05/07/2016 World Business Report


05/07/2016

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Now for the latest financial news with Aaron And World Business

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-- here is everything you need to know about the world of finance.

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The British government sits down with the UK's biggest lenders

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And all of this while Italy's government gets set to break EU

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rules and use taxpayer money to prop up its own banks.

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Indian efforts to stop people stuffing cash under their mattress -

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we look at the difficulty in spreading banking in remote areas.

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Good morning, Britain. Hello, world. This right here is a fascinating and

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exciting snapshot of the latest in the world of business and money -

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stuff that matters. Let's start with global markets.

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They now less rattled by the UK's decision to leave

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the European Union, all eyes are now focussing on the banking sector.

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If we look across over to the continent.

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Italian banks share price have hit record lows over concerns the main

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banks will be under pressure to boost their capital reserves

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Also today, UK Chancellor George Osborne is expected to meet heads

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of major banks in Britain to discuss how the country should respond

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to the decision to leave the European Union.

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OK, let's get more from all of this, or on all of this.

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With me is Peter Hahn, Professor of Banking

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at the London Institute of Banking and Finance.

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A fairly face to us all. It is great to have you on the programme. Thanks

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for in at this time! Let's play a little game. You are the Chancellor.

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I've given you that provision. You are George Osborne. I am the banks.

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What are you going to say to me? It is called jaw moving. Everybody's

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jaw moves a lot but it is really saying don't panic, carry on, don't

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get us into a spiral of withdrawing credit to exaggerate the

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recessionary environment, but banks will make their own decisions,

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assessing the risks, which are changing. And unfortunately, it's

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just more uncertainty, as mentioned earlier. Can the banks have that

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control? They're gonna say to George Osborne, especially after some

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drinks at this meeting, who are you kidding, how can we hold the title

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of being the financial hub of the world, let's be frank, certainly of

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Europe, if we're not in Europe? Well, there are two things going on.

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One is what is the future of the industry? Its access to Europe. The

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other side is recessionary Britain. Will we go into recession? Do they

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continue to dance credit? We've got an environment where we are changing

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government. -- credit. We are changing these laws. We don't know

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where this will be, this relationship, creating uncertainty

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about investment, people will be uncertain about jobs and banks will

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have to take caution on lending. They withdraw lending, all of a

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sudden confidence goes and you can almost create their recession

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without having to... Switching gears to Italy now. That would be and I

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think, wouldn't it? What's wrong with Italian banks? The

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old-fashioned story, lots of bad loans. Lots of bad loans, and their

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regulator, a European regulator, said they had to get rid of them.

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Sell them off, write them off, get rid of them, which forces Italian

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banks to take losses. Who is going to take the loss, will it be

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shareholders? Yes, and it could be bondholders. In Italy, bondholders

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are often also depositors. So, we're looking at the losses potentially on

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these loans affecting the normal deposit. Just briefly, I've got to

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wrap up and are not listening to them, there is a problem because it

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seems the government, the Prime Minister, wants to step in and use

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taxpayer money, talking about debtholders, that will really annoy

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the Germans and Brussels. They are saying it is against the rules.

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There is a simple rule in Europe, you've got to have a percent losses

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-- 8% losses on your existing ballot sheet -- balance sheet before

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getting government assistance. That will violate the European rules and

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they've just been set up. Unfortunately the problem is Italian

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banks didn't have enough institutional bondholders that were

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assumed for whom the rules were created. It sounds complicated. We

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appreciate it, thank you very much my friend. Let's talk about

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Bangladesh's huge garment industry is reeling after Friday's deadly

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Islamist attack, in which 20 people were killed.

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And foreign clothing companies are reviewing their investments.

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Uniqlo, which is based in Japan, says it's suspending

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all but essential travel to the country.

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Rico Hizon in our Singapore bureau has more.

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It is great to see you. Hey, this is the last thing Bangladesh needs,

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certainly its economy. This garment industry is pretty much the

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majority, isn't it, on how the country in? It is the

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bread-and-butter of the economy, Aaron, and the south Asian economy

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is now feeling the fallout from this terror attack on Friday. And apart

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from Uniqlo you have other companies like Mitsubishi motors reportedly

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advising workers to avoid travelling to the country this month. You have

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some 240 Japanese firms operating in the country. And Uniqlo has told its

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staff to stay at home. As you mentioned, it is a major production

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centre for retailers, including the likes of Marks Spencer and Dap and

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analysts are warning that other brands could consider shifting out

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production from Bangladesh into other less unsettled, more peaceful

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countries like Cambodia and Sri Lanka -- Gap. Some figures onto how

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important this is to the company - it is the second biggest supplier of

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clothes behind China. The garment industry is worth around $26

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billion, or ?20 billion, and accounts for around 80% of the

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exports in the country and millions of jobs. Let's hope these major

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multinational retailers don't leave. What's important right now for

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Bangladesh is security and peace and order. Indeed. Nicely said. We will

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talk to you soon, mate. Thank you. Stating kind of in the Asian region.

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India is the second most populated country on the planet and fewer than

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half have a bank account. That is something the government wants to

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change. Setting up simple banking services is proving difficult. Our

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correspondent reports. A typical bank branch in a typical Indian

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village but while it is quite basic at least these villages have a bank.

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More than 800 million people live in India's countryside and many don't

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have anywhere nearby to put their cash -- villagers. So, little wonder

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many don't have bank accounts at all. So, how to change that? Firms

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are being given the chance to open simple banks where customers can

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save and withdraw money or pay bills but not get loans or have credit

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cards. Instead of building traditional branches like these they

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will reach people through kiosks and mobile phones, which should help

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people get into the system. It is not going to plan. 11 non- finance

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specialist companies have been given licence to run these banks but

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already three have pulled out. All have decided that the scheme

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doesn't make business sense. That's frustrating for firms like Pay Point

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India whose application was rejected. It says the criteria was

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too narrow. There are companies involved in financial inclusion

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project that should have been part of this. The companies which were

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granted licence, they lacked customer understanding. The only

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difference between people who didn't get it and people who were offered

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is network vis-a-vis net worth. The reserve bank of India has defended

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the selection. He said he was unhappy with companies dropping out.

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We gave out licenses to anybody we thought had the appropriate

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qualifications to run a payment bank. Therefore when you go forward,

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do a proper assessment, don't just go for a licence because it is a

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valuable property to have, but instead to the due diligence on your

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own and when you apply it should be with the intent of fully carrying it

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out. Barring more upsets the first payment bank will launch in August

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with the rest opening over the next year but it will take time to gauge

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if India's ambition of financial inclusion is on the right path. OK,

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I've got to leave you with this. Talking about the legendary

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competitive ETA. This man ate down 70 hotdogs in ten minutes on Monday,

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reclaiming his crown at the Nathan's Hotdog Eating Contest, marking a

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return to form. Last year he saw his winning streak Rogan by Matt" mega

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toad". I am not making it up. And this woman chew down 38.5 hotdogs.

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Don't forget you can get in touch with me and some

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I will be back with Adnan to take a look at the papers, tata.

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Thousands of pupils in England could be affected by a teachers

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