:00:03. > :00:13.Those are the latest headlines. Now for the latest financial news
:00:13. > :00:13.
:00:13. > :00:18.with Sally Bundock and World Hello and welcome to World Business
:00:18. > :00:21.Report. I'm Sally Bundock. A sweeping return to power for
:00:21. > :00:31.Japan' Liberal Democratic party but can a new government solve old
:00:31. > :00:33.
:00:33. > :00:38.economy? Hello from Singapore. The country's
:00:38. > :00:44.benchmark index soared to a eight 1/2 monk hired rover hopes of
:00:44. > :00:48.better economic highs. -- 8.5 months high.
:00:48. > :00:58.Swiss bank UBS is reported to be facing a $1 billion fine for its
:00:58. > :01:00.
:01:00. > :01:04.role in rigging the London There is a change at the top in
:01:04. > :01:07.Japan. Ex-premier Shinzo Abe gets a second chance to lead Japan after a
:01:07. > :01:11.landslide victory for his Liberal Democratic Party in Sunday's
:01:11. > :01:14.parliamentary election. Many are hoping this new government will
:01:14. > :01:23.help the world's third largest economy break out of its 20-year
:01:24. > :01:28.economic slump. Markets have reacted well to the news. The main
:01:28. > :01:31.market, the Nikkei, in Tokyo is up over 1.5% today and the yen down at
:01:31. > :01:34.a 20-month low against the US dollar. But finding a solution to
:01:34. > :01:37.the country's many problems is not going to be easy. Japan's public
:01:37. > :01:40.debt is more than twice its economic output and climbing
:01:40. > :01:49.figures out last month show the country has slipped back into
:01:49. > :01:54.recession for the fifth time in 15 years. The chronically strong yen
:01:54. > :01:57.continues to hurt the country's foreign sales for growth. New Prime
:01:57. > :02:00.Minister Shinzo Abe has promised a revival plan which seems
:02:00. > :02:06.seductively simple. Print money and spend it. Lots of it. But will it
:02:06. > :02:14.do the trick? We are joined by Rico Hizon in the
:02:14. > :02:20.BBC's Singapore office. How are the market's reacting?
:02:20. > :02:25.At this point, investors believe that Shinzo Abe and the LDP may
:02:25. > :02:32.have the answers, may have the solutions, to fix the country's
:02:32. > :02:40.economy. Many pundits are calling the next prime minister's economic
:02:40. > :02:44.initiatives ergonomics. He set an inflation target of 2%, plus a big
:02:44. > :02:53.spending on public works to kick- start the economy. The Nikkei has
:02:53. > :02:57.risen more than 14%. That rally has taken the gains to 17%. That is
:02:57. > :03:03.outpacing the European and US markets. That has led the yen to
:03:03. > :03:08.hit a 20-month low. It has boosted the appeal of exporter shares. The
:03:08. > :03:12.weaker yen helps boost Japanese exports' it overseas earnings and
:03:12. > :03:20.increases their competitiveness. Exporters today are therefore
:03:20. > :03:25.continuing to benefit. Many companies are also searching in
:03:25. > :03:35.reaction to the LDP victory, noting the party opposes a nuclear free
:03:35. > :03:40.
:03:40. > :03:45.policy. Thank you. UBS is reportedly on the
:03:45. > :03:52.verge of paying more than $1 of manipulating the London
:03:52. > :03:55.interbank lending rate. This would be more than double that levied by
:03:55. > :03:59.regulators in America and Britain against Barclays for the same type
:03:59. > :04:03.of offences and it does not bode well for Royal Bank of Scotland,
:04:03. > :04:06.tipped to be the third bank to face Libor-rigging fines in the next few
:04:06. > :04:09.weeks. Where does this latest scandal leave the banking industry?
:04:09. > :04:13.I'm joined by Chris Skinner, Chairman of the Financial Services
:04:13. > :04:20.Club. Nice to see you. UBS is the next one to be dealt a very big
:04:20. > :04:23.fine. More than double Barclays? What is your reaction? I think it
:04:23. > :04:27.is the shakedown of the whole issue in the market over the last few
:04:27. > :04:31.years, of manipulation of the market. Collusion between some of
:04:31. > :04:39.the banks and fixing interest rates. There have been several other
:04:39. > :04:43.issues, insider trading. We have seen HSBC has been issuing a fine
:04:43. > :04:46.for money-laundering. They have to go back to being effective and
:04:47. > :04:54.working honestly, which they have not been for a few years. We have
:04:54. > :04:57.been reading about UBS. Some report it would admit 36 traders were
:04:57. > :05:02.involved in the manipulation of interest rates. Four UBS and others
:05:02. > :05:06.that followed, the fine is larger because they did not come forward
:05:06. > :05:13.initially. Barclays initiated the whole investigation, given the?
:05:13. > :05:17.Barclays were the first to inform the authorities. -- didn't it.
:05:17. > :05:20.Potentially there were issues of collusion between the banks. UBS is
:05:20. > :05:27.the first now to be fined and they have admitted criminal wrongdoing
:05:27. > :05:34.in Japan, which is quite significant, if confirmed. This is
:05:34. > :05:38.a fine actor will be between the US, the Swiss and UK authorities.
:05:38. > :05:41.Perhaps up to $1.6 billion, which is three times the amount of
:05:41. > :05:48.Barclays. It shows there is a real move to get the bounty system back
:05:48. > :05:52.to where it should be. Where does this leave UBS? They have had
:05:52. > :05:56.terrible story after a terrible story. They were spectacularly
:05:56. > :06:01.failed out because they were hit by the economic crisis. They lost
:06:01. > :06:06.quite a bit of money recently. And they had to settle with the US in
:06:06. > :06:10.terms of tax evasion charges. It is one thing after another. Yes but
:06:10. > :06:14.they have a new management team that is redirecting the banking. A
:06:14. > :06:18.completely new way and a new vision. The bank has been one of the last
:06:18. > :06:24.investment banks in the world. It will no longer be an investment bag.
:06:24. > :06:28.It will be a private bank and is laying off about 10,000 staff.
:06:28. > :06:33.Major cuts. About 16% of the workforce. They are going back to
:06:33. > :06:38.being a normal Swiss bank. Funny how things change. Thank you.
:06:38. > :06:41.As soon as we hear about the news regarding UBS, we will make sure we
:06:41. > :06:46.keep you up-to-date. Returning to our top story. The
:06:46. > :06:52.change of leadership in Japan. Seijiro Takeshita, Director or
:06:52. > :06:56.Mizuho International, joins me from Tokyo. Thank you for joining us.
:06:56. > :07:00.What is your reaction? Obviously, the market reaction initially is
:07:01. > :07:09.very strong to the positive side. Does that mean this is a good
:07:09. > :07:12.change for Japan or is that just the initial reaction? Well, I
:07:12. > :07:16.certainly think it will solve quite a lot of problem. A lot of people
:07:16. > :07:21.expect there will be another election, which we will have in
:07:21. > :07:25.July next year. But basically the Upper House can now veto all run
:07:25. > :07:29.over the decision-making process. All opposition it was decided by
:07:30. > :07:34.the upper house. At least the decision-making process will be
:07:34. > :07:43.smoother. Secondly, there will be a lot more proactive issues. For
:07:43. > :07:47.example, the Budget that will be formed next month. They will beat
:07:47. > :07:51.we patching a lot of relationships that were lost, especially foreign
:07:51. > :08:01.relationships, that were lost through a very sloppy management of
:08:01. > :08:01.
:08:01. > :08:05.foreign policies. -- there will be re-patching. Looking at some of the
:08:05. > :08:11.promises Shinzo Abe has made, he says they will keep flooding money
:08:11. > :08:15.into the Japanese economy until inflation is at 2%. Deflation has
:08:15. > :08:18.been one of the clouds hanging over Japan for many years. Do you feel
:08:18. > :08:25.that will work? Japan has been doing this for a long time and yet
:08:25. > :08:30.the economy is still lacklustre. The biggest worry is this diabetes
:08:31. > :08:37.that we have, which is called deflation, which is putting so much
:08:38. > :08:41.pressure on other parts of Japan. It is not easy. His policy that
:08:41. > :08:47.came out in fighting deflation is rather fragile. I think we have to
:08:47. > :08:51.wait and see if he can come up with some concrete measures. At least he
:08:51. > :08:56.is being more proactive in making these policies. We have to wait and
:08:56. > :08:59.see until the policy comes out towards the end of this month.
:08:59. > :09:03.long do you think this government can remain in power? This has been
:09:04. > :09:06.something that has hampered the economy, the fact that there has
:09:06. > :09:13.not been that political stability to see through the significant
:09:13. > :09:16.structural changes that Japan really needs to see. Absolutely.
:09:16. > :09:20.They have to go for more of a painful policy. The transition of
:09:20. > :09:25.the Japanese economy is what people are waiting for. Not these
:09:25. > :09:29.patchwork economies, putting a band aid over a deep wound. They have to
:09:29. > :09:32.go for a painful solution. Unfortunately that has not been the
:09:32. > :09:37.case by the Japanese politicians. You can see the patience of the
:09:37. > :09:42.Japanese public is running low. As you saw with this landslide victory.
:09:42. > :09:45.But also, there is a 10% decline in the number of turnouts. That means
:09:46. > :09:50.any Japanese are losing expectation and hope for the Japanese politics
:09:50. > :09:56.overall. I really think this is their last chance to basically make