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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Day Bakut podcast. Good morning is

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Speaker 2: find out the nineteenth of December. I'm Caroline Hepka in

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Speaker 2: London and I'm Stephen Carolin Brussels. Coming up today we delivered.

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Speaker 1: EU leaders agree a landmark deal to lend Ukraine ninety

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Speaker 1: billion euros using joint borrowing.

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Speaker 2: The Bank of Japan lifts rates to their highest level

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Speaker 2: since nineteen ninety five, but a lack of clarity on

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Speaker 2: the path ahead drives yields to multi decade highs.

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Speaker 1: Plus, internal documents reveal how alone from the billionaire Western

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Speaker 1: family helped trigger the collapse of a twenty three billion

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Speaker 1: euro empire.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: European Union leaders have reached a landmark agreement to lend

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Speaker 1: Ukraine ninety billion euros for the next two years. The

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Speaker 1: decision came in the early hours of this morning, after

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Speaker 1: marathon talks in Brussels. Under the agreement, to the E,

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Speaker 1: you will raise joint debt backed by the block's budget

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Speaker 1: to fund the loan. That's a significant pivot from a

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Speaker 1: previous plan favored by many countries to use Russian assets

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Speaker 1: frozen on EU soil. Speaking after the deal, EU cancel

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Speaker 1: President Antonio Costas set out how the agreement would still

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Speaker 1: be tied back to those Russian assets.

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Speaker 3: As a matter of urgency, we will provide a loan

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Speaker 3: backed by the European Union budget. This will address the

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Speaker 3: urgent financial needs of Ukraine. The Union reserves its right

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Speaker 3: to make use of the immobilized asset to repay this loan.

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Speaker 3: At the same time, we gave a mandate to the

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Speaker 3: Commission to continue working on the reparation loan based on

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Speaker 3: Russian immobilized assets.

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Speaker 1: Antonio Costa, speaking there as leaders hope the deal will

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Speaker 1: strengthen Key's hand the negotiating table and keep the war

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Speaker 1: torn country afloat. Speaking after the agreement, Germany's Chancellor friederate

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Speaker 1: Martz described the deal as a pragma good solution. Francis

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Speaker 1: President Emmanuel Macron said the absence of this decision would

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Speaker 1: have been a disaster, but that Europe will have to

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Speaker 1: find a way to engage directly with Vladimir Putin as

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Speaker 1: the US that pushes ahead with peace talks now.

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Speaker 2: Japanese bond yields have jumped after the Bank of Japan

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Speaker 2: hiked interest rates to the highest level since nineteen ninety five.

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Speaker 2: While the bank's quarter point moved to zero point seventy

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Speaker 2: five percent was widely expected, traders are focusing on the

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Speaker 2: lack of clear guidance on the timing of future hikes.

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Speaker 2: Here is our Japanese economics reporter, Paul Jackson.

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Speaker 4: It's not quite back to the nineteen eighties, but it's

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Speaker 4: suddenly back to the nineteen nineties. This is the highest

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Speaker 4: interest rate since the nineties, three years since it's been

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Speaker 4: this high. And we've seen the en weeken a tad

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Speaker 4: after the decision, and we've also seen benchmark yields arise

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Speaker 4: above two percent, and they haven't really been at that

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Speaker 4: level regularly since the late nineteen nineties.

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Speaker 2: JGB yield's currently trading at two sports zero two. Paul

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Speaker 2: Jackson speaking there this after Bloomberg reported last week that

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Speaker 2: Bank of Japan officials see it as likely than interest

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Speaker 2: rates will eventually rise above zero point seventy five percent

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Speaker 2: before the titening cycle ends.

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Speaker 1: The Bank of England delivered it's expected rate cut yesterday,

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Speaker 1: but as policymakers are warning there's limited room for more reductions.

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Speaker 1: Britain Central Bank moved its base rate to a three

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Speaker 1: year low of three point seventy five percent. The Governor,

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Speaker 1: Andrew Bailey says recent inflation data has been a positive surprise.

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Speaker 5: I think now that we're on a path where we'll

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Speaker 5: probably be around this level for a few months, but

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Speaker 5: we think that come to spring April May time we

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Speaker 5: should see another quite sharp drop and take us hope

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Speaker 5: to run target. So we're going to come back to

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Speaker 5: targets sooners than we forught, so that's encouraging. All of

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Speaker 5: us is are encouraging.

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Speaker 1: Bailey's decision to cost rates for a sixth time comes

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Speaker 1: as concerns in Britain shift away from persistent inflation and

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Speaker 1: towards a stuttering economy and labor market. Despite that, a

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Speaker 1: new survey of consumers suggests sentiment has improved in the

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Speaker 1: run up to Christmas. JFK's gauge for big ticket spending

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Speaker 1: rows to minus eleven in December, of four points from

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Speaker 1: November and the highest score since January twenty twenty two.

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Speaker 2: In other news, officials have found the dead body of

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Speaker 2: the suspected gunman in a rampage at Brown University. The

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Speaker 2: suspect was named as Claudio Manuel Nevis Valente, forty eight

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Speaker 2: year old Portuguese national who was a former student at Brown.

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Speaker 2: The chief of police in the town of Providence, Oscar Perez,

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Speaker 2: says the suspected shooter took his own life.

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Speaker 6: An individual was identified as Claudio Nevis Olynthi and he

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Speaker 6: was a forty eight year old man. He was a

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Speaker 6: Portuguese national and his last name, non Adress, was in Miami, Florida.

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Speaker 2: The authority say there is no longer a threat to

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Speaker 2: the public and a man hunt which had lasted nearly

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Speaker 2: a week. Two people were killed and nine were wounded

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Speaker 2: in the mass shooting lost Saturday at Brown University.

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Speaker 1: TikTok is being acquired by a group of buyers led

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Speaker 1: by Oracle after a long delayed plan to separate from

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Speaker 1: its Chinese parent company. Byte Dance. CEO show Too told

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Speaker 1: employees about binding agreements to create a US joint venture

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Speaker 1: majority owned by American investors in an internal memo seen

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Speaker 1: by Bloomberg. The news comes after a national security law

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Speaker 1: passed under former US President Joe Biden mandated byte Dance

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Speaker 1: and TikTok Us to have no operational relationship. Our senior

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Speaker 1: editor for Technology and Strategic industries. Michael Shepherd says, we

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Speaker 1: still don't have all the information, and yet the.

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Speaker 7: Security guarantees are going to be one of the big

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Speaker 7: questions out there, and the other will be has China

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Speaker 7: signed off on this as well, and we are waiting

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Speaker 7: to see what Beijing will see and if it has

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Speaker 7: been part of the tree conversation in books.

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Speaker 1: Michael Shepherd speaking there, the terms outlined in choose note

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Speaker 1: to employees appear to leave the door open for bitedowns

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Speaker 1: to potentially retain oversight of key parts of US TikTok.

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Speaker 1: The dealers expected to close on the twenty second of January,

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Speaker 1: but Chinese regulators have yet to say whether they'll approve

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Speaker 1: the transaction.

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Speaker 2: Wells Fargo has been sued by a former manager who

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Speaker 2: claims the bank faked its diversity commitments. Joseph Bruno says

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Speaker 2: that he was fired after objecting to what he identified

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Speaker 2: as the lenders practice of interviewing minority candidates for jobs

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Speaker 2: that were already filled. The allegations made by him and

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Speaker 2: others sparked a criminal investigation led by the US Department

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Speaker 2: of Justice into whether the bank violated civil rights laws.

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Speaker 2: The probe was later closed without charges, according to a

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Speaker 2: regulatory filing. Wells Fargo didn't immediately respond to the news.

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Speaker 2: The bank has previously called Bruno's claims baseless and said

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Speaker 2: that the fake interviews were and widespread if they happened

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Speaker 2: at all. Those are some of our top stories for

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Speaker 2: you this morning. Let's just go through the markets. With

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Speaker 2: that Bank of Japan hike, we are watching the Japanese yeend,

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Speaker 2: which is weakening three tenths lower against the dollar, even

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Speaker 2: though we've seen a spike in yields. Ten year JGB

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Speaker 2: yields have moved five basis points higher, so two spots

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Speaker 2: zero two for the tenia benchmark, the nicky rallying more

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Speaker 2: than one percent the year, a little change up in

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Speaker 2: stock features down three tenths after the USCPI reading yesterday,

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Speaker 2: cooling tenure. US Treasury yields adding two basis points this morning,

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Speaker 2: Bloomberg Dollar Spot index is ticking a little bit higher.

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Speaker 2: That is a look at the markets.

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Speaker 1: In a moment, we'll bring you more on that major

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Speaker 1: EU deal to provide financial support to Ukraine, plus why

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Speaker 1: a private loan from the owner of selfadgees became a

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Speaker 1: flashpoint in the collapse of a twenty three billion euro empire.

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Speaker 1: But another story that we've been reading this morning or watching,

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Speaker 1: I should say, if you're being currently swamped to a

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Speaker 1: corporate Christmas messages at Sparethard for the top manager to Blackstone.

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Speaker 1: To celebrate the private equity giant's fortieth birthday, they produced

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Speaker 1: a special holiday video about their midlife crisis. Let's take

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Speaker 1: a listen.

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Speaker 2: Earning forty it's a really big deal.

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Speaker 4: Did you get a nose ering?

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Speaker 5: I've always had this.

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Speaker 8: Some of us are in denial that we've become a

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Speaker 8: mature organization.

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Speaker 9: Hey, guys, let's start buying sports teams. Okay, we could

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Speaker 9: buy Ferraris. No, let's buy Ferrari.

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Speaker 4: Yeah, we're definitely having him in life crisis?

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Speaker 8: Are we rolling?

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Speaker 7: Even Steve's going through it well, I was thinking of

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Speaker 7: becoming a DJ.

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Speaker 9: Steve Schwarzman DJ He'd crush as.

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Speaker 1: That was Golbin Saxeo, David Solomon making a cameo at

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Speaker 1: the end there in that Blackstone video. Other notable appearances.

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Speaker 1: Danny DeVito's in it as well. It's actually over seven

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Speaker 1: minutes long. I mean it's quite the storytelling. Yes, very

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Speaker 1: impressive to have put this together. But also I mean,

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Speaker 1: these people whose day job is not acting did a

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Speaker 1: not bad job.

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Speaker 2: I have to say, I don't understand now that you

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Speaker 2: have to be a money manager but be able to

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Speaker 2: moonlight as a late night talk show host slash comedy

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Speaker 2: you know. Genius. Of course, it's beautifully edited and carefully

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Speaker 2: thought out. I mean, all powered to them. I think

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Speaker 2: it was a good effort and it is actually quite funny.

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Speaker 1: Yeah, and look, it's also part of the business message

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Speaker 1: they're trying to get across too, as they're actually opening

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Speaker 1: up their business to more This was everyday investors or

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Speaker 1: more retail investors as well. Will they be won over

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Speaker 1: by guitar riffs and eighties hairstyles? Is not the worst

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Speaker 1: campaign I could think after try and get people's attention.

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Speaker 2: Yeah, love it. Okay, Well, that's something that has caught

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Speaker 2: our attention. I'm sure it will be doing the rounds today,

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Speaker 2: no doubt. But let's also think about our top story

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Speaker 2: today and the deal reached by EU leaders to use

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Speaker 2: common debt for a loan to Ukraine of ninety billion

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Speaker 2: euros over the next two years. Now, Steve and I

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Speaker 2: wanted to ask you about the significance of this deal

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Speaker 2: as the euse foreign policy of kaya Kalas was in

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Speaker 2: the radious studio with us yesterday. She told you that

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Speaker 2: she only saw fifty to fifty chands of any agreements.

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Speaker 2: But it was also the fact that it took so

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Speaker 2: long to get to this deal and went on into

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Speaker 2: the wee small hours of the morning.

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Speaker 5: Yeah.

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Speaker 1: Indeed it was just before three am local time here

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Speaker 1: when the deal was actually announced. The message going into

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Speaker 1: this is that a deal had to be found because

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Speaker 1: Ukraine's financial situation was so powerless in the coming months

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Speaker 1: that the EU needed to step up and do something.

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Speaker 1: Kaya Klass wasn't overly optimistic when we spoke to her

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Speaker 1: yesterday morning, and that was because of the continued opposition

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Speaker 1: from Belgium to a plan to use frozen Russian assets

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Speaker 1: that are held mostly at Euroclear in muscles to back

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Speaker 1: the ninety billion euro loan for Ukraine. Now, there was

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Speaker 1: a second option on the table, or some diplomatsa described

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Speaker 1: as being on the shelf in the run up to

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Speaker 1: this meeting, and this would have been using the EU's

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Speaker 1: own budget to back joint borrowing for the loan for Ukraine.

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Speaker 1: It was seen as much less likely going into this

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Speaker 1: meeting and actually that is closer to what we got

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Speaker 1: in the final version of the agreement. So the ninety

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Speaker 1: billion eurolone will come from joint EU debt issuance using

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Speaker 1: the headroom that's available in the EU's budget currently. That

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Speaker 1: was passed with unanimous agreement. But Ukraine will only need

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Speaker 1: to pay back that loan once it receives reparations from Russia,

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Speaker 1: and the EU has reserved the right to make use

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Speaker 1: of those frozen Russian assets to finance the loan, and

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Speaker 1: those assets will stay frozen until the reparation's loan is paid,

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Speaker 1: so there is still a link to those frozen Russian

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Speaker 1: assets in this deal, even though the initial financing will

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Speaker 1: come from joint EU borrowing. Now the conclusions do note

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Speaker 1: that this deal, this compromise that was found, it doesn't

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Speaker 1: actually will not have an impact on the financial obligations

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Speaker 1: from three member states Hungary, the Czech Republic and Slovakia.

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Speaker 1: So that means that if there were to be a repayment,

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Speaker 1: that this wouldn't fall on those member states. So that

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Speaker 1: clearly gives an indication of what the negotiations were like

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Speaker 1: behind the scenes, but it was signed off on by

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Speaker 1: all those countries that's the nitty gritty. If we talk

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Speaker 1: about the significance, this is a huge achievement for EU leaders.

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Speaker 1: They've demonstrated despite all of the criticism, that they can

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Speaker 1: do a deal. Kayaklas told us this yesterday that a

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Speaker 1: deal would send a signal of support to Ukraine, but

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Speaker 1: also to Russia that the EU is still present and

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Speaker 1: supporting Kiev, and also to the US that the EU

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Speaker 1: is stepping up where the US is pulling back. That

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Speaker 1: doesn't mean that it was an easy solution, a very

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Speaker 1: long day of negotiations, as we mentioned. I can tell you, Carl,

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Speaker 1: and I'm normally the first person in this office in

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Speaker 1: the morning, and the time that I arrived, the coffee

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Speaker 1: cups were still warm from our colleagues who'd been here

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Speaker 1: all night reporting on this as well. There are, of

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Speaker 1: course more details to be worked out, but it is

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Speaker 1: nonetheless a headline that e uias wanted to see this morning,

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Speaker 1: that there was a deal.

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Speaker 2: Okay, I think that's very interesting then that it is

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Speaker 2: being seen in this positive light. And want to bring

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Speaker 2: in Tony Haupin, who leads our team covering Russia for more. Tony,

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Speaker 2: very good to speak to you. How important do you

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Speaker 2: think this deal is from your perspective for Ukraine, Karl Well.

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Speaker 9: I mean Ukraine had said basically it was a matter

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Speaker 9: of their survival whether they got this money or not.

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Speaker 9: As even know of the US has pulled back, it's

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Speaker 9: provided practically no financing this year for Ukraine. And if

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Speaker 9: EU had blinked and said that we're not able to

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Speaker 9: provide financing going into twenty twenty six, Ukraine was facing

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Speaker 9: a really dire situation to fund its government and to

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Speaker 9: continue supporting its defense much beyond spring. The deal now

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Speaker 9: allows Ukraine to stand up and say, well, look, we

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Speaker 9: have the support of our European allies. We are able

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Speaker 9: to continue this war effort. And that's the signal to

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Speaker 9: Russia as well that it's not going to step back

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Speaker 9: and that therefore it can't be browbeaten into some kind

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Speaker 9: of unacceptable deal. That it's there to negotiate, but it

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Speaker 9: can't be forced into surrender.

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Speaker 1: But the frozen assets are still in line to be

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Speaker 1: used eventually to repay this loan if there isn't reparations

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Speaker 1: paid to Ukraine. Of course, part of the hesitancy of

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Speaker 1: using those assets in the first place was the risk

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Speaker 1: of retaliation from Russia. How is Moscow likely to respond

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Speaker 1: to this plan?

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Speaker 9: Yeah, so the Central Bank of Russia's been making very

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Speaker 9: threatening noises in the last week or so. It's begun,

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Speaker 9: for example, legal action in Russia against europe Clear for

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Speaker 9: in access to two hundred billion euros. It's also yesterday

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Speaker 9: it threatened to extend legal action to European banks where

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Speaker 9: Russia's frozen assets were stored. And it was basically raising

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Speaker 9: the tensions and making an attempt really to see if

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Speaker 9: some members of the European Union would blink them back away.

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Speaker 9: On one level, you could say that that actually had

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Speaker 9: some effect, right because in the end they couldn't find

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Speaker 9: consensus on this original plan for frozen assets to raise

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Speaker 9: the money back by the U budget. But it's still

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Speaker 9: the fact that the Russian assets are frozen, and that's

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Speaker 9: going to be a bonus contention for years to come.

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Speaker 2: Yes, it is. So let's see then what happens with this.

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Speaker 2: But a very important day when it comes to Ukraine. Nonetheless, Tony,

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Speaker 2: thank you for being with us. Tony Happin, who leads

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Speaker 2: our team covering Russia. Stay with us. More from Bloomberg

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Speaker 2: daybaqube coming up after.

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Speaker 1: This Rene Benko, the Austrian property tycoon who built a

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Speaker 1: twenty three billion euro global empire spanning Newark's Chrysler Building

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Speaker 1: to London's Selfridge's department store before his company signa prime

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Speaker 1: selection collapsed, faces potential new fraud charges. According to a

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Speaker 1: dossier compiled by Austrian authorities and examined by Bloomberg new

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Speaker 1: Benko denies wrongdoing. But let's dig into the details of

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Speaker 1: this story with our Vienna bureau chief Martin Edder. Martin,

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Speaker 1: good to talk to you. These documents are the most

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Speaker 1: detailed look at the inner working of Benko's business. Tell

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Speaker 1: us more about who he is and he's another arrest

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Speaker 1: since January.

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Speaker 8: Good morning. So, Rene Benko is a self made businessman.

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Speaker 8: He he was once one one of the richest in Austria,

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Speaker 8: you know, after the red Bull family, Mattershits and the

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Speaker 8: Porsche family. He owned a number of high profile luxury

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Speaker 8: real estates across Europe. You could mention the self Redges

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Speaker 8: department store, but also the Hotel Bower in Venice and

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Speaker 8: cadiv in Berlins. And his story is very much that

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Speaker 8: of the zero interest rate era. You know, he was

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Speaker 8: investing in real estate when he could get cheap loans

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Speaker 8: and and and property prices were rising, so that that

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Speaker 8: obviously faced headwinds when when the interest rates went higher

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Speaker 8: after the Russia's invasion of Ukraine. So he's faced a

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Speaker 8: number of problems. His companies are insolvent and him personally,

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Speaker 8: he's been in pre trial detention in since January. He's

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Speaker 8: been sitting in a They also have started to prison

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Speaker 8: in Vienna's ninth District and prosecutors have taken him into

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Speaker 8: court on two accounts of insolvency fraud. He has appealed

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Speaker 8: to the verdict so far and he denies wrongdoing. So

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Speaker 8: that's largely where we stand in in Banco's personal fight

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Speaker 8: with justice.

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Speaker 2: Okay, so when it comes to his company Signa, there

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Speaker 2: are quite a number of interesting names and players involved

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Speaker 2: in this story. How did Canada's Western Family end up

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Speaker 2: being caught up in the insolvency.

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Speaker 8: Yeah, so this is a very interesting story and this

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Speaker 8: is what we focus on in our piece today. The

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Speaker 8: Western Family obviously they own a lot of retail businesses

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Speaker 8: in North America and they used to be the owners

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Speaker 8: of the Selfridges department store in London. They owned it

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Speaker 8: for eighteen years and sometime around the COVID pandemic, they

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Speaker 8: said that, well, maybe the retail is such concentration in

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Speaker 8: retail is not the best idea. So they started looking

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Speaker 8: for a buyer. And here comes ren A Banco, who

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Speaker 8: already owned luxury department stores stores in Switzerland and Berlin

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Speaker 8: in Germany. And obviously he was a good candidate, and

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Speaker 8: he's a very convincing person, very charming person, like many Austrians,

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Speaker 8: and he put an appropriate deal on the table, and

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Speaker 8: so they agreed to the transaction at the end of

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Speaker 8: twenty twenty one. And it was an interesting time because

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Speaker 8: consumers were returning to in person purchases, the mood was

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Speaker 8: somewhat buoyant after COVID restrictions, and there was really a

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Speaker 8: sense that retail might be a booming industry in the

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Speaker 8: coming years. What they didn't didn't understand, at least on Benco.

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Speaker 8: For Benco, was that that interest rates would start rising.

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Speaker 8: You know, this was just before Russia invaded Ukraine. So

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Speaker 8: they they signa undoubtedly already faced difficulties in trying to

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Speaker 8: close the deal, coming up with the financing. And this

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Speaker 8: is the link where the Western family got involved with

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Speaker 8: the broader insolvency of Signa. The Western Family provided a

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Speaker 8: three hundred million pound vendorlone to help close the deal.

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Speaker 8: So the whole deal was worth four billion pounds and

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Speaker 8: the Western family was willing to put three hundred million

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Speaker 8: pounds in to help the financing. This is not uncommon,

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Speaker 8: but it is sort of a commitment to the transaction

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Speaker 8: and over the course of the insolvency, which in Earnest

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Speaker 8: the financial difficulty started in twenty twenty three, but the

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Speaker 8: insolvencies were fired at the end of twenty twenty three.

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Speaker 8: That left West the Western family with the large part

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Speaker 8: of that loan outstand and they're still fighting to get

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Speaker 8: that money back.

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Speaker 1: So where do the investigations stand in Austria Now?

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Speaker 8: There are a number of invest lines of investigations. So

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Speaker 8: so far the prosecutors have filed two charges of insolvency

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Speaker 8: fraud against Benko himself. Obviously he has denied wrongdoing and

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Speaker 8: he's fighting those verdicts. So one of the verdicts is

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Speaker 8: a two year prison sentence for donating three hundred thousand

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Speaker 8: euros to his mother just before his insolvency. So basically

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Speaker 8: prosecutors say that that was a transaction that hid some

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Speaker 8: of his private wealth from creditors in a time when

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Speaker 8: he shouldn't have been making those payments. The other strand

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Speaker 8: is quite a similar insolvency fraud case. He locked up

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Speaker 8: some of his luxury watchers in a safe and prosecutors

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Speaker 8: say that that was also legal from an insolvency process

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Speaker 8: a standpoint, But prosecutors are also looking at broader fraud

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Speaker 8: insolvency fraud, and embezzlement charges. Benko has denied wrongdoing on

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Speaker 8: these arm but those have yet to go to court.

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Speaker 8: And the documents that we reviewed relate to one of

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Speaker 8: these strands and and how Renee Benco allegedly used some

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Speaker 8: money that he he collected from shareholders for a capital

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Speaker 8: increase and and ran it through a network of companies

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Speaker 8: and then used that money and presented that money as

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Speaker 8: his own arm and sort of the Western links comes

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Speaker 8: here that he actually used some of that money as

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Speaker 8: part of the financing difficulties to try and repay the

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Speaker 8: Western loan.

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Speaker 2: Above.

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Speaker 8: Apart from that, there's also a few arm arbitration cases.

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Speaker 8: We have seen court filings from some of his most

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Speaker 8: prominent investors, Mubadala in the middle East and some other

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Speaker 8: higher file family officers and well this insolventy administrators are

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Speaker 8: still trying to sift through the rubble of his empire.

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Speaker 8: And I can tell you lawyers and courts will be

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Speaker 8: busy with this signal story for a number of years.

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Speaker 8: In Pieno.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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