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Speaker 1: Good morning.

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Speaker 2: It's Wednesday, the twenty sixth of July in London. This

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Speaker 2: is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll. Coming

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Speaker 2: up today. Alison Rose quits as the boss of nat

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Speaker 2: West after a political storm over the closure of former

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Speaker 2: politician Nigel Farag's account It's a bumper day of bank

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Speaker 2: earnings in Europe with Santan Der, Deutsche Bank and Lloyd's

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Speaker 2: among those reporting, and will bring you details from the

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Speaker 2: earnings of tech giants Alphabet and Microsoft as they funnel

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Speaker 2: more money into AI ventures. Let's start with a roundup

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Speaker 2: of our top stories. The CEO of nott West, Alison Rose,

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Speaker 2: is stepping down after admitting she discussed the closure of

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Speaker 2: Nigel Farage's bank accounts with a BBC journalist. The Rose

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Speaker 2: called her comments about the former politicians relationship with the

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Speaker 2: bank a serious error of judgment, but speaking last night

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Speaker 2: before she quit, Nigel Farag said his confidentiality had been broken.

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Speaker 3: I mean anybody, even down to a junior clark in

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Speaker 3: a bank who've breached the confidence of a customer would

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Speaker 3: have to go. This is a non partis anssue. This

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Speaker 3: is not left or right wing politics. This is about

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Speaker 3: the British banking industry. It's about our financial services industry.

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Speaker 3: It's about the biggest employer in this country at MASSES.

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Speaker 2: Last week, Nigel Farage told Bloomberg Radio there should be

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Speaker 2: a parliamentary inquiry into the decision by Coots to close

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Speaker 2: his account. NatWest chair Howard Davies described to Alison Rose's

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Speaker 2: departure as a sad moment. He's due to retire next year,

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Speaker 2: leaving questions over the future leadership of the bank. The

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Speaker 2: British billionaire Joe Lewis, the owner of Tottenham Hartsburg football club,

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Speaker 2: has been charged with insider trading in the United States.

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Speaker 2: Boomberg Sewing Parts reports.

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Speaker 4: Joe Lewis, the founder of investment firm Tavistock Group, faces

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Speaker 4: more than a dozen charges, including securities fraud. Prosecutors in

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Speaker 4: New York claim the British billionaire passed on inside information

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Speaker 4: from companies he was an investor into, Friends, employees, and

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Speaker 4: Romantic Partners. Prosecutors also accused him of passing on non

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Speaker 4: public information about several other companies. In a statement, his lawyer,

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Speaker 4: David Zornow, said the US government has made an egregious

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Speaker 4: error in judgment in charging mister Lewis, an eighty six

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Speaker 4: year old man of impeccable integrity and prodigious accomplishments. Prosecutors

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Speaker 4: have not announced Lewis's arrest with the indictments in London.

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Speaker 4: I'm une Pots Bloomberg day Break.

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Speaker 2: Europe turning to some as today's banking results. Deutsche Bank

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Speaker 2: whether the trading slowed down better than analysts had been expected,

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Speaker 2: at fixed income trading declining ten percent in the second quarter.

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Speaker 2: It's the first indication of how Europe's investment banks are

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Speaker 2: firing over a challenging quarter for the business. In retail banking,

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Speaker 2: Santander's earnings beat estimates as higher interest rates in Europe

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Speaker 2: boosted revenue. The Madrid based giant posted net income of

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Speaker 2: two point six seven billion euros in the second quarter,

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Speaker 2: exceeding the analyst forecast of two point five eight billion euros.

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Speaker 2: We've also had earnings out from Lloyd's in the past

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Speaker 2: few minutes as well, reporting statutory pretax profit for the

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Speaker 2: second quarter that missed the average analyst estimates, that figure

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Speaker 2: coming in at one point six one billion pounds. The

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Speaker 2: estimate had been for one point seven to two billion pounds.

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Speaker 2: That's the statutory pre tax profit figure from Lloyd's. Both Google,

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Speaker 2: parents Alphabet and Microsoft beat analyst expectations for second quarter

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Speaker 2: revenue in their results. Bloomberg Intelligence Senior tech analyst man

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Speaker 2: Deep Singh says the search giant has addressed concerns that

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Speaker 2: AI will undermine its core business.

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Speaker 5: In this environment. If they're able to grow revenue five percent,

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Speaker 5: I think that just goes to show how strong the

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Speaker 5: mode is. And look, they talked about you know what

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Speaker 5: all they are doing on the generative aifront, So clearly

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Speaker 5: there is a nice product momentum they have in terms

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Speaker 5: of catching up to chat GPT on the BARD side

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Speaker 5: and the large angriid model. So overall, the tone of

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Speaker 5: the call was way different from the last time around

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Speaker 5: m Q one.

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Speaker 2: That was Bloomberg Intelligence Senior tech analyst man Deep Singh.

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Speaker 2: For its part, Microsoft forecast a slowing in its cloud

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Speaker 2: services business, which overshadowed optimism about its new AI products.

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Speaker 2: In the USA, the Federal Reserve is forecast to lift

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Speaker 2: its benchmark interest rate to the highest since two thousand

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Speaker 2: and one.

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Speaker 1: Bloomberg's Vinnie del Judais has the preview.

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Speaker 6: Bloomberg Economics' upcoming data on US inflation and employment, supporting forecasts.

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Speaker 6: Today's anticipated rate increase will be this year's last. The

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Speaker 6: FED cut its benchmark rate to zero when the pandemic

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Speaker 6: struck in twenty twenty to support the US economy, which

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Speaker 6: suffered a historic shock with unemployment hitting fourteen point seven percent.

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Speaker 6: The US Central Bank started tightening last year as inflation

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Speaker 6: or a door four decade high. It's been moderating of late,

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Speaker 6: but hovers above the Fed's target economy is surveyed by

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Speaker 6: Bloomberg see the Fed boosting its target rate another quarter

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Speaker 6: point today to arrange a five point two five percent

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Speaker 6: to five point five percent. Anni Dell Judie Bloomberg Day

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Speaker 6: Break Europe.

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Speaker 2: So some of our top stories on the program this

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Speaker 2: morning is how much the focus around earnings today too.

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Speaker 2: But just one other story that did catch my eye

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Speaker 2: as this latest report about Antarctic c ice growth what

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Speaker 2: scientists are now referring to as a six sigma event,

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Speaker 2: so deviations from the norm in terms of sigmas. It's

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Speaker 2: the way to chandardized data and make it easier to

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Speaker 2: compare in test hypothesis. But this sort of takes us

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Speaker 2: beyond the level of what a record low doesn't encapsulates

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Speaker 2: in terms of description of where the level of ice

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Speaker 2: for this time of year is in the Antarctic. As

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Speaker 2: of mid July, there was an Argentina sized chunk of

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Speaker 2: ice missing. This is according to analysis from the National

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Speaker 2: Snow and Ice Data Center. This really showing, I suppose,

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Speaker 2: another aspect of the climate story, given all of the

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Speaker 2: focus that we've had on wildfire's here in Europe as well,

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Speaker 2: that certainly.

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Speaker 1: Very worrying report from the.

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Speaker 2: National Snow and iceed Data Center about the situation in

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Speaker 2: the Antarctic as well. Let's get more details now on

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Speaker 2: the story from the British Bank Not West and the

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Speaker 2: news that the CEO, Alison Rose, has stepped down following

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Speaker 2: a row over how the bank closed accounts held by

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Speaker 2: the former politician Nigel Farage. Let's speak to Bloomberg's anounce

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Speaker 2: editor Adam High for more on this. Adam, thank you

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Speaker 2: for joining us. Was this inevitable that Alison Rose had

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Speaker 2: to go given the political pressure on her?

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Speaker 7: Well, I think what you saw is that the pressure

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Speaker 7: just built, and it built kind of to a point

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Speaker 7: where the boarder really forced into making this decision. So

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Speaker 7: despite them actually backing her, you know, in the earlier

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Speaker 7: part of yesterday really and kind of saying, you know,

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Speaker 7: maybe they'll dock her pay, but they still said that

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Speaker 7: she was there to lead the company and to do

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Speaker 7: the job as CEO. So it did come as a

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Speaker 7: little bit of a shock in terms of the speed

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Speaker 7: of the turnaround. Just hours later, of course, you had

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Speaker 7: that board meeting that went well into the wee hours

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Speaker 7: of the morning, and then you got the conclusion that

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Speaker 7: they had agreed to part terms a mutual agreement they

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Speaker 7: said in their statement. So I think it did reach

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Speaker 7: the point where it kind of became untenable. They had

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Speaker 7: to make the decision. Someone had to, you know, to

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Speaker 7: take the to take the blame here, and of course

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Speaker 7: in this instance, Alison Rose has done that.

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Speaker 1: Does this resolve the issue then for that West?

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Speaker 7: Now, well, what I do think is that quite a

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Speaker 7: lot of what you've seen in this scenario is that

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Speaker 7: you know that West still have a pretty big problem

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Speaker 7: on their hands. I mean, on the one hand, Rose

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Speaker 7: has taken you know that they've used her exit as

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Speaker 7: a way of you know, being able to publicly say

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Speaker 7: that listen, we've learnt from this. She's made an apology.

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Speaker 7: The companies, you know, sorry for what happened, and in

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Speaker 7: that case it kind of removes one one key figure

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Speaker 7: from the saga. But what it doesn't do is still

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Speaker 7: tell you about what's what's been done to the nat

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Speaker 7: West brand here of course, that they're still having to

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Speaker 7: go through the process of trying to explain what went

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Speaker 7: wrong here and how we have arrived at this situation

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Speaker 7: where where Alison Rose was in the end forced to

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Speaker 7: to to make the exit. So I think for that

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Speaker 7: West it still going to linger on for some time

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Speaker 7: even from here after.

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Speaker 2: This, and the questions around leadership of course very much

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Speaker 2: in focus for the bank too, given the fact that

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Speaker 2: separate to this, Hard Davies, the chairman, is also due

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Speaker 2: to retire next year, so it will be all changed

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Speaker 2: in those top positions.

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Speaker 7: Indeed, And of course we've known about Davis's plans for

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Speaker 7: some time, that's been well telegraphed, and he's of course

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Speaker 7: been at the bank for some time as well, and

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Speaker 7: Alison Rose has been there for the best part of

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Speaker 7: three decades. Of course, she's only been doing the CEO

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Speaker 7: role for the last since twenty nineteen, the back end

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Speaker 7: of twenty nineteen, so just a few years. But to

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Speaker 7: your point, that's a key change not just at the

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Speaker 7: CEO level, but also at the chair level on top

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Speaker 7: of the board. So that's quite a lot for any

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Speaker 7: company to deal with at the best of times, especially

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Speaker 7: in this situation where you're fighting to not only repair

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Speaker 7: the kind of the reputational damage, but some of the

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Speaker 7: wider implications about how this got to the really the

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Speaker 7: upper echelons of British government and the PM's office, but

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Speaker 7: also in the Treasury and ultimately you know, the decision

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Speaker 7: that Rose had to go.

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Speaker 2: Yeah, I'm certainly a very fascinating to see where the

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Speaker 2: political end of this story goes as well now given

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Speaker 2: the broader debate around the designation of politically exposed person

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Speaker 2: in UK finance. For now, Adam High in Sydney, our

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Speaker 2: finance editor, thank you so much for joining us with

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Speaker 2: the details of those stories as well. Of course, we

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Speaker 2: have the slew of bank earnings out from across Europe today,

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Speaker 2: giving as a picture of how the sector is performed

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Speaker 2: in the second quarter of this year. Deutsche Bank, Unicredits,

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Speaker 2: Santander and Lloyd's among the companies reporting today. We've got

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Speaker 2: Andrea janse Van Vooren Withness Now in studio to discuss

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Speaker 2: some of those results. Anyway, we'll try and get through

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Speaker 2: as many as we can. Andre great to have you

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Speaker 2: with us. Let's start with Deutsche Bank. There a difficult

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Speaker 2: time for an investment bank. How have they fared well?

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Speaker 8: It seems like on the whole the results that they're

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Speaker 8: putting out this morning as rise to some extent. We

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Speaker 8: see trading revenue still holding up. To some extent, the

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Speaker 8: fall day is not as big as was expected. We

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Speaker 8: see still interest margins still holding up. So on the

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Speaker 8: whole for Deutsche Bank, they mentioned if you look at

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Speaker 8: the hottam at the first off situation, this was the

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Speaker 8: best best period since twenty eleven. So yes, it was

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Speaker 8: a good It seemingly a good set of results overall.

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Speaker 1: Yeah, and interesting that this would come after the lands.

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Speaker 2: But that we have from the bank yesterday that they're

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Speaker 2: going to also increase their share buy backs.

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Speaker 8: Yes, so a lot there for investors to be happy about.

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Speaker 1: We have the share.

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Speaker 8: Buybacks that that seemed to be nue to continue even

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Speaker 8: in a time where as we discussed, the trading revenue

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Speaker 8: was expected to come under pressure, where was uncertainty over

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Speaker 8: over the where the Nate margins.

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Speaker 1: Will will, we'll, we'll we'll hold up.

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Speaker 2: So yes, yeah, certainly, certainly a very interesting times to

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Speaker 2: be watching. How and of course we will be looking

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Speaker 2: at how shares are performing as well. Just on trade

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Speaker 2: gate now we're seeing Deutsche Bank shares down around one

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Speaker 2: point four percent after those figures, so we'll be well

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Speaker 2: watching to see that as well. I wonder in the

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Speaker 2: kind of as we get the detail from the CEO

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Speaker 2: and the CFO on the earnings call, which is which

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Speaker 2: has just started, what sort of detail we'll be watching

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Speaker 2: out for. What are the kind of comments are you're

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Speaker 2: looking forward to hear, and after the comments that we've

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Speaker 2: had from the CFO speaking to Bloomberg this morning.

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Speaker 8: Well, we'll be definitely looking to see what they they

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Speaker 8: focus for the rest of the year. How do they

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Speaker 8: see this environment of of of of of higher rates,

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Speaker 8: how do they in terms of how passful will be

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Speaker 8: where the margins will continue to hold up the top

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Speaker 8: of gardens we can see there, and also how they

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Speaker 8: see trading revenue carrying on. We do expect I see

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Speaker 8: from the results they are they are upbeat about that,

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Speaker 8: and I mean, as we can see also from from

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Speaker 8: from some of the other banks that reported this morning

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Speaker 8: on the whole bitter then expected uh some Sunday beating estimates.

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Speaker 8: They've commented that the highest high interest rates boosted revenue

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Speaker 8: and and that of set the impact.

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Speaker 1: Of of of of of.

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Speaker 8: The provision's similar situation for UniCredit. We can also see

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Speaker 8: all the banks still making cost cuts where they can,

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Speaker 8: and we will be looking to see how how the

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Speaker 8: bank will will will will boss themselves all the.

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Speaker 2: Yes, I'm sorry, actually this the CFO of Santander is

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Speaker 2: actually speaking to our colleagues on Boom Bloomberg television as

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Speaker 2: we're talking now. I mean that they're an interesting example

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Speaker 2: because of course they are very much a retail bank.

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Speaker 2: What should we take away or what what have you

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Speaker 2: seen in their results that stood out for given that

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Speaker 2: we had those beats as you mentioned, both from Santander

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Speaker 2: and from Uni Credit.

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Speaker 8: I think the big takeaway is that consumers are holding up.

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Speaker 8: They are still continuing to pay their loans, and the

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Speaker 8: banks are making the moneys as the high interest rates

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Speaker 8: that they charge on their loans boost their margins while

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Speaker 8: they's been little erosent to their margins.

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