what is discussed, and sterling

particularly, we will see a reaction

that?

What is interesting is the

volatility of sterling, it is quite

high. It is not like it is moving

around very much, but if you want to

protect the portfolio against a

swing one or the other way, the cost

of that is one of the highest since

we have seen since the Brexit

referendum. There is a lot at stake

in deciding the UK position, is it

credible, will we end up in

something similar to the EU or crash

out without any deal?

The impact of

currency movement is quite crucial.

HSBC have said look at this

preferred number, it excludes the

currency movement to give you a

better impression of how companies

are doing.

It can be mastered in the

UK, about 70 or 80% of the stock

market is overseas earnings. -- it

can be massive in the UK.

It is a

busy week as far as results are

concerned, less economic data?

Everybody's watching screens, the

stock market. The Dow Jones rose

almost two dozen points in a week

last week, the biggest percentage

increase in it week in five years.

You might be tempted to say that

means we have the all clear and

everything is fine, but the big

moves in stock markets happen when

they are volatile. You could get a

big move down this week easily. The

fundamentals are positive, a tug of

war is going on between strong

earnings, a tax cut in America and

rising interest rates. Interest

rates are low in America, housing

has not slowed down and the big

central banks in Europe are printing

money. It feels like the stock

market bull market has not finished

but we could see short-term

volatility as people get to grips

with this tug-of-war.

Lots of speed

bumps. Seat belts on. Trevor will be

back later to talk this through the

papers.

Still to come...

In a world of fast fashion,

is there still space

for traditional tailors?

We meet one of the Savile Row

stalwarts who says it's got

a new lease of life.

You're with Business

Live from BBC News.

Betting firm William Hill has been

hit with a £6.2 million penalty

package for breaching anti-money

laundering and social

responsibility regulations.

Business correspondent

Sean Farrington has been

looking at the details,

he's in our Salford newsroom.

What have they been doing?

What have

they been doing? The Gambling

Commission, the regulator looking at

this, has used pretty strong words,

systemic issues. It means it is not

just one or two micro people, this

is the structure of the company not

assisting the anti-money-laundering

practices and executing social

responsibility how they should. One

problem was the gambling commission

found that ten customers were able

to use money found from criminal

proceeds to put through William Hill

accounts, which ended up with

William Hill making £1.2 million in

profit on the back of our cash. So

part of the £6.2 million is to pay

back the £1.2 million, £5 million is

a fine linked to breaching

regulations put in place. Some

extraordinary examples being given

by the Gambling Commission, one of

simply placing more than half £1

million over these accounts over the

period of a year or more.

William Hill having a verbal

conversation at assuming they are

earning more than £300,000, the

customer, thinking they could afford

it. It turned out they earned

£30,000 a year and was stealing from

their employer. So part of these

proceeds could be to reimburse

people who suffered from the

criminal act that took place. The

Gambling Commission told us this

morning this could possibly be a

much wider issue. They do not expect

this to be the last decision they

had to make on this scale when it

comes to the gambling industry and

social responsibility and dealing

with anti-money-laundering

regulations.

Thank you, Sean. Thank

you for the detail on William Hill.

More news on the KFC saga that they

have run out of chicken. A

procurement expert has been speaking

with us. And views from

Intercontinental group, 7% rise in

profits, launching a new brand.

Speaking with the chief Executive,

earlier, he is talking about lots of

new expansion plans,

Intercontinental hotels group

benefited a lot from the tax changes

in the US.

You're watching Business Live,

our top story,

HSBC, Europe's biggest bank,

has seen pre tax profits soar

by 141% to more than $17 billion.

Seventy per cent of that came

from its operations in Asia.

They have called that a pivot to

Asia.

Only half of new firms in the US

make it through the first five years

of business intact so what's

the secret to a company

becoming a long-term success?

Henry Poole & Co has been

running for centuries.

Setup in 1806 it's been credited

as being the founding tailor

of Savile Row here in London.

One its most famous clients

was Winston Churchill,

who bought his first suit

from the company in 1906.

But it's also a company

with a firm eye on the future,

in 2006 it setup a made to measure

store in Beijing,

to take advantage of

the growing market in Asia.

Simon Cundey,

managing director

of prestigious tailoring

business, Henry Poole & Co.

Good morning, you have brought in

all sorts of bits and pieces, we

will talk about these, you have been

around, not you, personally, but you

have been around a while, 1806. And

it is still a family business.

Lucky

enough to be a family business, very

much credited to generations of

family that have run it and kept it

very much for the next generation,

that is the key element, train

within the house, bring in the next

group of tailors and cutters that

make the company.

Let's wallow in

the history for a little bit, really

amazing, you have brought in this

ledger, it is really heavy, I'm

going to try to show this to the

viewers, basically... This is the

first major book?

1846, he was a

very clever gentleman, his father

was a cloth merchant, but Henry

Poole became a cutter and a bit of a

dandy and a socialite, people like

Prince Bertie and Napoleon, came to

him in 1846...

His measurements are

in here. All handwritten. Plenty in

here. What do these numbers tell us,

not only about the way we have

changed, people getting taller and

wider, but interesting insight into

their lives, when they have been

back a couple of times.

Socially,

absolutely, it is a little club, the

aspects of business, very much part

of this history line which goes

through the years.

And just to say

as well, the cost of a suit, a sort

of remained the same in terms of

relative to peoples income, looking

at one month 's salary, roughly, to

buy one of your suits.

Going through

the situation of choosing fabrics,

we have 4000 fabrics, seasonal,

travel, business, you name it, we

can sell it, then we go through

styling, we go through the fittings

with you, it is all about 70 hours

to make a suit.

It is a classic

suit, normally, because men will

wear these for ten years.

Minimum,

yes.

I immediately assumed they

change its shape in that time.

So

yes, we do alterations.

You have

things in place.

It comes with four

inches of extra fabric, so the

allowance of winter weight and some

weight, if call it that, the

prosperous years, shall we say, that

is what we do, we let it out, and

some people have a two set wardrobe,

one for summer, one for winter.

The

suits that you make, never

particularly in fashion so they

never go out of fashion, that is the

sign of a classic suit. A lot of

pressure with fast fashion that you

will do something that is

particularly in vogue, but you don't

do that.

Complete cycle wheel that

we go through fashion, pendulum

swings between the Pell width,

height of button, these things

always change. -- lapel width.

These

shoes, they do not look several

wrote to me, they look very modern,

he teamed up with Adidas for this.

A

bit of fun, one customer is with

Adidas, and... We make a few suits,

named after people, one of them is

the Winston Churchill, but he loved

the fabric so much he said, we

should do something special, we came

up with the idea of a commute issue

and evening shoot...

That is how you

know this was made in Savile row.

--

evening suit. About £150, but

because they are collectors item,

limited-edition, their value has

trebled. As a business point of

view, good investment.

Quick word on

skills, this is a family business,

so many pressures, fabric is made in

the UK, you make these suits, you do

not send them somewhere else, you

have to retain the skills. How

difficult is it to get people who

can make a good suit?

About 15 years

ago it was very difficult to find

people who would be interested in

the business, with the situation of

skills and craft, a lot of

manufacturers realise they can train

within, within the automotive,

within the jewellery or clothing, if

you train your craft, you have to

train within. Last ten years, very

successful, full programme now, now

the average age is 40 years old.

Absolutely fascinating, thank you

very much for coming in. We could

talk for a long time.

120 of them!

Interesting comparing height and

width, and they come back the second

time and they have got a bit wider!

Richard Branson is in India, let's

see what talking about.

There will

be in a Sayers at the start of any

new industry and they are right to

be naysayers until we have proven

wrong. The outside of it is

gigantic. -- upside. Trains made a

big difference to India in the last

century, I believe that hide the

loop will be a giant step forward

that India needs. It can connect

most of the major cities in India in

well under two hours and the cost of

building it will be private money.

-- hyperloop. The cost to the

passenger of travelling on a Virgin

hyperloop will be competitive with

any high-speed train. We think we

can build it for a lot less then you

can build a high-speed train. And

therefore we should be able to

charge less.

Richard Branson with

ambitions for virgin hyperloop one.

In India.

This story, the new boss of Uber,

relatively new, saying that it is

commercially viable, flying taxes,

five to ten years, would you climb

on board?

Probably but I have a bad habit of

ordering a taxi and saying, five

minutes, ten minutes... Will they be

hovering around my rooftop?

One

viewer says, yes, glad to use one if

safety is guaranteed and cost is

friendly. Sean says the same,

depends upon the safety. Can you

tell me how to hail one, says one.

Chris says, no. Peter says, at a

nonsense. Hot debate going on. What

else is going on? Brexit,

interesting story in the FT,

campaigners to stop Brexit preparing

a six-week advertising blitz.

A

group partly funded by George Soros,

but also a crowdfunding arrangement,

and he will step up advertising over

the next six weeks, head of the vote

for the customs union and he will

already have people working on Mad

Max and David Davis's head, at Best

for British, I can see this

happening. Key votes are coming up.

The political party launch, Renew,

people focusing on this, we will

hear more and more about it.

Time is

tight, really good to see you. Thank

you for explaining the market

movements. Thank you for your

company, we hope you enjoyed the

programme and we will be here

tomorrow.