WEBVTT - Barclays CEO Talks Banking

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Okay, let's talk about Barclays outward numbers this morning. Group

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<v Speaker 2>pre tax profit two point zero eight billion, that slightly

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<v Speaker 2>beats estimates. This morning, the bank is setting a sign

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<v Speaker 2>three hundred and twenty five million in terms of compensating

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<v Speaker 2>customers impacted by the UK motor finance scandal. It looks

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<v Speaker 2>like there's going to be some pushback there. The bank

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<v Speaker 2>is going to launch a five one hundred million stock

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<v Speaker 2>repurchase scheme. So let's talk about the details and exactly

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<v Speaker 2>what has happened here. Cs fencaategch Christian and CEO of

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<v Speaker 2>Barclays joins us. Now, thank that great to see you.

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<v Speaker 2>Thanks for the time. We always appreciate it. In terms

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<v Speaker 2>of what stands out here, what are we looking at.

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<v Speaker 2>I'm looking at trading being fairly mixed, I'm looking at

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<v Speaker 2>a pushback when it comes to the motor finance story,

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<v Speaker 2>and I'm looking at a raising of the net interest

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<v Speaker 2>story going forward. Which one of those three things do

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<v Speaker 2>you think investors should be focusing on this morning?

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<v Speaker 3>Well, I think they should be focusing on the broad

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<v Speaker 3>performance of Barclays. We had a top line beat of

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<v Speaker 3>eleven percent growth year over year to seven point two billion.

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<v Speaker 3>On the top line, we've had nine percent consecutive quarters

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<v Speaker 3>of tangible net asset value growth. Importantly, as you said,

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<v Speaker 3>we've increased our guidance for ANII from twelve point five

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<v Speaker 3>to greater than twelve point six billion pounds, increased our

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<v Speaker 3>rote estimates to twenty twenty five to greater than eleven percent.

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<v Speaker 3>We're accelerating uh our ship share buyback program by announcing

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<v Speaker 3>five hundred million pounds this quarter and moving to a

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<v Speaker 3>quarterly cadence. And then importantly, you know, we we continue

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<v Speaker 3>we we've announced that we're going to come back to

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<v Speaker 3>our shareholders one year ahead of schedule and then give

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<v Speaker 3>them and talk about our new set of financial targets

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<v Speaker 3>UH in February from twenty six through twenty eight. So

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<v Speaker 3>I think it represents the broad good performance we've had

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<v Speaker 3>for many many quarters.

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<v Speaker 2>Now, yep, okay, let'stick into the details of what is

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<v Speaker 2>happening here and talk about what's happening with trading. Fake

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<v Speaker 2>looks pretty solid and certainly ahead of estimates. But I'm

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<v Speaker 2>understanding I think reading my notes that the estimates were

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<v Speaker 2>maybe a little low for what people realistically thought you

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<v Speaker 2>guys could deliver so fick our performance, but equities not

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<v Speaker 2>what happened in equities Venka.

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<v Speaker 3>Yeah, So I'm very broadly happy with what the Investment

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<v Speaker 3>Bank has been doing over seven quarters. And you know

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<v Speaker 3>we've had six quarters in a row of top line growth,

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<v Speaker 3>of earnings leverage by having what we call positive jaws

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<v Speaker 3>and improving profitability. You know, the Investment Bank produced greater

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<v Speaker 3>than ten percent rot as did all our divisions. Now

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<v Speaker 3>within that, I've always said we're running our own race,

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<v Speaker 3>and we're running our own race and producing the numbers

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<v Speaker 3>we wanted to. Quarter by quarter, some things will do

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<v Speaker 3>better and something's worse. We're obviously pleased with our fake

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<v Speaker 3>performance and we'd like to understand better how we can

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<v Speaker 3>improve inequities. But I view this over many quarters, and

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<v Speaker 3>so you know we're taking a long run, but you

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<v Speaker 3>know we will look to do better in every segment

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<v Speaker 3>every quarter.

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<v Speaker 2>What do you think the answer is in equities? If

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<v Speaker 2>that's the question you're asking, what do you think the

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<v Speaker 2>answer could be?

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<v Speaker 3>I think we need to continue to deepen our client franchise.

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<v Speaker 3>We've been working on it, and improve the breath of

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<v Speaker 3>our products. We've been at it. We're going to continue

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<v Speaker 3>and we will see the results as we've seen in

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<v Speaker 3>every other part of this bank.

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<v Speaker 4>Ben Catt, It's creedy in London. Think of your time

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<v Speaker 4>this morning was pivot from the equity picture to the

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<v Speaker 4>credit picture if we can. There's been lots of warnings

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<v Speaker 4>coming from the big US banks around cracks and private

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<v Speaker 4>credit that could ultimately have broader effects. You have been

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<v Speaker 4>in multiple seats at Barkley's, certainly as the chief risk officer.

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<v Speaker 4>What are you seeing is are those worries warranted?

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<v Speaker 3>Look, credit is something that you do over the cycle.

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<v Speaker 3>I think you have to be extremely careful at all

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<v Speaker 3>points in the cycle about you know who your client is,

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<v Speaker 3>your client selection, the terms under you lend your concentrations,

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<v Speaker 3>how much you lend industry sectors. We take this very seriously.

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<v Speaker 3>We take this over the cycle. I mean, we had

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<v Speaker 3>an exposure to try color. I'm obviously not happy about it.

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<v Speaker 3>We're looking at what lessons we learned, and we have

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<v Speaker 3>looked at it and applied it across our portfolio. But

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<v Speaker 3>I think credit is one of those things that you

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<v Speaker 3>take seriously. Doesn't matter whether it's so called private or credit,

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<v Speaker 3>and who the lender is it is a full time,

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<v Speaker 3>specialized job day in and day out.

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<v Speaker 4>But then kat is it a systematic risk or is

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<v Speaker 4>it still isolated? How should we be thinking about investments

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<v Speaker 4>in private credit when firms like the one you just

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<v Speaker 4>mentioned go bankrupt?

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<v Speaker 3>So in that particular case, there seems to have been fraud.

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<v Speaker 3>Now I should say that Barclay's had no exposure to

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<v Speaker 3>First Frands, although we were approached multiple times by them.

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<v Speaker 3>The thing about fraud is you wonder whether it is

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<v Speaker 3>one bad actor or it is some effect of circumstances

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<v Speaker 3>that are stretching the company's finances and making them take

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<v Speaker 3>risks that they otherwise should or would not do. That's

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<v Speaker 3>the kind of thing we look for, and that's what

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<v Speaker 3>I think investors should be looking for over the next

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<v Speaker 3>you know, months and quarters.

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<v Speaker 1>Thank you, good morning. It's Annah sticking with this theme

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<v Speaker 1>and channeling in some of the thoughts that we got

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<v Speaker 1>from Andrew Bailey the Bank of England just yesterday. He

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<v Speaker 1>and his team say that they're worried that the market

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<v Speaker 1>is slicing and dicing loan structures like it's pre GFC,

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<v Speaker 1>pre Financial crisis. Do you see similarities?

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<v Speaker 3>Look, I think securitization technology has been with us for decades. Obviously,

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<v Speaker 3>the governor and the central bank have a view of

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<v Speaker 3>you know where and how much, And they're talking about

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<v Speaker 3>a broader review, which is I think a good and

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<v Speaker 3>prudent thing for any central bank to do.

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<v Speaker 1>And they talk about alarm bells ringing. It doesn't sound

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<v Speaker 1>like you're hearing alarm bells, Vanka.

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<v Speaker 3>Look, as I said, we pay attention to credit with

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<v Speaker 3>what we hope is the same amount of dedication all

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<v Speaker 3>through the cycle. And when you do that, you try

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<v Speaker 3>to be very disciplined about it.

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<v Speaker 2>Okay, but how easy is it to be disciplined at

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<v Speaker 2>the moments ces you talk about the fact that that

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<v Speaker 2>Barclays is delivering on that. But this is a this

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<v Speaker 2>is an industry wide issue, and we've learnt in the

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<v Speaker 2>past that there can be problems in strange parts of

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<v Speaker 2>markets that are hard to determine and that they can

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<v Speaker 2>have significant ripple effects into into more mainstream banking. Are

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<v Speaker 2>you being extra diligent right now? We've had years in

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<v Speaker 2>which liquidity has been easy, We've had years in which

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<v Speaker 2>underwriting standards have come down. Are you paying more attention?

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<v Speaker 2>Are you looking at what you're doing more carefully now

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<v Speaker 2>as we come to the end of this process, how

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<v Speaker 2>much due diligence are you doing?

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<v Speaker 3>So we do a lot of due diligence at all

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<v Speaker 3>points in the cycle. And I think I would separate

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<v Speaker 3>two things. Every time you make a lending decision, and

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<v Speaker 3>you monitor those loans, whether it's in a good time

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<v Speaker 3>in a cycle or a bad time in a cycle,

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<v Speaker 3>assuming you knew it, you would always apply similar standards.

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<v Speaker 3>So I think the important thing is to maintain standards

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<v Speaker 3>through a cycle. And then if there are periods when

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<v Speaker 3>you're worried more, then you may increase the frequency of

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<v Speaker 3>your diligence and start looking at signs that you might

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<v Speaker 3>otherwise have thought were normal. And so, as I said,

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<v Speaker 3>what you're looking for at this point is our business

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<v Speaker 3>model stretched. And you know what are the quality of

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<v Speaker 3>financial controls and companies and the independence of financial controls.

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<v Speaker 3>These are the things you worry about all the time

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<v Speaker 3>and you pay extra attention to in periods of heightened concern.

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<v Speaker 4>Let's sayin kin, I feel like every time we have

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<v Speaker 4>you on the program, we always have to ask you

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<v Speaker 4>about the IPO market in London. I'll do it again

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<v Speaker 4>this time, but perhaps with a little bit of a

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<v Speaker 4>twist connecting it to the private credit space. We're seeing

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<v Speaker 4>deal making, We're seeing m and a activity start to

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<v Speaker 4>pick up in the States. We're not seeing that same

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<v Speaker 4>enthusiasm on this side of the pond, but we are

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<v Speaker 4>seeing more mobilization when it come to private credit because

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<v Speaker 4>it feels like the IPO route isn't one that's available

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<v Speaker 4>to everyone. Does that make Europe more vulnerable to a

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<v Speaker 4>risk in the private space than the public one.

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<v Speaker 3>Well, I think the amount of private credit is of

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<v Speaker 3>course much creator in the United States because it's a

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<v Speaker 3>more advanced industry and developed there. But I want to

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<v Speaker 3>sort of not talk about private versus credit. Public credit

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<v Speaker 3>is credit is credit. I think as far as the

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<v Speaker 3>IPO market goes, we on this desk behind us took

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<v Speaker 3>part in an IPO yesterday of a UK bank Showbrook.

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<v Speaker 3>I think you've seen some signs. It's obviously not as

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<v Speaker 3>strong as it is in the US, and I do

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<v Speaker 3>think in Europe as in the UK, and in fact

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<v Speaker 3>the Governor mentioned this yesterday in the House of Lords,

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<v Speaker 3>there has to be a continued growth in the equity

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<v Speaker 3>risk culture of the country and hopefully with that you'll

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<v Speaker 3>see more IPOs.

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<v Speaker 1>Thank you very much. Thank you for joining us the

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<v Speaker 1>Buntley CEOCSN categoration and with us to talk about the

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<v Speaker 1>numbers and the credit market. Yes, really interesting to get

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<v Speaker 1>his take on things we've heard from the US banking sector,

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<v Speaker 1>an Indy from the Bank of England governor, his concerns

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<v Speaker 1>around AI of course, and certainly yesterday talking about credit markets.