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Speaker 1: This is Bloomberg daybak you for this Wednesday, the twenty

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Speaker 1: sixth of April in London.

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Speaker 2: Coming up today, in search of a lifeline, First Republic

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Speaker 2: considers a one hundred billion dollar asset sale as AT

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Speaker 2: share price tumbles the.

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Speaker 1: China Connection Standard Chartered's first quarter earnings beat expectations, as

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Speaker 1: the bank posts an upbeat outlook.

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Speaker 2: Alphabet spells out its response to chat GPT, as Microsoft

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Speaker 2: steals a march on its rival.

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Speaker 3: A bitterpill from the Bank of England, bat gets burnt

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Speaker 3: over North Korea. Those are the stories we're looking at

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Speaker 3: in today's papers. And I'm leanne Gerrins.

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Speaker 1: Plus the Neuveau Financial Beach. Bloomberg identifies the twenty five

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Speaker 1: Titans who have ascended in the past decade.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 4: and every way you get your podcasts.

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Speaker 2: Good morning.

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Speaker 1: I'm Stephen Carroll and I'm Caroline Hetger. Here are the

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Speaker 1: stories that we're following today.

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Speaker 2: Beleaguered US lender First Republic is exploring the sale of

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Speaker 2: up to one hundred billion dollars in assets. The move

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Speaker 2: to shore up the bank's balance sheet comes after mass

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Speaker 2: massive deposit outflows and a near halfing of its market cap.

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Speaker 2: Bloomberg's US finance lead Sally Bakewell says the bank may

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Speaker 2: now be looking for external investment.

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Speaker 5: The goal here is most likely to make the bank

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Speaker 5: a bit smaller and potentially more palatable for an outside

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Speaker 5: investor to come in and purchase it or purchase a stake,

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Speaker 5: which would probably need to do along with some form

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Speaker 5: of government intervention in order for the bank to keep operating.

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Speaker 2: Sally Bequell says the bank likely faces a bleak future

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Speaker 2: without some sort of a rescue deal. Shares in First

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Speaker 2: Republic are down by more than ninety percent this year,

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Speaker 2: hitting an old time intra day low on Tuesday.

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Speaker 1: In bank earnings news, Standard Chartered has reported adjusted pre

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Speaker 1: tax profit of one point seven to one billion dollars

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Speaker 1: for the first quarter, beating the average analyst estimate. Income

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Speaker 1: this year is expected to grow around ten percent, the

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Speaker 1: top end of the lenders range. The strong performance underlines

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Speaker 1: the boost that China is reopening is having on Asia

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Speaker 1: focus companies.

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Speaker 2: Alphabet and Microsoft both reported earnings that beat expectations, providing

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Speaker 2: a promising start to the first quarter season for big

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Speaker 2: tech Google. Alphabet's dominant search business whether the economic downturn,

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Speaker 2: with AD sales beating estimates while it's cloud unit turned

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Speaker 2: to profit for the first time. Here's Alphabet CEO Sandarpitchai.

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Speaker 6: The fundamental divers here are people are looking for relevant information,

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Speaker 6: and in commercial categories they find ads to be highly

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Speaker 6: relevant and valuable. All those dynamics I think, you know,

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Speaker 6: which have long served us well remain and as I said,

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Speaker 6: will be will be trading and testing as we go,

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Speaker 6: and I feel comfortable, will be will to you know,

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Speaker 6: drive innovation here like we've always done.

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Speaker 2: That was Alphabet's CEO center Pitchhai.

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Speaker 1: Well now to Microsoft, which has also beaten estimates for

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Speaker 1: its third quarter revenue, driven by growth in its cloud

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Speaker 1: computing and office software. The story now from Bloomberg's Charlie Pellett.

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Speaker 7: The quarter was fueled by resilient corporate demand for its

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Speaker 7: mainstay cloud computing software and services. Though total sales growth

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Speaker 7: has accelerated the single digits after five years of more

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Speaker 7: robust gains, Microsoft products like Azure in Office three sixty

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Speaker 7: five cloud based products continue to attract customers, even as

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Speaker 7: many scaleback spending in a shaky economy. In New York,

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Speaker 7: Charlie Pellett Bloomberg Daybreak.

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Speaker 2: Europe countries and companies are dialing up their anti China

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Speaker 2: rhetoric youth. The UK's Foreign Secretary James Cleverly says China

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Speaker 2: is carrying out the biggest military build up in peacetime.

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Speaker 2: Cleverly set out the dilemma the West faces in a

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Speaker 2: speech in London.

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Speaker 8: We have an interest in continuing to benefit from Chinese investment,

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Speaker 8: but we don't want the long arm of the Chinese

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Speaker 8: Communist Party reaching towards the central nervous system of our country.

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Speaker 8: And in the past we haven't always struck the perfect

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Speaker 8: balance between openness and security.

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Speaker 2: Cleverly's approach echoes that of US Treasury Secretary Janet Yellen's

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Speaker 2: more measured language towards Beijing.

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Speaker 5: Well.

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Speaker 1: The fig Sectuary was joined by former UK politicians in

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Speaker 1: his criticism of China. Metas Nick Klegg told Bloomberg that

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Speaker 1: there are profound differences in values between China and the

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Speaker 1: Western world.

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Speaker 9: I think as a general principle, it's always good in

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Speaker 9: any market, including the technology market. To have a level

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Speaker 9: playing field, and so for instance, TikTok's hugely successful, highly

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Speaker 9: dynamic and innovative Chinese companies able to operate in the

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Speaker 9: United States, but companies like Meta are not able to

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Speaker 9: operate our social media services in China.

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Speaker 3: Well.

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Speaker 1: The Social Media Giants head of global affairs also has

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Speaker 1: warned about the dangers of AI built with what he

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Speaker 1: called undemocratic values. TikTok has this successfully taken market share

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Speaker 1: from Meta's Instagram and Facebook platforms in recent years, and

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Speaker 1: insists that it operates independently of its Chinese owner, byte Edance.

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Speaker 2: So those are some of our top stories on the

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Speaker 2: program this morning. I just want to dig into one

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Speaker 2: of the stories that we have been covering elsewhere though,

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Speaker 2: an in depth look at the new generation of megart

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Speaker 2: in the world of finance.

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Speaker 1: Yeah, it's a great piece. So it's the people who've

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Speaker 1: built up this wealth, at least in the last decade.

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Speaker 1: Basically it favors tech based traders. This is in contrast

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Speaker 1: to let's say the stockpickers of old. Perhaps it also

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Speaker 1: has a number of startup founders, but what the list

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Speaker 1: does not have any women billionaires at this level, So

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Speaker 1: you know, you're talking about the likes of Ken Griffin

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Speaker 1: Citadel Security. He tops the list with a fortune of

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Speaker 1: thirty five billion dollars.

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Speaker 2: Yeah, and also cz the founder of Binancers on the

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Speaker 2: list too from the crypto world, his fortune estimated at

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Speaker 2: twenty eight point two billion dollars as well. The youngest

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Speaker 2: names on the list are the Collinson brothers who founded

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Speaker 2: the payments firm Stripe as well. They have a cool

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Speaker 2: fortune of five billion dollars each.

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Speaker 4: Yeah.

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Speaker 1: I also thought it was really interesting that Alex Gerko,

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Speaker 1: who is the quant trader behind XTX markets here in

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Speaker 1: the UK, he's actually Britain's biggest taxpayer as of last year,

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Speaker 1: so he's a name that we should all know about,

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Speaker 1: certainly here in London.

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Speaker 10: Yeah.

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Speaker 2: Definitely an interesting reflection I suppose on the up and

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Speaker 2: coming names, because of course there are the likes of

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Speaker 2: Warren Buffett as far above any of these names, but

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Speaker 2: these are people who've made their fortune in the past

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Speaker 2: ten years making this list as well. So it's an

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Speaker 2: interesting look at the open commos in this even if

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Speaker 2: there are people who've been in this business for a

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Speaker 2: very long time, but the open commos in the financial

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Speaker 2: sector we love a rich list.

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Speaker 7: Yeah, no perspective.

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Speaker 1: You know, it gives you a taste of where you

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Speaker 1: could go in terms of your trading.

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Speaker 4: Look.

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Speaker 1: The other thing that I do want to discuss though,

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Speaker 1: were the comments around China which we brought to you

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Speaker 1: in terms of James Cleverly who gave his Manchi and

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Speaker 1: House speech yesterday. Obviously that's just over the road from

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Speaker 1: where we sit. Some additional things that he talked about

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Speaker 1: that basically it would be a tragic miscalculation if Beijing's

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Speaker 1: aggression continues. He was talking in his speech all about

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Speaker 1: the need for China to be more transparent. We know

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Speaker 1: that China has huge military spending, but beyond the price tag,

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Speaker 1: we know very little about what China is spending on.

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Speaker 1: And Cleverly was saying, we need transparency for this huge

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Speaker 1: peacetime build up of military spending, and we need to

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Speaker 1: understand the doctrine the intent behind this military expansion. But

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Speaker 1: I was reading the Global Times in terms of the

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Speaker 1: China response this morning, I thought that was really interesting

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Speaker 1: because they have a lot from the Chinese Feire Ministry

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Speaker 1: spokesperson who was saying that this accusation of military expansion

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Speaker 1: against China is groundless.

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Speaker 2: Yeah, well, that's a really interesting to see the Chinese

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Speaker 2: state media take on that as well. Let's get back

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Speaker 2: to our top story around Fresh Republic in the United States, though,

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Speaker 2: and are reporting that they are exploring selling assets to

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Speaker 2: shore up the bank's finances. Our banking editor Patrick Winto

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Speaker 2: has joined us More with more Now on this story, Patrick,

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Speaker 2: what exactly is First Republic considering selling?

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Speaker 10: Yeah, well, I think this is a really interesting story.

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Speaker 10: It looks like they are trying to sell various loans

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Speaker 10: or portfolios of the loans, and just come backtop to that.

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Speaker 10: This bank has been building a lot of business by

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Speaker 10: selling mortgages to a very desirable Cleontel. So these are

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Speaker 10: very wealthy clients in the US, company founders and so on.

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Speaker 10: But they were giving the mortgages at very low interest rate.

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Speaker 10: What's happened now is that interest rates are turned and

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Speaker 10: those mortgages are no longer valuable, and in fact, the

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Speaker 10: bank might be losing money because they have to pay

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Speaker 10: some customers for deposits. It's not making much money on

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Speaker 10: these mortgages. But what it's trying to do is shift

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Speaker 10: lost some of these loans from its books. Except obviously

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Speaker 10: not a very easy thing to do now. The interest

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Speaker 10: rates have gone are gone so high, and that might

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Speaker 10: be part of the reason why there is so much

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Speaker 10: troubles surrounding this bank right now.

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Speaker 1: Yeah, I mean, so the ease of finding buyers then

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Speaker 1: for this, what do we know about who might buy them?

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Speaker 10: It's difficult to know right now. I guess in one way, yes,

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Speaker 10: they are interesting because you know, lots of banks at

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Speaker 10: this point in time wants to increase business with very

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Speaker 10: wealthy clients, with millionaires and with billionaires. A lot of

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Speaker 10: the buont bracket banks in the US want to do that.

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Speaker 10: But on the other side, you know, they're not especially

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Speaker 10: revenue generating assets right now, and it seems like First

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Speaker 10: Republic may have to add some kind of sweetener. We're

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Speaker 10: not totally sure what that is to convince other banks

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Speaker 10: to buy these loans. But you know, at the same time,

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Speaker 10: I guess no bank really was to see more of

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Speaker 10: their peers and rivals failed because ultimately these day rises

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Speaker 10: the whole system. So you know, I guess at some

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Speaker 10: point we'll see some interest for these, but it's unkoy's

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Speaker 10: going to buy them right now.

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Speaker 2: What does the scale of this asset sale being considered

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Speaker 2: tell us about the state of First Republic's finances.

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Speaker 10: It obviously shocked the market, right, you know, shares were

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Speaker 10: down yesterday. They were down first of all, twenty five percent,

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Speaker 10: then they went down. I think they're almost fifty percent.

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Speaker 10: So it's obviously the extent of it is obviously a shock.

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Speaker 10: People knew there were issues. Perhaps thinks I believe that's

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Speaker 10: you know, they knew that other banks had sales and

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Speaker 10: Search Republic obviously wants to avoid that. It wants to

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Speaker 10: avoid being taken over. But I think you know the

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Speaker 10: fact that they're having to sell all these loan books

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Speaker 10: finally lays it out and the clear it lays it openly.

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Speaker 10: This is a problem that we have. This is what

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Speaker 10: we need to do and listen to how we're trying

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Speaker 10: to solve it. And that's obviously shots the market.

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Speaker 1: Patrick, thank you so much for being with us, a

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Speaker 1: story that we will continue to watch them from First Republic.

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Speaker 1: That is Bloomberg's Banking editor Patrick Winters.

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Speaker 2: Up next to Bitter Pills from the Bank of England,

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Speaker 2: bat gets burnt over in North Korea.

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Speaker 4: Now the paper review on blue Bird Daybreak Europe. The

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Speaker 4: news you need to know from today's.

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Speaker 1: Papers Aleiane Gerens joins us for more. The headline in

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Speaker 1: the Financial Times, We're all worse off, says Bank of

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Speaker 1: England chief economists.

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Speaker 3: Good morning, Leanne, Caroline, good morning to you. Yes, so

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Speaker 3: this article this morning in the Ft might just be

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Speaker 3: a bitter pill to swallow for many people and workers

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Speaker 3: around the country and on the frontline of industrial action.

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Speaker 3: So I'm guessing, if you haven't already noticed, there's a

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Speaker 3: growing chunk of our paycheck which has been spent on

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Speaker 3: bills and this as inflation and energy costs do rise.

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Speaker 3: So yesterday the BOE chief economist Hugh Pills said people

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Speaker 3: need to accept they are now poorer instead of seeking

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Speaker 3: to clawback an historic drop in living standards after a

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Speaker 3: jump in inflation.

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Speaker 10: Now.

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Speaker 3: He was speaking on a podcast called Beyond Unprecedented from

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Speaker 3: the Columbia University and says someone needs to accept that

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Speaker 3: they are worse off and stop trying to maintain the

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Speaker 3: real spending power by bidding up prices, wages or passing

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Speaker 3: the energy costs onto customers. Now as comments do reiterate

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Speaker 3: what BOE officials have been saying over the past year, However,

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Speaker 3: I do think that he would more blunt in suggesting

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Speaker 3: that workers must shoulder more of the burden.

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Speaker 1: Well, yes, and no. I wonder I think that's my

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Speaker 1: question because it talks about someone. So basically a year

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Speaker 1: ago the Bank of England Governor Andrew Bailey was saying

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Speaker 1: that someone workers you know, shouldn't be restrained in their

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Speaker 1: pay and wage demands. That caused a huge furiory. I

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Speaker 1: think the Bank of England now is saying someone and

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Speaker 1: specifically pointing out businesses and energy companies. Actually, in some

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Speaker 1: ways you could argue that it's it's a poke to business.

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Speaker 1: You know. You can't also be as one think tank

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Speaker 1: called it, you know, putting up prices. Greedflation is what

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Speaker 1: that think tank dubbed it. You know, you have to

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Speaker 1: think about it too, So I wonder about that story.

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Speaker 3: This story also just one thing, Caroline lays bear the

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Speaker 3: conflict with thousands of public sector workers angry at the

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Speaker 3: government over its decision to restrain pay. We have seen

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Speaker 3: so many strikes across the country when it comes to

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Speaker 3: education the NHS as people want more in their pockets

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Speaker 3: because inflation is higher. But the Bank of England is saying,

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Speaker 3: you know, that will stok it even more. And remember

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Speaker 3: the Bowe Governor Andrew Bailey said people need to stop

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Speaker 3: asking for pay rises and for those wondering when it

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Speaker 3: may all end, he said inflation made it below the

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Speaker 3: two percent target in the next two years, but we

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Speaker 3: must remember that. As comments along with a speech by

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Speaker 3: the Bowe Deputy Governor Ben Broadbent yesterday, they are the

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Speaker 3: final scheduled appearances from Monetary Policy Committee individuals ahead of

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Speaker 3: the next rate decision here in the UK.

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Speaker 2: Okay worth bearing in mind, Let's go to the Times

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Speaker 2: nextly on British American tobacco pay six hundred and thirty

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Speaker 2: five million dollars over North Korean exports.

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Speaker 3: So the London based foot Sea one hundred, maker of

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Speaker 3: Lucky Strike and Dunhill cigarettes, has agreed to pay this

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Speaker 3: multi million pound settlement following business activities in North Korea,

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Speaker 3: and this was between two thousand seven and twenty seventeen.

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Speaker 3: Now bat has entered into a deferred prosecution agreement with

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Speaker 3: the DOJ and a civil settlement agreement with THEFAC and

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Speaker 3: these are both in the US. According to the Times,

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Speaker 3: it also says a subsidiary in Single Pore has also

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Speaker 3: made a plea deal with the DOJ. Now listen Following

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Speaker 3: an investigation, the company was found responsible for engaging in

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Speaker 3: a conspiracy to send more than two hundred and fifty

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Speaker 3: million dollars in profits from a North Korean joint venture.

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Speaker 3: So this is what this is really surrounding this joint

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Speaker 3: venture with North Korea, and we know the communist country

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Speaker 3: just faces a range of US sanctions really designed to

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Speaker 3: choke or funding for its nuclear and ballistic missile program.

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Speaker 3: So we're seeing this all come together here, and a

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Speaker 3: US attempt from the UN Secretary Security Council to band

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Speaker 3: tobacco exports to North Korea was actually vetoed by Russia

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Speaker 3: and China last year, but we see the British American

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Speaker 3: tobacco company paying out this huge sum of money over

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Speaker 3: business activities in North Korea, which it has apologized for.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 2: You can also listen live each morning on London DAB Radio,

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Speaker 2: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 2: I'm Caroline Hipka and I'm Stephen Carroll. Join us again

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Speaker 2: tomorrow morning for all the news you need to start

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