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Speaker 1: Broadcasting across the globe. This is WBBR New York, Bloomberg

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Speaker 1: eleven three O. This is Bloomberg Daybreakuet for this Monday,

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Speaker 1: the twenty seventh of March in London. Coming up today.

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Speaker 1: Credit Sweez Fallout. The chairman of Saudi National Bank resigns

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Speaker 1: after comments to Bloomberg triggered the bank's collapse discredited suite.

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Speaker 1: The bank faces the prospect of a disciplinary proceeding the

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Speaker 1: end in sight, Silicon Valley's assets are sold for citizens.

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Speaker 1: Martha Lane Fox on business investment, Twitter's source code leagues

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Speaker 1: and the risks of raising the state pension age. Those

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Speaker 1: other stories we're looking at in today's papers. And I'm

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Speaker 1: Leanne Garon's plus a test of metal. Elami Nickel returns

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Speaker 1: to regular trading for the first time in more than

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Speaker 1: a year. That's all straight ahead on Bloomberg Daybreak Europe.

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Speaker 1: The business news you need to start your day in

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Speaker 1: just one fifteen minute podcast on Apples, Spotify, The Bloomberg Business,

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Speaker 1: Apple and everywhere you get your podcasts. Good morning from Londonland,

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Speaker 1: Caroline Headka and I'm Danny Berger. You're listening to Daybreak here.

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Speaker 1: Let's get to some of our top stories, and we've

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Speaker 1: had a lot of breaking news this morning. Among them.

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Speaker 1: Amara el Kudari, the chairman of Credit suie's largest shareholder,

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Speaker 1: has resigned. Speaking in an interview with Bloomberg TV earlier

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Speaker 1: this month, Al Kudari said absolutely not when asked if

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Speaker 1: Saudi National Bank would be open to further investments and

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Speaker 1: Credit suis if there was another call for additional liquidity.

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Speaker 1: Those comments help spork a slump in the Swiss lenders

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Speaker 1: shares and led to its takeover by UBS. He will

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Speaker 1: be replaced by the Saudi National Bank CEO, said Muhammed

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Speaker 1: el Kamandi. Now First Citizens has agreed to buy all

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Speaker 1: of Silicon Valley Banks deposits and loans. SVB became the

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Speaker 1: biggest US lender to fail in more than a decade,

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Speaker 1: and it's collapse triggered a global banking crisis. Nil kesh Kari,

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Speaker 1: the FED president, the Minneapolis FED president, says that recent

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Speaker 1: bank turmoil has boosted the risk of a US resession.

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Speaker 1: What's unclear for US is how much of these banking

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Speaker 1: stresses are leading to a widespread credit crunch. And then

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Speaker 1: that credit crunch, You're right, just as you said, would

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Speaker 1: then slow down the economy. This is something we are

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Speaker 1: monitoring very very closely. Keshko. We spoke to CBS after

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Speaker 1: Bloomberg discovered that US authorities are considering expanding an emergency

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Speaker 1: lending facility to help pop up First Republic. Credit Suis

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Speaker 1: is facing the threat of possible disciplinary action over how

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Speaker 1: top managers ran the bank in the lead up to

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Speaker 1: its collapse and takeover by UBS. Speaking to Swiss newspaper

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Speaker 1: n z Z, Finmont president Marlene Amstad said quote CS

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Speaker 1: has a cultural problem that translated into a lack of accountability.

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Speaker 1: Adam Hey, Bloomberg Finance editor, says, the bank has a

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Speaker 1: lot of questions to answer. What's being muted in this

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Speaker 1: local report coming out over the weekend is essentially that

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Speaker 1: there were some kind of fairly systemic failures by some

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Speaker 1: of the top managers at Credit Suiting in various areas.

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Speaker 1: And just to run you one quote from the FINRA president,

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Speaker 1: which I think is quite telling of the extent of

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Speaker 1: what they're thinking right now, is that quote. Often it

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Speaker 1: was not clear who was responsible for what. Adam hay

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Speaker 1: with the details there. Over the weekend, Switzerland's finance minister

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Speaker 1: defended the government back takeover of credit suites, saying the

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Speaker 1: troubled bank wouldn't have lasted another day now. The head

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Speaker 1: of Britain's Independent Economic Forecast that says that GDP is

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Speaker 1: four percent smaller due to Brexit. The Office of Budget

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Speaker 1: Responsibility Chairman Richard Hughes says that leaving the EU was

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Speaker 1: a similar sized shock to the pandemic. We think that

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Speaker 1: in the long run it reduces that overall output by

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Speaker 1: around four percent compared to have you remained in the EU.

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Speaker 1: UK growth has been held back by a range of

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Speaker 1: supply constraints on some of the key drivers of growth.

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Speaker 1: We've lost around five hundred thousand people from the labor force.

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Speaker 1: We've seen stagnant investment since twenty sixteen, and also our

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Speaker 1: productivity has slowed dramatically since the financial crisis and not

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Speaker 1: really recovered. Who spoke to the BBC as the CEO

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Speaker 1: of the UK's largest investor, said that the UK has

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Speaker 1: gone backwards in its efforts to level up the country.

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Speaker 1: This is the Legal and General Boss Nigel Wilson, who

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Speaker 1: says that a series of shocks, sky high inflation and

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Speaker 1: a lack of investment have led to an historic fall

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Speaker 1: in living standards for much of Britain. The London Medal

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Speaker 1: Exchange has resumed Asian hour trading of nickel contracts, marking

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Speaker 1: a crucial step in efforts to repair the market. The

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Speaker 1: Medal opened for business at one am UK time, more

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Speaker 1: than a year after the Lemy suspended trading and canceled

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Speaker 1: billions of dollars of deals in response to a massive

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Speaker 1: short squeeze. And lastly, thousands of protesters have taken to

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Speaker 1: the streets in Israel after the Prime Minister fired his

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Speaker 1: defense chief Benny Minnaho dismissed Your Gallant after he took

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Speaker 1: to the airways to quit size a controversial plan to

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Speaker 1: reduce the power of the Supreme Court. Speaking before events

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Speaker 1: turned violent, Amid Pinchevsky, a journalism professor at the Hebrew

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Speaker 1: University of Jerusalem, said that things need to change anymore now. Everything. Basically,

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Speaker 1: it's not going to go back. We're not going to

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Speaker 1: go back now. Pinchevsky and others say that the judicial

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Speaker 1: overhaul will concentrate too much power in the hands of

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Speaker 1: the ruling party in Israel. Those are a few of

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Speaker 1: our top stories this morning. Look, I think the Saudi

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Speaker 1: fallout is incredibly interesting, Amar al Kaderi. Of course it

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Speaker 1: was blue Bergs used for Gomaldin, who was speaking to

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Speaker 1: Saudi National Bank in mid March about whether or not

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Speaker 1: they would increase their stake in credit suits. The response

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Speaker 1: was quite a blunt No, it was known that that

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Speaker 1: would be the sort of response, but somehow it caught

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Speaker 1: the attention of investors and it really did seem to

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Speaker 1: trigger that cell off. Yeah. I mean, it's such a

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Speaker 1: fragile market, so any comments are are amplified. But look,

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Speaker 1: the aftermath of that was S and B staken in

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Speaker 1: credit suites. About one billion dollars was wiped out from it.

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Speaker 1: We have some fantastic in Depthinburg reporting that talks that's

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Speaker 1: talked about how golf investors perhaps are more cautious towards

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Speaker 1: investing in banking in general. So the ramifications of this,

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Speaker 1: it does seem like there's been some scarring and yes,

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Speaker 1: this is just yet another ramification. Yeah, absolutely, bluebo us

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Speaker 1: if gomal Din. We'll join us a bit later on

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Speaker 1: in the program to talk all of those issues through. Also, though,

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Speaker 1: the other story that caught my attention, I don't know

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Speaker 1: whether you've read it this morning, is around Jack mah,

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Speaker 1: So he's sort of in self exile effectively, and I

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Speaker 1: think it's got a lot of people's attention because he's

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Speaker 1: one of China's most recognizable business leaders. And Bloombeck has

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Speaker 1: a story on the tone about how the Chinese government

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Speaker 1: really would like him to turn to make the sort

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Speaker 1: of pitch for how the government is supporting private business.

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Speaker 1: But there is still a huge amount of skepticism around

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Speaker 1: that because of the kind of issue that Jack mar

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Speaker 1: faced after the big speech that he made in twenty

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Speaker 1: twenty that criticized some regulators and other high profile CEOs.

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Speaker 1: And yes, it's a very interesting piece. There might be

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Speaker 1: signs that maybe he's coming back to public life. This

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Speaker 1: maybe isn't the strongest sign, but the South China Morning

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Speaker 1: Post did report this morning that there was a jackma

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Speaker 1: citing specifically in Hang Joe. According to the paper, he

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Speaker 1: was visiting a private school. He was seen in a

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Speaker 1: car with the Ali Barber CEO and executive vice president.

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Speaker 1: That was enough to send Ali Baba shares higher this morning.

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Speaker 1: But again just Jack Mars citing, not him speaking in public,

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Speaker 1: but perhaps some signs that he's returned to China. Yeah, absolutely,

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Speaker 1: very interesting Okay, let's get more on are the bread

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Speaker 1: and butter the bank story, the news that First Citizens

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Speaker 1: has agreed to buy Silicon Valley Bank parts of it.

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Speaker 1: The deal include the purchase of about seventy two billion

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Speaker 1: dollars of SVB assets at a discount of about sixteen

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Speaker 1: and a half billion dollars. Our market supporter yan Patrick

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Speaker 1: Barnard joins us now for more. Um do you think,

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Speaker 1: Jean Patrick, this draws a lot in after the events

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Speaker 1: of the past couple of weeks, now that the US has,

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Speaker 1: you know, after some delay, wrapped up this sale of

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Speaker 1: most of the business. Very good morning. I'm not sure

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Speaker 1: if I'm brave enough to say it's the drawing a

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Speaker 1: line all the under the whole story right now, but

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Speaker 1: I would say it does support the sentiment. It shows

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Speaker 1: that that shows us us that the whole episode was

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Speaker 1: handled rather quickly from the regulator, from the governments. It

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Speaker 1: did not let it, let let us hang for for

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Speaker 1: too long and let us build into the market. So

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Speaker 1: that's that's a good sign and probably helps confidence that

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Speaker 1: should there be another bank that it's getting into trouble,

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Speaker 1: that there could be that there can be a quick

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Speaker 1: solution for it. And you know, everyone wants a quick solution,

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Speaker 1: but everyone is also looking out for where the next

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Speaker 1: drama might unfold. Friday, it was really all about Deutsche Bank,

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Speaker 1: the fears over there. I'm looking at trade gated is

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Speaker 1: up on the pre market. Trade is about two point

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Speaker 1: six percent. But we are we gonna are we gonna

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Speaker 1: be done without Friday session. We're gonna draw a line

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Speaker 1: under it and say, okay, that was that was just

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Speaker 1: some irrational market action. I would say like Friday certainly

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Speaker 1: had some irrational components to it. And I strongly rejected

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Speaker 1: the notion that there's instability in the banking system because

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Speaker 1: there was simply no evidence at all to show that.

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Speaker 1: But what is certainly not over is the earning story

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Speaker 1: for banks. Banks have been everybody's everybody's favorite trade since

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Speaker 1: actually since October and even more this year, because everybody

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Speaker 1: was feeling like, well, the higher rates are helping them,

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Speaker 1: the economy is inculd shape, the central banks are getting

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Speaker 1: more in control of inflation. And now that story has

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Speaker 1: flipped upside down, that we probably do get a recession

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Speaker 1: in the US this year, that rates probably are coming lower,

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Speaker 1: that banks might face some low loss provisions going higher

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Speaker 1: and that we'll all eat into to earnings. Refinancing maybe

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Speaker 1: will be a bit more tricky for banks, and so

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Speaker 1: I would say like that some of the moves in

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Speaker 1: European banking shows that we have seen over the last

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Speaker 1: couple of days do reflect those earnings concerns and they

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Speaker 1: will probably not go away or rebound very quickly. Okay,

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Speaker 1: thank you so much, Jean Pato Barnat for being with us.

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Speaker 1: Really good to have you on the program. We'll be

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Speaker 1: watching yup the what happens with financials when we start

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Speaker 1: trading in Europe in about fifteen minutes. That is our

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Speaker 1: market report at Yean Patrick Barnard. But I want to

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Speaker 1: turn our attention then to the story around the Saturday

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Speaker 1: National Bank Chaman resigning. Yeah. First, let's get a reminder

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Speaker 1: of what he said just your weeks ago on the

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Speaker 1: fifteenth of March. The answer is absolutely not, for many

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Speaker 1: reasons outside the simplest reason, which is regulatory and statutory.

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Speaker 1: We now own nine point eight percent of the bank.

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Speaker 1: If we got above ten percent, all kinds of new

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Speaker 1: rules kick in, whether it be by our regulator or

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Speaker 1: the European regulator, or this was the regulator, and we're

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Speaker 1: not inclined to get into a new regulatory region. That was,

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Speaker 1: of course, the Saudi National Bank chairman Al Kudari speaking

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Speaker 1: to Bloomberg's Usef Kamal ald in just two weeks ago

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Speaker 1: about Credit suis really what kicked off all the turmoil

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Speaker 1: of the bank. And this hour we learned that Kudari

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Speaker 1: has just stepped down. Yusuf joins us. Now, Yusuf, what

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Speaker 1: do you make of this resignation. Yeah, I mean it's

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Speaker 1: not a surprise. Sources that I've been speaking to said

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Speaker 1: that that was one of the scenarios that was being

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Speaker 1: hashed out, and now it is official. Ahmadan Aamdi, who was,

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Speaker 1: you know, an institution within Saudi National Bank, very well known.

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Speaker 1: He takes over as chairman, you side, personal reasons and yeah,

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Speaker 1: it's clear that the political capital that was put into

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Speaker 1: play when they decided to go big on Credit Suis

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Speaker 1: late October early November, that's been completely used up and

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Speaker 1: it was time to go. They put quite a bit

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Speaker 1: of risk into this, remember that, I mean, for them,

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Speaker 1: it was not just about an opportunity, was about creating synergies.

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Speaker 1: It was about putting Saudi National Bank on the global arena.

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Speaker 1: To compete with other big banks. So there was a

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Speaker 1: lot going into this, and clearly on the Saudi National

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Speaker 1: Bank side, it was time to reset credibility or try

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Speaker 1: to at least and regain investor confidence. Okay, how badly

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Speaker 1: hurt do you think that Saudi National Bank has been

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Speaker 1: then from the collapse of Credit suis. Here's the thing,

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Speaker 1: they actually have not been hurt that bad. If you

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Speaker 1: compare them to their peers, to other banks around the

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Speaker 1: world in terms of valuations, they won billion dollar loss

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Speaker 1: or a little bit in excess of that on the

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Speaker 1: Suite stake is not significant for Saudi National Bank, the

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Speaker 1: short of four billion Saudi rials In terms of their

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Speaker 1: size and in terms of the kind of deals they do,

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Speaker 1: it's not significant. But it is more the credibility and

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Speaker 1: future compromises they would have to make in terms of

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Speaker 1: new deals. So no, there is no immediate impact or

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Speaker 1: consideration that they had to play with that would lead

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Speaker 1: them to that decision. You know, I would not connect

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Speaker 1: these two things. It's not that there was something that

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Speaker 1: was falling apart at Saudi National Bank and that's why

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Speaker 1: he had to leave. Know, was more about the audience,

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Speaker 1: the global impact and how far the story went as

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Speaker 1: a result of his comments. Yeah, and I mean it's

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Speaker 1: it's it's also incredible the speed at which it's when.

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Speaker 1: I mean, you only talked to uh Al Kudari two

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Speaker 1: weeks ago. Reflecting back on that and everything that's unfolded,

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Speaker 1: were you surprised by what he said? Yes, I was.

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Speaker 1: I was just as surprised as the market was. I mean,

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Speaker 1: we weren't even sure that he would speak. I was

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Speaker 1: on what's happened with him? Twenty four hours before the interview.

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Speaker 1: He looked like he might pull out at the last minute, So,

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Speaker 1: you know, until five minutes before the interview, until he

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Speaker 1: actually approached me and sat on the set, I wasn't

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Speaker 1: sure this was going to happen. He knew that tweets

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Speaker 1: would come up, you know, banks more broadly in terms

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Speaker 1: of liquidity, But then he said what he said, and

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Speaker 1: he said it with such conviction, and he saw the

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Speaker 1: market reaction. Within fifteen minutes, we were down fifty percent

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Speaker 1: and the rest, as they say, it's history. Absolutely mind you,

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Speaker 1: you know, with change comes opportunity. I suppose how could

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Speaker 1: UBS revamp in the Middle East now that it's you know,

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Speaker 1: got credit suites and all the people that Credit Suites

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Speaker 1: actually has in the Gulf. Yeah, I mean they can

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Speaker 1: cherry pick. So we understand. They're about forty investment bankers

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Speaker 1: between Dubai and Ria, then a couple of other spots,

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Speaker 1: and they've built a strong reputation. They have a fantastic

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Speaker 1: network of high net worth clients and the royalty in

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Speaker 1: there as well, and they made early progress in penetrating

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Speaker 1: Saudi Arabia as a market. So UBS will sit down.

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Speaker 1: We don't understand how much they've got to work with,

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Speaker 1: but they have some top talent and they're going to

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Speaker 1: try and make use of that. In terms of resetting

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Speaker 1: the up UBS tone from UBS actually pulled out from

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Speaker 1: much of this activity, so this would be a way

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Speaker 1: to revamp and restart these operations in this part of

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Speaker 1: the world, which for UBS sounds to me like it's

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Speaker 1: only upside at this point. What about sort of the

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Speaker 1: other way around in terms of golf investments in European banks?

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Speaker 1: Will this change the attractiveness of that proposition? Yeah? Well,

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Speaker 1: I mean the Middle East investor base has had a

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Speaker 1: very fraud relationship with European banks. I mean, despite it

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Speaker 1: always being an amazing opportunity in terms of valuations. When

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Speaker 1: push comes to shove a few years later turns out

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Speaker 1: to have been a horrible investment. You think about what

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Speaker 1: the Qataris did with Deutsche Bank, what happened two thousand

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Speaker 1: and eight with some of the other stakes and European banks,

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Speaker 1: and now with credit suites, and we understand that the

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Speaker 1: Cutter Investment a story is actually reviewing much of its portfolio.

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Speaker 1: It's exposure to European banks. Maybe a broader shift is warranted.

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Speaker 1: And what that could mean, as we understand it is

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Speaker 1: that you have capital coming out of European banks getting

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Speaker 1: redeployed into completely different sectors like tech. Well, that is

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Speaker 1: certainly one to watch. He's if thank you so much

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Speaker 1: for being with us, being base of Gamal Al Dinner

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Speaker 1: speaking to us after the resignation of the Saudi National

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Speaker 1: Bank chairman. Now up next Martha Lane Fox on business investment, Twitter,

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Speaker 1: source code leagued and the risks of raising the state

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Speaker 1: pension age. Now the paper review on blue Bird day

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Speaker 1: Break Europe. The news you need to know from today's papers.

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Speaker 1: So joining us now has been based on the an

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Speaker 1: GERANs with a lookout today's newspapers. The Financial Time says

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Speaker 1: that Martha lane Fox is warning UK policymakers of fragile

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Speaker 1: business confidence. Now here's an interesting name then, yes, indeed,

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Speaker 1: Caroline a name that many of us have heard before,

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Speaker 1: and maybe this is your first time, but let's just

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Speaker 1: get into what she says. Now. Martha lane Fox is

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Speaker 1: the new president of the British Chambers of Commerce and

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Speaker 1: she says big investment decisions are being held back and

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Speaker 1: that's due to political and economic uncertainty here in the UK. Now,

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Speaker 1: speaking to the final Antial Times, she says people just

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Speaker 1: don't feel like taking risks investing or thinking about international

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Speaker 1: trade when they are still feeling anxious about the political situation.

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Speaker 1: An economy is putting them off taking these risks, and

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Speaker 1: that's basically what she says. She does go on to

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Speaker 1: say though, that the Chancellor Jeremy Hunt, you know, during

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Speaker 1: his budget this month, he really made business investments such

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Speaker 1: a priority in that But she says they just need

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Speaker 1: to do more work. Where she soon acts government need

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Speaker 1: to come out really and do more because she's saying

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Speaker 1: she's talking to businesses all over the country and it's

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Speaker 1: clear from them that their confidence is still absolutely fragile.

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Speaker 1: And she discusses the Labor Party and says a lot

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Speaker 1: of business seemed to be almost impressed with the Shadow Chancellor.

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Speaker 1: Rachel reeves, well, I do think it does feel to me.

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Speaker 1: I'm not sure what you think, Danny, that there is

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Speaker 1: a moment right where the conversation around Brexit and just

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Speaker 1: the reality check that Brexit has done and Norma's damage

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Speaker 1: to Britain's economy is actually now, as you know, no

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Speaker 1: longer taboo. It was absolutely taboo for a number of

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Speaker 1: years to say that, but the OBR saying it clearly,

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Speaker 1: to BOE saying it, the BOE is saying it, and

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Speaker 1: I mean, you know, many many city investors have said

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Speaker 1: it for a long time, but it's not taboo. And

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Speaker 1: I think that's quite un pivotal for the next general election. Maybe.

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Speaker 1: Oh and it's harder to ignore when all other economies

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Speaker 1: in Europe are back where we were pre covided, except

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Speaker 1: for the UK. Martha also says it, Ladies. Martha lay

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Speaker 1: Box also says that basically she talks about Brexit and

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Speaker 1: she says, we're doing forty percent less trade with Europe

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Speaker 1: than we were before, so there we are. She says

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Speaker 1: that an astonishing large number. So other other stories hitting

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Speaker 1: the papers. New York Times has a Twitter story about

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Speaker 1: some leakages. Yes, indeed, Danny so parts of Twitter source code. Now,

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Speaker 1: this is the underlying beaut code on which the social

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Speaker 1: network actually runs, and has been leaked online. And this

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Speaker 1: is all according to illegal filing. A fraction of the

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Speaker 1: code was posted on GitHub. Now that's, of course, the

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Speaker 1: online platform used by software developers. Now, one real big

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Speaker 1: concern about this Twitter leak and this code getting out

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Speaker 1: is that it could make security vulnera vulnerabilities really present,

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Speaker 1: and that could good of hackers the mean to extract

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Speaker 1: user data or actually take down Twitter as a whole.

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Speaker 1: On Friday, Twitter Center copyright infringement notice to gethub. Gethub

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Speaker 1: has complied and has taken down the code that day.

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Speaker 1: But Caroline, of course, you know, Twitter seems to be

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Speaker 1: facing a lot of outages and a few problems at

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Speaker 1: the moment since the takeover an Elon Musk and since

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Speaker 1: he does try to find the balance when it comes

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Speaker 1: to Twitter. But tech companies have become you know, real

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Speaker 1: time targets for opportunist hackers and others. We've seen Microsoft

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Speaker 1: and Google go through the similar sort of thing when

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Speaker 1: it comes to vulnerability, so hackers. Now Twitter apparently wants

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Speaker 1: to know the identity of the user behind this league. Yeah,

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Speaker 1: and I suppose the criticism our Twitter is whether it's

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Speaker 1: to do with all of the personnel changes and laying

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Speaker 1: off of so many kind of texts off within the company. Lastly, though,

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Speaker 1: pension age in the UK. The Times headline reads that

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Speaker 1: raising the state pension age risks trapping millions in poverty. Yes,

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Speaker 1: and this is a piece by Paul Johnson. Now he's

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Speaker 1: the director of the Institute for Fiscal Studies, and he

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Speaker 1: really discusses the latest political flashpoint pensions, but Caroline really

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Speaker 1: more so in Franci argues and he does try to

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Speaker 1: relate it back to the UK and how we view pensions,

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Speaker 1: and he basically says, here in the UK, our state

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Speaker 1: pension age is actually much higher. It's sixty six and

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Speaker 1: it's heading to sixty seven this decade and then in

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Speaker 1: twenty years it's going to be sixty eight. And really

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Speaker 1: there's been no backlash against it whatsoever. People have kind

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Speaker 1: of just accepted this has happened. And he's arguing that

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Speaker 1: things do change. In this case, projections of life expectancy

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Speaker 1: and it's good to remain flexible in the face of change.

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Speaker 1: But he's saying it's really important that people know when

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Speaker 1: they're ten thousand pound pension is actually going to kick in,

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Speaker 1: so that they can plan for their retirement and also

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Speaker 1: have this massive degree of confidence. But he really talks about,

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Speaker 1: you know, how changing the pension age is really going

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Speaker 1: to push people into poverty because it's once again the unknown. Yes,

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Speaker 1: Paul Johnson, I mean maybe he's a perennial thought in

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Speaker 1: the side of this government. Obviously he's very focused on

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Speaker 1: poverty reductions, so I think that's would be his defense.

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Speaker 1: But yeah, I think maybe you could rename Paul Johnson's

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Speaker 1: Effect something quite a different thing. But then he also does,

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Speaker 1: you know, really discuss a private pensions now and what

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Speaker 1: that means, you know, for people who are just having

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Speaker 1: state pensions.