19/01/2017 World Business Report


19/01/2017

The latest business news with informed analysis from the world's financial centres.


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Now for the latest financial news with World Business Report.

:00:00.:00:00.

Brexodus fears grow in the City of London, as leading firms warn

:00:00.:00:17.

thousands of staff may now be relocated.

:00:18.:00:24.

No arrest warrant for Samsung boss Jay Y Lee.

:00:25.:00:27.

but prosecutors vow to continue the corruption

:00:28.:00:29.

We'll be live in Seoul in just a moment.

:00:30.:00:53.

We start here in London, where fears of a costly Brexit

:00:54.:00:58.

Leading firms are now weighing up moving thousands of staff out

:00:59.:01:03.

of the UK, after Prime Minister Theresa May confirmed plans to leave

:01:04.:01:06.

the European Single Market as well as the EU,

:01:07.:01:09.

On Wednesday, the boss of HSBC said he's preparing to move

:01:10.:01:15.

around 1000 of his 5000 London staff to Paris.

:01:16.:01:18.

That would mean around 20% of its European revenue leaving

:01:19.:01:20.

the UK, worth several billion dollars.

:01:21.:01:22.

also told the BBC that 1000 jobs may go in London as a result of Brexit,

:01:23.:01:27.

again around a fifth of its workforce.

:01:28.:01:29.

And according to a report in the Handelsblatt newspaper

:01:30.:01:31.

in Germany this morning, Goldman Sachs may halve its London

:01:32.:01:34.

workforce, moving 3000 staff to New York and Continental Europe,

:01:35.:01:37.

Goldman though says it has yet to make a decision on the matter

:01:38.:01:52.

However, some believe this could be the tip of the iceberg

:01:53.:01:56.

Back in October, consultants Oliver Wyman warned 75,000 UK

:01:57.:02:07.

jobs are at risk if financial companies based here lose the right

:02:08.:02:11.

Theresa May is addressing the World Economic Forum

:02:12.:02:14.

in Davos today, she will also be meeting the bosses of some

:02:15.:02:17.

of the big banks including Goldman Sachs and JP Morgan

:02:18.:02:20.

Yesterday, Pierre Moscovici, former French Finance Minister,

:02:21.:02:29.

now EU commissioner for Economic and Financial Affairs,

:02:30.:02:32.

Taxation and Customs, spoke to our economics

:02:33.:02:33.

He denied the EU would try to punish Britain for leaving the EU.

:02:34.:02:48.

It is not about punishment. I said that we need to find a balanced and

:02:49.:02:58.

positive agreement. I said we are friends and must work together. They

:02:59.:03:05.

even said so in the European Parliament this morning in Davos.

:03:06.:03:10.

But we must be clear that you cannot have all the advantages of being a

:03:11.:03:15.

member of the club when you are out of the club. Our British friends

:03:16.:03:24.

will bleed invented clubs. -- probably. They can understand that.

:03:25.:03:32.

There you. That is one view. And now for another view.

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Olivier Vardakoulias is Senior Economist

:03:35.:03:35.

The plot has thickened. No surprise at all to hear some of the big

:03:36.:03:48.

banks, global banks, who have big operations in London, are now

:03:49.:03:53.

rethinking. Yes. That is because they perceive she has made

:03:54.:04:02.

unattainable pledges. She will go for a hard Brexit, exiting the

:04:03.:04:10.

Common Market and the EU and also the common union. What they are

:04:11.:04:15.

afraid of, and rightly so, is basically that this will not

:04:16.:04:21.

guarantee the so-called passport writes. Explain those rights for

:04:22.:04:26.

those uninitiated in financial services. Any bank located, or

:04:27.:04:33.

investment bank, located in the country, has the right to do

:04:34.:04:38.

business in any European country, without needing to have an agreement

:04:39.:04:43.

with individual member states of the EU. That is why, for example, you

:04:44.:04:47.

have many American investment banks based in London. That is because

:04:48.:04:52.

they can do business in whatever European country freely. That will

:04:53.:04:58.

not be the case if the UK does not manage to reach a special agreement

:04:59.:05:03.

for accessing the special European market. These banks will have to

:05:04.:05:07.

negotiate and basically the UK will have to negotiate individually with

:05:08.:05:11.

different member states. Quite frankly, the easy solution for these

:05:12.:05:15.

banks is to relocate part of their activities on the continent. Not all

:05:16.:05:20.

of them, part of them. It is interesting. When you look at the

:05:21.:05:24.

sentiment from both sides, like Donald Tusk saying it will be a

:05:25.:05:28.

difficult negotiation process, Theresa May saying if they do not

:05:29.:05:33.

get the vote they want they will exit completely. In that situation,

:05:34.:05:39.

what do we see for the future of the city of London in terms of how it

:05:40.:05:43.

will operate? She implied in her speech that she will change the

:05:44.:05:48.

goalposts in terms of how things go in London, taxing, regulation, so it

:05:49.:05:54.

becomes better on the ground. Yeah. I think there are two things here.

:05:55.:06:02.

Political posturing, if you want. On the one hand, you know, the way that

:06:03.:06:06.

Theresa May presented that to European partners is that they will

:06:07.:06:13.

withdraw from the European Court of Justice and so on. And then I will

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try to basically seek market access without being part of the EU. And if

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you do not do what I want, we will move offshore. Basically a tax haven

:06:29.:06:34.

in the UK, that kind of model. She will try to liberalise the financial

:06:35.:06:40.

sector even more, at our risk and peril, as the 2008 crisis showed,

:06:41.:06:47.

and replaced the job losses from respectable bank activities by

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attracting things like hedge funds or other financial activities. Now,

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this is a very risky strategy. Not just because obviously it can

:06:57.:07:00.

trigger different kinds of financial fragility within the system, but it

:07:01.:07:04.

is also bad news for British working families. Turning the UK into a bank

:07:05.:07:12.

haven will not help those who voted to leave the EU. Very interesting.

:07:13.:07:17.

Thank you for your time today. I am sure I will talk to you again before

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we leave the EU officially. Thank you for coming in. We will go to

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South Korea next. That is where a growing

:07:24.:07:26.

corruption scandal has led to the impeachment

:07:27.:07:28.

of President Park Geun-hye, and has been threatening to suck

:07:29.:07:31.

in the boss of Samsung, Some good news for him

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in the past few hours though. Mr Lee was held by prosecutors

:07:35.:07:37.

overnight on Wednesday, but early this morning he's been

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allowed to go home after a court in Seoul threw out

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a warrant for his arrest. Prosecutors wanted him arrested

:07:45.:07:46.

on suspicion of bribery, embezzlement and perjury,

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charges he denies. Let's talk to the BBC's

:07:49.:07:53.

Kevin Kim in Seoul. He has been covering this for us. I

:07:54.:08:07.

hope you are there. Tell us more about the latest and what happens

:08:08.:08:15.

today. The last 24 hours were some of the longest and most dramatic for

:08:16.:08:23.

Jay Y Lee. At the city jail, the head of the biggest company in South

:08:24.:08:29.

Korea waited through the night until there was a decision to release in.

:08:30.:08:33.

Early in the morning the judges said there was no sufficient reason to

:08:34.:08:37.

put him behind bars. He was then seen walking out of jail with a

:08:38.:08:41.

slight smile. Apparently he then went straight to work. I understand

:08:42.:08:47.

the prosecutors are saying we will pursue this. We will not waver. They

:08:48.:08:53.

seem to be very determined despite the decision of the judge. That is

:08:54.:08:58.

correct. The message Jay Y Lee wanted to send is business as usual.

:08:59.:09:04.

But this may not be the end of the problems for the chief of Samsung.

:09:05.:09:08.

The company has been accused of bribery. He may still have to face a

:09:09.:09:13.

trial if prosecutors face charges. The allegations are that he gave

:09:14.:09:17.

millions of dollars in return for the votes of the national pension

:09:18.:09:22.

fund in a big restructuring of the company. But in the meantime, Jay Y

:09:23.:09:28.

Lee still stays a free man. Great to talk to you again. Thank you for

:09:29.:09:33.

now. He was in Seoul for us. Squeezing in some other stories.

:09:34.:09:35.

Renegotiating the Nafta trade deal with Canada and Mexico is the Trump

:09:36.:09:39.

administration's top trade priority, according to commerce secretary

:09:40.:09:41.

He was speaking to US senators at a confirmation hearing

:09:42.:09:44.

Mr Ross said China was the "most protectionist" country among large

:09:45.:09:48.

economies, but said Nafta is "logically,

:09:49.:09:50.

the first thing for us to deal with."

:09:51.:09:56.

Shares in TV streaming service Netflix soared as much as 9%

:09:57.:09:59.

on the news it is growing much faster than expected.

:10:00.:10:02.

Netflix added just over seven million new subscribers in the last

:10:03.:10:05.

three months of 2016, a third more than forecast,

:10:06.:10:08.

and expects to break the 100 million mark by the end of March.

:10:09.:10:11.

Netflix has invested heavily in original content while ending

:10:12.:10:13.

deals with top studios, a gamble that is paying off.

:10:14.:10:27.

Financial markets. A mixed day. Good news for Japan. The Japanese yen

:10:28.:10:37.

weakening. You can see the pound is keeping a close eye on it. Janet

:10:38.:10:42.

Yellen talking yesterday in San Francisco saying that rates in the

:10:43.:10:45.

US could be up again. They are predicting the month of March. That

:10:46.:10:51.

is what is happening. I will see you again soon as we will review the

:10:52.:10:56.

stories in the news in just a moment.

:10:57.:11:02.

A disabled man has won his case at The Supreme Court,

:11:03.:11:05.

after a dispute over wheelchair space on a bus.

:11:06.:11:07.

It means bus drivers will have to do more

:11:08.:11:11.

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