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Speaker 1: This is Bloomberg Daybreak here for this Thursday, the ninth

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Speaker 1: of February in London. Coming up today. From bad to worse, credit,

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Speaker 1: Sweee reports grim results as investors pod cash at a

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Speaker 1: record rate. I give for cuts. Disney's CEO announced his

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Speaker 1: job losses as he looks to make it the happiest

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Speaker 1: place on earth for investors. Could it be game over

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Speaker 1: from Microsoft activision deal? The UK regulator takes aim at

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Speaker 1: the tire up business lobby equals with tax breaks. Twitter

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Speaker 1: runs out of characters and Boris Johnson makes five million

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Speaker 1: pounds in less than five months. Those are the stories

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Speaker 1: we're looking at in today's papers and I'm leanne Geryon's plus,

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Speaker 1: the UK property market becomes a bit of a fixer

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Speaker 1: rupper as sales and inquiries full further, that's all straight

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Speaker 1: ahead on Bloomberg Daybreak Europe. The business news you need

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Speaker 1: to start your day in just one fifteen minute podcast

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Speaker 1: on Apple, Spotify, the Bloomberg Business App and everywhere you

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Speaker 1: get your podcasts. Clients pod cash out of credit SWEE

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Speaker 1: at a wreck heard rate in the final three months

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Speaker 1: of last year. The one D twenty billion dollar outflow

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Speaker 1: comes as the bank reported a fifth straight quarterly loss.

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Speaker 1: The bank saw a net loss of almost one point

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Speaker 1: four billion Swiss francs over the period, versus estimates of

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Speaker 1: just over one point one billion. The bank CEO Earler

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Speaker 1: Kona didn't mince his words in assessing his bank's performance.

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Speaker 1: The results are unacceptable, obviously, and that's why we created

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Speaker 1: the News to Edgy transformation program, which we as you know,

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Speaker 1: communicated enter October to create a new credit space. Much

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Speaker 1: of my focus simpler, build around client needs and we'll

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Speaker 1: have more of Francine Lucke was interview with Credit Swite

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Speaker 1: CEO Kona. In a few minutes, the bank says it

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Speaker 1: now expects a substantial full year loss. Looking ahead, the

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Speaker 1: Swiss Lander also says both its investment bank and wealth

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Speaker 1: management unit will be loss making in the first quarter

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Speaker 1: of this year. And now to other earnings just making

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Speaker 1: on the big terminal this morning, start with Union Leave.

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Speaker 1: Fourth quarter underlying sales come in just about on estimates

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Speaker 1: set up by nine point two. The estimate was for

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Speaker 1: a game of nine point to one percent. Union lever

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Speaker 1: sees underlying operating margins will be around six in the

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Speaker 1: first half of the year. That also talking about inflation

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Speaker 1: and the cost of that to the business, also asked Zenica.

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Speaker 1: They report their fourth quarter earnings per share at a

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Speaker 1: dollar thirty eight, so actually above the estimated dollar thirty five.

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Speaker 1: Those the latest in results, and Disney shares jumped in

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Speaker 1: late trading after the company unveiled a five point five

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Speaker 1: billion dollar cast cutting plan, which includes seven thousand job losses.

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Speaker 1: CEO Bob Iger made the announcement. He returned to the

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Speaker 1: lead of the entertainment giant in November after his successor

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Speaker 1: was fired. I guess there's the business now needs to

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Speaker 1: tighten its belt. We are going to take a really

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Speaker 1: hard look at the cost for everything that we make,

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Speaker 1: both across television and film, because of things in a

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Speaker 1: very competitive world have just simply gotten more expensive. And

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Speaker 1: that's something that is already underway here. Bob Iger was

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Speaker 1: speaking to investors after Disney delivered a set of upbeat

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Speaker 1: financial results. First quarter revenue beat expectations, growing by almost

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Speaker 1: eight percent to twenty three point five billion dollars. Now,

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Speaker 1: traders are ramping up bet that the Federal Reserve will

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Speaker 1: now raise rates to six percent. That's nearly a percentage

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Speaker 1: point higher than the current consensus and It comes after

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Speaker 1: last week's red hot jobs data. Federal Reserve Governor Christopher

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Speaker 1: Waller says that further tightening will be needed to bring

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Speaker 1: inflation down to targets. We have farther to go, and

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Speaker 1: it might be a long fight with interest rates higher

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Speaker 1: for longer than some are currently expecting, but it will

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Speaker 1: not hesitate to do what is needed to get my

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Speaker 1: job done well. It isn't the only Fed official to

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Speaker 1: talk about the need for further rate rises in the

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Speaker 1: past twenty four hours. The federals A Bank of Minneapolis

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Speaker 1: president Cash Curry also says that more hikes will be

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Speaker 1: needed to combat an inflationary wage growth. And Microsoft steel

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Speaker 1: to buy Activision Blizzard is being opposed by the UK's

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Speaker 1: competition regulator, which says the sale could harm gamers, Bloombergs

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Speaker 1: and human parts reports. The UK's Competition regulator says it

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Speaker 1: has serious reservations over microsoft sixty nine billion dollar takeover

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Speaker 1: of video game company Activision Blizzard. The Competition and Markets

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Speaker 1: Authority says that one way forward could be the sell

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Speaker 1: off of the Blockbuster Call of Duty franchise the same

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Speaker 1: and throws into question the viability of the whole deal,

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Speaker 1: which is already under attack from US regulators. Yesterday, Activision

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Speaker 1: shares slumped on the news, putting them more than twenty

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Speaker 1: percent below Microsoft's offer, suggesting investors think it could now

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Speaker 1: be game over for the deal in London. I'm you

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Speaker 1: in parts in Boo Daybreak Europe. Meanwhile, other issues in

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Speaker 1: the UK, so you figures show that the housing market

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Speaker 1: here has slipped further into hibernation in January, as bars

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Speaker 1: and sellers both stayed away. The whole Institution of Charted

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Speaker 1: Surveyors says the lack lost the activity led into a

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Speaker 1: further job in property prices at the start of the year.

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Speaker 1: The findings add to evidence that prices may be headed

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Speaker 1: for the longest slump since the global financial crisis in

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Speaker 1: two thousand and eight. And Ukrainian President vladimir's Lensky is

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Speaker 1: in Brussels today hoping to secure more military aid in

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Speaker 1: the fight against Russia's invasion. So Lenski will address a

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Speaker 1: meeting of European Union leaders. Yesterday, he received a standing

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Speaker 1: ovation in Westminster, where he appealed for fighter jets and

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Speaker 1: warned Putin that Ukraine won't be beaten. We know Russia

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Speaker 1: will lose and we we really know the victory. The

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Speaker 1: victory will change the worlds and these will be a

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Speaker 1: change that the world has long needed. Speaking alongside Zelensky,

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Speaker 1: Prime Minister Soona said quote nothing is off the table

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Speaker 1: and that Britain had begun assessing its plane if its

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Speaker 1: plans could be sent to Ukraine. The US, UK and

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Speaker 1: Germany have all previously ruled out sending fighter jets to

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Speaker 1: the country. Okay though, so a few of our top

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Speaker 1: stories for you this morning. Vladimir Zelenski goes to Europe

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Speaker 1: today to lobby Continental Europeans for more weapons. But he

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Speaker 1: was here in London yesterday and it really did strike

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Speaker 1: a very strong note. This is only the second trip

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Speaker 1: that the Ukrainian president has made outside of the country

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Speaker 1: in this year long war. Some of the phrases that

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Speaker 1: he used um were just incredibly meaningful. I think to

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Speaker 1: people in the UK and you it was rhetoric, but

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Speaker 1: it was also the kind of heart that he presented

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Speaker 1: to the UK that all the MP's were classic. He's

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Speaker 1: incredibly skilled at communication. I think that's something that's so important,

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Speaker 1: particularly as we enter the second year of this war,

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Speaker 1: the importance of keeping allies together in this battle. He

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Speaker 1: really seems to understand the power of connecting with each

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Speaker 1: country individually. Yeah. Absolutely, we wonder what he will do

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Speaker 1: then today with your peer leaders. I mean he did

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Speaker 1: manage to move the needle for the UK. We she

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Speaker 1: seen O talking about exploring the possibility of fighter jets.

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Speaker 1: That would be a very significant move, So that those

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Speaker 1: thoughts really about what was happening in London yesterday. But

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Speaker 1: this morning, of course, we've had out the Credit Swiss earnings.

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Speaker 1: There's a t live blog on the Bloomberg terminal with

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Speaker 1: all of our finance reporters contributing. But clients pulled out

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Speaker 1: a huge number a hundred and twenty billion dollars on

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Speaker 1: the bank in the fourth quarter, deteriorating confidence in the

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Speaker 1: Swiss Land and other CEO or Rick Kerner has been

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Speaker 1: speaking to Bloomberg's editor at large, Francine Lacqua now. She

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Speaker 1: began by asking him how he would assess Credit sweez

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Speaker 1: is latest set of results. The results are unacceptable, obviously,

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Speaker 1: and that's why we created the News to Ergy Transformation program,

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Speaker 1: which we as you are communicated enter October to create

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Speaker 1: a new Credit Swiss. Much of my focust simpler built

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Speaker 1: around client needs in the midterm very profitable and we

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Speaker 1: are executing at pace. And let me also say we

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Speaker 1: are confirming all our targets we gave by the end

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Speaker 1: of October. So when do you think results will be acceptable?

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Speaker 1: When will they be at a level that you're comfortable with. Look,

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Speaker 1: we said this is a three year, three year transformation.

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Speaker 1: We gave targets on on return, on times roacuity. As

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Speaker 1: you know, we reconfirmed them. So it will take some time,

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Speaker 1: certainly a very transformative year, and then we get better

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Speaker 1: and better. What's your outlook for asset flows? So we

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Speaker 1: have seen what has happened in October. Um, let me

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Speaker 1: say that you know, the outflows we have seen basically

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Speaker 1: are more than eighty five stemming from October and November,

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Speaker 1: and if you click only in October is more than six.

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Speaker 1: So what we did immediately after we could communicate the

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Speaker 1: end of October, we put in place and at least

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Speaker 1: what the colleagues me me an unprecedented client outreach program.

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Speaker 1: So we talked in the meantime to more than ten

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Speaker 1: thousand wealth management clients individually as we talk, and more

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Speaker 1: than fifty thousand clients in Switzerland. And I think that

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Speaker 1: has created very good momentum. So if I look into

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Speaker 1: January the group overall, isn't that positive on deposits, wells

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Speaker 1: management globally as well? Let's menationment Asia Peck as well.

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Speaker 1: Let's mentioned as PEC being positive for net new assets

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Speaker 1: and Switzerland as well. So I think the situation has

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Speaker 1: changed completely. Is this a trend that you believe will

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Speaker 1: definitely continue? And where are these influence coming from? They

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Speaker 1: are coming from different different geographies, different places in the firm.

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Speaker 1: As I said, Asia very positive, Switzerland positive in terms

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Speaker 1: of net new assets, other areas as well. So I

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Speaker 1: think it's it's a really completely changed situation. When will

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Speaker 1: Christmas be reliably profit again? Look, that is a far reaching,

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Speaker 1: far reaching question. We said very clearly we will make

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Speaker 1: a loss in twenty twenty three and from there on

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Speaker 1: um if we get better and better. But could it

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Speaker 1: be or does it have to be done? I mean,

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Speaker 1: I think in the past you've said and then Analyss

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Speaker 1: you're saying, look you could actually does it make a

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Speaker 1: difference to when you hit that target? Look, the difference

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Speaker 1: is how we execute and how the long term attractiveness

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Speaker 1: for our shout as we look like that will be

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Speaker 1: very attractive, but never less. Twenty twenty four, I think

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Speaker 1: we should be profitable any cornerstone investors that you've been

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Speaker 1: able to walk in, Do you mean we suspect to CSFB. Yes,

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Speaker 1: so we had, as we said already in Tobo, we

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Speaker 1: had into a strong interest there. We have several investors

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Speaker 1: now being interested in coming in. We first wanted to

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Speaker 1: do as you have seen, the transaction with m Klein

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Speaker 1: and company, because that's an important step to accelerate the

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Speaker 1: transformation into CSFB. And now we are, you know, in

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Speaker 1: very close in tact and discussions with several investors potentially

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Speaker 1: coming into CSP. So what's the transaction looking like? For example,

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Speaker 1: with Michael clients, how much equity? Well it does he

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Speaker 1: get so as as we communicated, so we pay one

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Speaker 1: on the seventy five million for UM for his very

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Speaker 1: good firm. UM. This is I mean, this is an

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Speaker 1: very fair price, I would say, UM. And and you

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Speaker 1: know this is very a creative, earning, secreative transaction immediately

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Speaker 1: and with strength and our advisory capabilities, UM gone very

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Speaker 1: obviously and therefore excelerate also our transformation into CSFP. So

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Speaker 1: I think that's look the whole transaction and the whole setups,

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Speaker 1: as we discussed already in October, was done you know,

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Speaker 1: to create long lasting, significant share of value, and this

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Speaker 1: transaction is one step on their way being plan on

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Speaker 1: buying other critiquies actually to change. No, we said looked

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Speaker 1: at two main careas which we are working on is

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Speaker 1: the new grade service and as csp um. Talking to

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Speaker 1: me a little bit about client onboarding. So if we

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Speaker 1: go back to some of the influencer outflows, are you

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Speaker 1: changing risk management or anti money laundering because there was

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Speaker 1: a problem in onboarding previous clients. No, I think we have.

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Speaker 1: We have done a lot of risk per mediation over

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Speaker 1: the last two years. Actually we'll do more this year.

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Speaker 1: But I think in this respect we are absolutely fine,

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Speaker 1: professional and we on board. We are even getting faster

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Speaker 1: in terms of onboarding. So that's that's all well under way.

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Speaker 1: Talking a little bit about compensation, I mean there's certainly

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Speaker 1: created waves. There was talk about you delaying compensation or

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Speaker 1: doing it in three transits. What is the reasoning behind that? No,

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Speaker 1: we we are don't do it in two sponsors. So

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Speaker 1: we have we haven't hadn't pick you know, sort of

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Speaker 1: say compensation day like today before yesterday, and there are

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Speaker 1: very small parts of the firm, particular seniors in CSFB

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Speaker 1: that was delayed a bit, but you know we are

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Speaker 1: we're doing that over the next couple of days. But

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Speaker 1: overall it was done globally more less at the same day.

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Speaker 1: So what's your strategy on compensation and bonuses? Look at

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Speaker 1: this rag in quotation markets is pretty simple. It needs

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Speaker 1: to be in line with the results more or less

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Speaker 1: um and and I think that's the current thinking and

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Speaker 1: the and the future thinking. And I think there is

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Speaker 1: also something which is very important you now if you

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Speaker 1: think about new credits with that provides us with the

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Speaker 1: opportunity to create an also new culture. And that is

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Speaker 1: all what we are defining now. And I think the

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Speaker 1: new culture when it comes to compensation in principle going

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Speaker 1: forward will be you know, you make profit, you paper honest,

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Speaker 1: If you don't, you pay the very little or nothing.

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Speaker 1: So that's that's the culture around bonus going forward. Are

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Speaker 1: you reallocating bonuses actually at the bank? Like how you

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Speaker 1: think about it? What do you mean by reallocating in

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Speaker 1: terms of the units? So is it it seems pretty

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Speaker 1: I guess intuitive that if you make a profit, if

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Speaker 1: you would do good. You have bonuses, are you taking

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Speaker 1: some away from certain people to give it to others? Like,

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Speaker 1: how has that changed in the last twelve months? Looked? No,

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Speaker 1: in principle or not. But the only thing which we

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Speaker 1: are doing, obviously is as you have seen, we we

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Speaker 1: we cut it the bonus pool significantly, which you would expect,

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Speaker 1: I guess in a year like last year. But then

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Speaker 1: we make sure and that's maybe the over the only

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Speaker 1: overlay we are creating, and make sure you know that

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Speaker 1: we can really keep the franchise. And in this sense

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Speaker 1: it might be that you know, a little bit goes

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Speaker 1: more left than right and so on, but in principle

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Speaker 1: it goes on the on the underlying results. Are you

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Speaker 1: worried about people leaving the firm? Look, we have a

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Speaker 1: tough bonus on the sands we are, we are in

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Speaker 1: competition with all our friendly peers. Um. But on the

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Speaker 1: other hand, I think I believe very strongly in that

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Speaker 1: one is you know, new credits vice, but also spe

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Speaker 1: for our important colleagues on that side, creates really something

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Speaker 1: which they can believe in. This is something new, This

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Speaker 1: is a very very good story, will be very profitable

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Speaker 1: on both sides. And there is something people believe in

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Speaker 1: the credit space, CEO it Kerner. They're speaking to Bitenberg's

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Speaker 1: editor at large, Frosting lackwid. I don't know how much

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Speaker 1: you can read into his tone of voice, but obviously

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Speaker 1: he was saying that it was an immensely difficult quarter, right.

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Speaker 1: He called the results unacceptable, and you know, he was

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Speaker 1: quite calm that it's really hard to understate how bad

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Speaker 1: two was for this bank. It was their worst year

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Speaker 1: since the financial crisis. That is really saying something. And

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Speaker 1: when you break out segment performance here, when you look

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Speaker 1: at wealth management, investment banking, asset management and the Swiss Bank,

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Speaker 1: three out of the four business units there were posting

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Speaker 1: pre tax losses. So that is quite substantial. Yeah, it

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Speaker 1: is substantial. Although that the that you know, trying to

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Speaker 1: refocus and think about the aren't they yes, positive influence

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Speaker 1: in January? So that is something at least positively forward to.

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Speaker 1: All right, So that that's the upside the credit space

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Speaker 1: is talking about. Okay, coming up next. Business leaders in

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Speaker 1: the UK call for tax but eggs, Twitter runs out

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Speaker 1: of characters and Boris Johnson makes five million pounds in

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Speaker 1: less than five months. Now The paper review on Bluebirdday

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

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Speaker 1: Bloomberg's Lean Garin's joins us now to talk through today's papers.

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Speaker 1: Good morning, Liam, Good morning Charlie. Why don't we start

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Speaker 1: with this time's headline reading that bosses are calling on

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Speaker 1: Chancellor Hunt for more tax breaks to avoid recession. Yes, indeed, Charlie,

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Speaker 1: good morning to you and great to have you on

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Speaker 1: this show. So Jeremy Hunt is under pressure from the

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Speaker 1: business lobby, the cb I, and this is to announce

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Speaker 1: tax breaks for businesses during his spring budget and they

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Speaker 1: are basically saying this is the last chance to help

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Speaker 1: the economy avoid a recession this year. And the Chancellor

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Speaker 1: will be presenting his budget on the fifteenth of March,

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Speaker 1: so it's definitely creeping up on us. And according to

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Speaker 1: The Times, the Confederation of British Industry is also called

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Speaker 1: on the government to provide better funding for childcare that

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Speaker 1: so people can come back to the workplace, and also

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Speaker 1: to increase green investment and this will help prevent the

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Speaker 1: UK from falling behind other G seven countries. The corporate

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Speaker 1: tax rates will go up to twenty six percent from April. Now,

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Speaker 1: this is a massive reversal of Quasi Quarteen's attempt to

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Speaker 1: really cut that rate to nent and that was during

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Speaker 1: his mini budget back in September last year. Now Tony Dancer,

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Speaker 1: he's the Director General of the CBI, initially welcomed Quartengs

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Speaker 1: mini budget last September, calling the forty billion pound blitz

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Speaker 1: of tax cuts a turning point for the economy. However,

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Speaker 1: as Caroline will outline, we saw a very different picture

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Speaker 1: in the markets. Yeah. Absolutely. And also the issue I

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Speaker 1: think for the budget is around the super deduction. So

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Speaker 1: this is you know, for a couple of years, businesses

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Speaker 1: have been given the possibility of a big tax bait

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Speaker 1: if they invest in kind of equipment and that's running

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Speaker 1: out in March. So actually the f T says the

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Speaker 1: io D and make UK they want that to be renewed.

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Speaker 1: I think that's quite an interesting point. And we were

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Speaker 1: speaking to the CBI just earlier this morning and I

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Speaker 1: thought it was interesting that Louise Helen was talking about

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Speaker 1: you know, I sort of challenged her because it's it's

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Speaker 1: such a different moment in the UK. Are there really

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Speaker 1: going to be any of these expensive plans like childcare

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Speaker 1: massively expensive for the government. Is that really going to happen?

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Speaker 1: She said, that's more than just rhetoric needs to come

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Speaker 1: through from Hunt. I thought that was quite an interesting

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Speaker 1: life from her. But also last night, if you were

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Speaker 1: trying to tweet, the Guardian has Twitter users temporarily unable

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Speaker 1: to post in the latest outage since the Musk takeover.

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Speaker 1: What happens. Yes, so at about ten pm last night,

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Speaker 1: if you're on your phone and he wanted to send

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Speaker 1: a tweet, well, you would have been informed by the

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Speaker 1: platform that you would hit your daily limited, even if

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Speaker 1: you hadn't actually tweeted all. According to the Guardian, the

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Speaker 1: outage was the latest in this the latest one to

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Speaker 1: hit the social media platform since a billionaire Elon Musk's takeover.

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Speaker 1: But Musk did tweet actually saying multiple internal and external

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Speaker 1: issues had caused the meltdown. The good news is it

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Speaker 1: only lasted an hour, so you had to wait one

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Speaker 1: hour and the US Tech publication the Information is reporting

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Speaker 1: mustard Twitter staff to pause this new development feature that

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Speaker 1: they were working on. And just one thing to highlight

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Speaker 1: this new development features. If you sign up for the

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Speaker 1: Blue Tick, if you subscribe to it, you could send

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Speaker 1: tweets with up to four thousand characters, which I think

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Speaker 1: is a pretty epic move. Four thousand characters. I mean,

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Speaker 1: that's like, let's say it's alright, and then what about

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Speaker 1: this headline of the Financial Times Boris chances are nearly

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Speaker 1: five million pounds since leaving Arfers Well, Charlie, not quite

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Speaker 1: five million, just shy of that. So he has declared

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Speaker 1: an income of four point eight million pounds and according

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Speaker 1: to the FT, this is fifty times a salary as

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Speaker 1: a backbench MP. So I hear you saying, how has

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Speaker 1: he made all this money? Boris Johnson did declare an

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Speaker 1: advanced payment of two point five million pounds from New

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Speaker 1: York's Harry Walker Agency for a number of future speaking arrangements.

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Speaker 1: We also know he's had this big cash offer because

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Speaker 1: he's going to be publishing his memoir speaking about his

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Speaker 1: three years or what was the advanced There was lots

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Speaker 1: of lots of betting on how much, well it was

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Speaker 1: apparently five hundred and ten thousand pounds was he advanced

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Speaker 1: for that advance? Okay, that's sort of lots of comparisons

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Speaker 1: that how much David Camra got for his book. Yes, exactly.

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Speaker 1: But I just wanted to say in one the one

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Speaker 1: thing one remember. Boris Johnson told MPs they should focus

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Speaker 1: on their parliamentary duties. You must put your job as

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Speaker 1: an MP first, and must devote yourself primarily and above

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Speaker 1: all to your constituencies.