:00:03. > :00:06.bail-out money. Those are the latest headlines from BBC World
:00:06. > :00:16.News. Now the latest financial news with Sally and World Business
:00:16. > :00:18.
:00:18. > :00:28.Hello and a warm welcome, you're with World Business Report. These
:00:28. > :00:33.
:00:33. > :00:42.are the headlines: Contagion fears gripped Wall Streak.
:00:42. > :00:52.UBS reveals its new strategy but will a shift away from investment
:00:52. > :00:54.
:00:54. > :00:58.banking win back the confidence of Another day another stark warning
:00:58. > :01:03.about the wider impact the eurozone debt crisis will have on the global
:01:03. > :01:07.economy. Shares sunk on Wall Street after ratings agency Fitch said
:01:07. > :01:11.contagion could spread to the US. The report out late on Wednesday
:01:11. > :01:16.warns that while US banks have manageable exposure to Europe,
:01:16. > :01:21.further contagion poses a serious risk to the US banking sector. That
:01:21. > :01:29.was enough to wipe 200 points off the Dow in the last minutes of
:01:29. > :01:33.trade. Morgan Stanley shares plunged 9%. Fiction is concerned
:01:33. > :01:40.about distressed European countries's were used hitting the
:01:40. > :01:44.banking system. They are concerned it is the troubles that have hit
:01:44. > :01:49.Ireland, Portugal, and Spain spread to more nations it could put in
:01:49. > :01:55.jeopardy America's banking system and its exposure to the eurozone.
:01:55. > :01:59.In total that could be 50 billion US dollars. At the moment they say
:01:59. > :02:02.that the US banking system's exposure to Europe is fairly
:02:02. > :02:08.manageable but they are worried about the into Connectivity of
:02:08. > :02:12.large global banks. That only piles on the were news for banks
:02:12. > :02:17.including City crew, Bank of America, even JP Morgan Chase and
:02:17. > :02:22.Goldman Sachs. It was enough to see the Dow Jones plunge, before the
:02:22. > :02:26.reported was down 36 points, afterwards it fell 190. They may
:02:26. > :02:36.only be pointing out some of the eurozone concerns that many people
:02:36. > :02:38.
:02:38. > :02:42.are aware of. But their report The markets in Asia started their
:02:42. > :02:47.days in a pretty dire way as you can imagine but things have calmed
:02:47. > :02:52.down. We can go to recur in Singapore for the latest. It has
:02:52. > :02:57.been a roller-coaster ride -- Rico. Indeed, roller coaster, very
:02:57. > :03:01.volatile but so far in the early afternoon trading session regional
:03:02. > :03:06.shares are still under pressure, led by the financial sector feeling
:03:06. > :03:16.the heat and financial stocks in Hong Kong, Singapore, Japan, South
:03:16. > :03:17.
:03:17. > :03:22.Korea, currently weakest after the rise in industry. That is the level
:03:22. > :03:28.that eventually forced Greece, Ireland and Portugal to seek bail-
:03:28. > :03:36.out programs. Asian investors will be watching closely the France and
:03:36. > :03:40.Spain bond auctions, and the results are keenly awaited. Overall
:03:40. > :03:45.analysts here don't really fear Asian banks being greatly affected
:03:45. > :03:49.compared to the US counterparts because exposure they say is not
:03:49. > :03:55.significant and minimal. But what they fear is the contagion from the
:03:55. > :04:02.eurozone debt crisis, which will pull the major economies into
:04:02. > :04:04.recession and intern impact of Asia's exports to Europe. Close to
:04:04. > :04:11.20% of the region's outgoing shipments are sold to the eurozone
:04:11. > :04:17.and this could impact the economies of the Asia-Pacific region. Thanks,
:04:17. > :04:22.Rico. We can speak to David Buick, or some more analysis. This news
:04:22. > :04:27.coming out just before the end of the day from Wall Street -- for
:04:27. > :04:33.some more analysis. It does not take much now, everybody's very
:04:33. > :04:39.neurotic. Things have fallen to a derisory new low. The markets move
:04:39. > :04:43.very quickly. We have to cast our mind back to 2008 when the Treasury
:04:43. > :04:48.Secretary said what many people thought was a logical, and he
:04:48. > :04:51.pulled the plug on Leeman Brothers, which exacerbated the problems for
:04:51. > :04:55.everybody because nobody knew how much money they might have lost
:04:55. > :05:00.because it was not an orderly closure. You can never necessarily
:05:00. > :05:04.organise something like this. But the problem with the euro debt
:05:04. > :05:09.crisis is the inertia on a political basis. The worst option
:05:09. > :05:16.is to do nothing and that is what they have chosen to. Is there a
:05:16. > :05:21.real worry about the impact globally, because that is kind of
:05:21. > :05:25.where Fitch is going. There is this underlying fear that they could be
:05:25. > :05:29.another credit crunch. I think that's right. They have over-
:05:29. > :05:33.reacted in the marketplace but as I said it does not take much. When
:05:33. > :05:39.you look at the damage credit default swaps can do, it is not
:05:39. > :05:44.just a piece of paper, the bond, that may have toxic losses on it.
:05:44. > :05:49.It is the counter party that may have bought it because they have
:05:49. > :05:53.problems and going down the line to them. It is like a pack of cards.
:05:53. > :05:56.David, we will talk more to you when we look through the newspapers
:05:56. > :06:00.in about ten minutes. But let's take a look at what is going on in
:06:00. > :06:04.Italy where the new Prime Minister will be presenting his austerity
:06:04. > :06:10.program to the Senate later today ahead of a confidence vote. On
:06:10. > :06:14.Wednesday Mario Monti unveiled a Cabinet of technocrats, 18 he is
:06:14. > :06:24.hoping will reassure investors and the Voges in Italy that he can get
:06:24. > :06:27.
:06:27. > :06:31.Italian debt under control -- the voters in Italy. -- a team. John,
:06:31. > :06:34.what is actually happening there today? It does sound very
:06:35. > :06:40.reminiscent of the last week or so when we have austerity measures
:06:40. > :06:46.being discussed and a vote of confidence. Yes that's true. There
:06:46. > :06:50.have been heavy discussions up to last week. This week we spent some
:06:50. > :06:55.time... actually the government spends some time trying to get Mr
:06:55. > :07:00.Monti re-elected and a whole series of meetings with members of the
:07:00. > :07:05.various parties and members of different interest groups. So the
:07:05. > :07:09.week has gone by, basically doing some kind of formal meetings and
:07:09. > :07:14.ritualistic meetings, which is kind of hard for the markets to
:07:14. > :07:20.understand. But these meetings will continue, today he should be sworn
:07:20. > :07:24.in, and getting a confidence vote on one of the Chambers, next week
:07:24. > :07:30.will be the other one. I understand the markets are kind of inflation
:07:30. > :07:33.find how, they are waiting to see the measures being taken --
:07:33. > :07:37.impatient right now. Let's talk about those measures, sorry to
:07:37. > :07:40.interrupt you because time is getting the better of us. When it
:07:40. > :07:50.comes to the austerity measures, some of the big ones like sorting
:07:50. > :07:56.
:07:56. > :08:00.out bureaucracy, they are not going to be in these meetings. There is a
:08:00. > :08:05.big concern and everybody in Italy is concerned about that. I have
:08:05. > :08:13.been talking to some politicians and they tell me that they like
:08:13. > :08:16.Monti, they like what Monti is doing, but the question is is he
:08:16. > :08:22.going to go to the Chambers and discuss the measures that need to
:08:22. > :08:26.be taken? Or is he going to take a fast approach? Is he going to
:08:26. > :08:31.implement the changes that need to be made? It seems the politicians
:08:32. > :08:40.think it will be the second thing he will do. Especially because it
:08:41. > :08:44.will come down the markets. Fang Q4 joining us. I am sure Mario Monti
:08:44. > :08:51.is looking forward to rolling up his sleeves cast thank you for
:08:51. > :08:55.joining us. Let's look at a presentation of a new strategy that
:08:55. > :09:00.will shake up a Swiss bank and caused vital change but will it
:09:00. > :09:04.deliver? The new chief executive is under pressure to prove he has the
:09:04. > :09:09.right formula as shareholders' patience is running thin. In recent
:09:09. > :09:14.years UBS has suffered a series of setbacks, the most recent the
:09:14. > :09:24.embarrassing and costly rogue trading scandal. UBS spend 150
:09:24. > :09:25.
:09:25. > :09:29.years building its business but it has plans to become a big player.
:09:29. > :09:35.Today the new chief executive will outline a future where activities
:09:35. > :09:39.like trading commodities or currencies are scaled back. It was
:09:39. > :09:44.really pummelled by its over extension into the housing market,
:09:44. > :09:48.property market in the US. And now private banking is under a lot of
:09:48. > :09:52.pressure. One has to ask what is left, it is going to abandon
:09:52. > :09:57.investment banking. They have already announced plans to cut more
:09:57. > :10:01.than 3,000 jobs, half of them at its investment banking arm.
:10:01. > :10:09.Investment banking has to be the smart banking operation because
:10:09. > :10:14.there is not enough business to sustain them if it is just
:10:14. > :10:18.investment banking. Retail banking is still growing, lots of people
:10:18. > :10:23.are getting rich even though many people are getting poor, and that
:10:23. > :10:33.is what they have got to focus on. Switzerland has traditional banking
:10:33. > :10:33.
:10:33. > :10:41.secrecy took a dent two years ago - - Switzerland's. In September, UBS
:10:41. > :10:46.and cover trading losses of $2.3 billion at its London operations --
:10:46. > :10:51.uncovered. There is no doubt the new CEO will have to restore its