1 00:00:03,200 --> 00:00:05,720 Speaker 1: This is Bloomberg Daybreak here for this Thursday, the twenty 2 00:00:05,800 --> 00:00:07,200 Speaker 1: seventh of April in London. 3 00:00:07,280 --> 00:00:11,080 Speaker 2: Coming up today, can First Republic last troubled lenders shares 4 00:00:11,119 --> 00:00:14,400 Speaker 2: hit an all time low as authorities debate its future. 5 00:00:14,320 --> 00:00:17,680 Speaker 1: Banking bonanza, Barklay's and Deutsche Bank report. 6 00:00:17,360 --> 00:00:21,080 Speaker 2: Earnings, Meta better, the social media giant returns to growth 7 00:00:21,120 --> 00:00:24,000 Speaker 2: after three straight quarters of declines. 8 00:00:23,760 --> 00:00:27,800 Speaker 3: CBI to be renamed game over for Activision deal and 9 00:00:27,960 --> 00:00:32,160 Speaker 3: p wc's one billion dollar accountant. Those are the stories 10 00:00:32,200 --> 00:00:35,720 Speaker 3: we're looking at in today's papers. And I'm Leanne Gerrin's. 11 00:00:35,440 --> 00:00:37,280 Speaker 4: Plus plain bad news. 12 00:00:37,320 --> 00:00:39,560 Speaker 1: Why the cost of air travel is going to remain 13 00:00:39,720 --> 00:00:40,839 Speaker 1: higher for longer. 14 00:00:43,760 --> 00:00:47,600 Speaker 5: That's all straight ahead on Bloomberg Daybreak Europe. The business 15 00:00:47,640 --> 00:00:49,800 Speaker 5: news you need to start your day in just one 16 00:00:49,920 --> 00:00:54,400 Speaker 5: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App, 17 00:00:54,520 --> 00:00:56,680 Speaker 5: and everywhere you get your podcasts. 18 00:01:00,560 --> 00:01:02,120 Speaker 2: Good morning. I'm Stephen Carroll and. 19 00:01:02,120 --> 00:01:05,319 Speaker 1: I'm Caroline Hecker. Here are the stories that we're following today. 20 00:01:05,800 --> 00:01:08,800 Speaker 2: First Republic shares hit an all time low as regulator's 21 00:01:08,840 --> 00:01:12,360 Speaker 2: way downrating. The bank shares fell by thirty percent when 22 00:01:12,360 --> 00:01:15,759 Speaker 2: Bloomberg broke the news the US regulators are considering limiting 23 00:01:15,760 --> 00:01:18,679 Speaker 2: the bank's access to the Fed's discount window, and an 24 00:01:18,720 --> 00:01:22,600 Speaker 2: emergency facility launched last month. The stocks now down by 25 00:01:22,720 --> 00:01:24,440 Speaker 2: ninety five percent since the. 26 00:01:24,400 --> 00:01:25,280 Speaker 6: Start of the year. 27 00:01:25,640 --> 00:01:29,119 Speaker 2: JP Morgan Asset Management CIO Bob Michaels says the US 28 00:01:29,240 --> 00:01:31,080 Speaker 2: banking sector is in crisis. 29 00:01:32,240 --> 00:01:35,800 Speaker 7: It's somewhat naive to say that this is just limited 30 00:01:35,880 --> 00:01:39,280 Speaker 7: to First Republic. If you step back and think about it, 31 00:01:39,720 --> 00:01:42,679 Speaker 7: this should never have happened. This went after the most 32 00:01:42,720 --> 00:01:47,680 Speaker 7: heavily regulated capitalized industry on the planet, banking, and the 33 00:01:47,720 --> 00:01:50,880 Speaker 7: regional banking system I think is quite vital to the US, 34 00:01:51,120 --> 00:01:52,520 Speaker 7: so I think it is a crisis. 35 00:01:53,680 --> 00:01:56,800 Speaker 2: Michael's fear is what happens when the current emergency loan 36 00:01:56,880 --> 00:01:59,680 Speaker 2: programs expire. It comes as the FED is set to 37 00:01:59,720 --> 00:02:03,280 Speaker 2: report to Congress on if banking watchdogs were vigilant enough 38 00:02:03,320 --> 00:02:06,840 Speaker 2: in their oversight of Silicon Valley Bank before its abrupt 39 00:02:06,880 --> 00:02:08,120 Speaker 2: collapse last month. 40 00:02:08,919 --> 00:02:13,000 Speaker 1: And now to Deutsche bank earnings amid volatility and slowing 41 00:02:13,040 --> 00:02:16,360 Speaker 1: deal activity, we now have Deutsche Bank's results. Their first 42 00:02:16,440 --> 00:02:21,360 Speaker 1: quarter fixed income, commodity sales and trading revenue is a miss. 43 00:02:21,400 --> 00:02:23,920 Speaker 1: It comes in at two point three billion euros. The 44 00:02:24,040 --> 00:02:27,320 Speaker 1: estimate had been for two point five three billion, so 45 00:02:27,440 --> 00:02:31,239 Speaker 1: fixed income trading revenue slid seventeen percent, which is more 46 00:02:31,280 --> 00:02:34,640 Speaker 1: than expected. The bank said that that partly reflects the 47 00:02:34,680 --> 00:02:40,200 Speaker 1: contribution of episodic items a year earlier. In terms of 48 00:02:40,280 --> 00:02:43,519 Speaker 1: the goal though for cost cutting, interesting that Deutsche Bank 49 00:02:43,600 --> 00:02:46,800 Speaker 1: has increased that goal for cost cutting from two billion 50 00:02:46,800 --> 00:02:49,600 Speaker 1: euros up to two and a half billion euros by 51 00:02:49,680 --> 00:02:53,120 Speaker 1: twenty twenty five, so stepping up their game when it 52 00:02:53,160 --> 00:02:54,480 Speaker 1: comes to efficiency. 53 00:02:54,520 --> 00:02:55,880 Speaker 4: The results from Deutsche Bank. 54 00:02:56,400 --> 00:02:59,440 Speaker 2: Matt I meanwhile added to big tech good news. The 55 00:02:59,520 --> 00:03:03,440 Speaker 2: parent company of Facebook, Instagram, and WhatsApp shares sarge twelve 56 00:03:03,480 --> 00:03:08,200 Speaker 2: percent Postmarcus after sales return to growth and user numbers beast. 57 00:03:08,280 --> 00:03:10,360 Speaker 2: The story from Bloomberg's Charlie Palace. 58 00:03:10,520 --> 00:03:14,000 Speaker 6: It signals the beginnings of a recovery in digital advertising. 59 00:03:14,360 --> 00:03:17,880 Speaker 6: First quarter sales rose to twenty eight point six billion dollars, 60 00:03:18,080 --> 00:03:21,959 Speaker 6: a return to growth after three straight quarters of declines 61 00:03:22,320 --> 00:03:25,520 Speaker 6: that compares with the twenty seven point seven billion that 62 00:03:25,600 --> 00:03:29,280 Speaker 6: analysts had projected on average. Meta is working to move 63 00:03:29,360 --> 00:03:33,160 Speaker 6: faster while cutting costs in what CEO Mark Zuckerberg has 64 00:03:33,240 --> 00:03:37,400 Speaker 6: dubbed the Year of Efficiency a slowdown in advertising demand 65 00:03:37,480 --> 00:03:40,640 Speaker 6: over the last year force a social media giant which 66 00:03:40,680 --> 00:03:45,080 Speaker 6: owns Facebook, Instagram, and WhatsApp, to slash headcount and reduce 67 00:03:45,120 --> 00:03:51,080 Speaker 6: spending in New York. Charlie Pellett Bloomberg Daybreak, Europe. 68 00:03:50,120 --> 00:03:54,520 Speaker 1: In more tech news. Samsung Electronics fell after profits missed 69 00:03:54,520 --> 00:03:57,920 Speaker 1: and its chip division posted a record quarterly loss. Is 70 00:03:58,000 --> 00:04:00,360 Speaker 1: Net income for the quarter also came in other than 71 00:04:00,400 --> 00:04:04,280 Speaker 1: anticipated at a little over one billion dollars. The world's 72 00:04:04,280 --> 00:04:07,800 Speaker 1: dominant storage chip maker says that it won't give annual 73 00:04:07,840 --> 00:04:12,600 Speaker 1: guidance on memory chips, citing economic uncertainties. Samsung sees demand 74 00:04:12,600 --> 00:04:16,599 Speaker 1: for storage components improving only gradually, with a recovery in 75 00:04:16,720 --> 00:04:19,599 Speaker 1: smartphones and displays in the second half of the year 76 00:04:19,760 --> 00:04:20,719 Speaker 1: driven by China. 77 00:04:21,160 --> 00:04:24,560 Speaker 2: Chinese President Chi Jinping has spoken with Ukrain's Vladimir Zelenski 78 00:04:24,640 --> 00:04:28,479 Speaker 2: for the first time since Russia's invasion began. Zelensky hails 79 00:04:28,520 --> 00:04:30,279 Speaker 2: the move as a foundation for peace. 80 00:04:31,760 --> 00:04:34,240 Speaker 8: There is an opportunity to give new energy to our 81 00:04:34,279 --> 00:04:38,240 Speaker 8: relations between Ukraine and China. There's an opportunity to use 82 00:04:38,320 --> 00:04:42,000 Speaker 8: China's political influence to restore strength to the principles and 83 00:04:42,080 --> 00:04:45,440 Speaker 8: rules on which peace should be based Ukraine and China, 84 00:04:45,560 --> 00:04:48,600 Speaker 8: like the vast majority of the world, are equally interested 85 00:04:48,760 --> 00:04:53,160 Speaker 8: in the strength of the sovereignty of nations in territorial integrity. 86 00:04:55,040 --> 00:04:57,520 Speaker 2: The symbolism of the call was important for both leaders, 87 00:04:57,560 --> 00:05:00,600 Speaker 2: although reports suggest there were no major breakth through during 88 00:05:00,600 --> 00:05:04,200 Speaker 2: the conversation. She reportedly told Zelenski that negotiations are the 89 00:05:04,240 --> 00:05:06,160 Speaker 2: only way out of the crisis. 90 00:05:07,040 --> 00:05:10,359 Speaker 1: Now to UK News, a think tank has found that 91 00:05:10,560 --> 00:05:13,839 Speaker 1: lost earnings due to long term sickness is costing the 92 00:05:13,960 --> 00:05:17,400 Speaker 1: UK billions of pounds. The Institute for Public Policy Research 93 00:05:17,560 --> 00:05:21,480 Speaker 1: estimates that forty three billion pounds was lost in twenty 94 00:05:21,600 --> 00:05:27,000 Speaker 1: twenty one, amounting to around two percent of gross domestic products. Okay, 95 00:05:27,040 --> 00:05:28,520 Speaker 1: there's are a few of our top stories. 96 00:05:28,520 --> 00:05:29,920 Speaker 4: Then this morning. 97 00:05:30,080 --> 00:05:32,680 Speaker 1: I am watching, though on a slightly lighted note, the 98 00:05:32,720 --> 00:05:37,200 Speaker 1: flight website, so try to get my summer travel deals sorted. 99 00:05:37,880 --> 00:05:42,120 Speaker 1: I may be waiting in Vain though my flight's so expensive. 100 00:05:42,240 --> 00:05:43,840 Speaker 2: Well, look, this is part of the conversations actually we 101 00:05:43,880 --> 00:05:46,120 Speaker 2: had with Willie Walsh and Maata last week at the 102 00:05:46,160 --> 00:05:48,880 Speaker 2: Bloomberg New Economy gate where Europe event in Ireland. And 103 00:05:48,920 --> 00:05:51,039 Speaker 2: there's a couple of factors involved in this and something 104 00:05:51,080 --> 00:05:52,840 Speaker 2: that we've heard also from the likes of easy Jet 105 00:05:53,360 --> 00:05:55,599 Speaker 2: in their results so far as well. So part of 106 00:05:55,600 --> 00:05:58,679 Speaker 2: it is actually due to the planes themselves, the shortage 107 00:05:58,720 --> 00:06:01,000 Speaker 2: of spare pikes, spare part it's being a big issue, 108 00:06:01,000 --> 00:06:03,120 Speaker 2: and trying to get some of those planes back in 109 00:06:03,160 --> 00:06:06,839 Speaker 2: the sky is something that's casting airlines pandemics. 110 00:06:06,920 --> 00:06:08,520 Speaker 4: So many were grounded. 111 00:06:08,240 --> 00:06:10,760 Speaker 2: Exactly, and there's been kind of still an ongoing hangover 112 00:06:10,880 --> 00:06:12,760 Speaker 2: that due to the supply chain disruption that came after 113 00:06:12,800 --> 00:06:15,480 Speaker 2: that as well. Michael O'Leary from Ryaner among those saying 114 00:06:15,480 --> 00:06:17,159 Speaker 2: that take a Price is likely to stay elevator for 115 00:06:17,240 --> 00:06:18,000 Speaker 2: several years. 116 00:06:18,160 --> 00:06:21,520 Speaker 1: Yeah. Also I did note that he Throws CEO John 117 00:06:21,560 --> 00:06:25,560 Speaker 1: holland Key were speaking to Bloomberg's Siddarth Philip and saying 118 00:06:25,600 --> 00:06:30,599 Speaker 1: that actually business travel hasn't rebounded. Corporate bookings are being 119 00:06:30,640 --> 00:06:33,919 Speaker 1: held back because of the economic uncertainty and by job cuts, 120 00:06:33,920 --> 00:06:36,680 Speaker 1: which kind of feeds into you know, the issues with 121 00:06:36,800 --> 00:06:38,839 Speaker 1: tech jobs for example, being slashed. 122 00:06:38,920 --> 00:06:42,440 Speaker 2: Yeah, and there's that question too about what you know 123 00:06:42,640 --> 00:06:45,760 Speaker 2: that in terms of post pandemic business travel, how much 124 00:06:45,760 --> 00:06:48,040 Speaker 2: of it we'll actually return in principle, will people do 125 00:06:48,279 --> 00:06:50,839 Speaker 2: how much proportion, how much of meetings. Will people do 126 00:06:50,880 --> 00:06:51,839 Speaker 2: over zoom instead? 127 00:06:52,040 --> 00:06:52,360 Speaker 1: Okay? 128 00:06:52,480 --> 00:06:55,480 Speaker 4: Not good news then for me in my summer bookings. Okay. 129 00:06:55,839 --> 00:06:58,520 Speaker 1: Having said that, let's get back to our top stories. 130 00:06:58,520 --> 00:07:01,760 Speaker 1: Shall we banking regulate is in the US considering a 131 00:07:01,800 --> 00:07:07,120 Speaker 1: move which could limit First Republic's access to FED lending facilities. 132 00:07:07,120 --> 00:07:10,280 Speaker 1: Our markets report A value titel is in the radio 133 00:07:10,320 --> 00:07:13,640 Speaker 1: studio this morning. What is the Federal Deposit Insurance Corporation 134 00:07:13,760 --> 00:07:16,720 Speaker 1: considering then? What effect would it have on First Republic? 135 00:07:17,480 --> 00:07:20,520 Speaker 9: So they're essentially looking at downgrading them in their private 136 00:07:20,560 --> 00:07:22,760 Speaker 9: scale in a way that will prevent them from using 137 00:07:22,800 --> 00:07:26,560 Speaker 9: the fed's discount window because essentially you take too much 138 00:07:26,600 --> 00:07:29,160 Speaker 9: credit risk on for the FED to lend to them. Now, 139 00:07:29,360 --> 00:07:33,120 Speaker 9: that's just a way to show that the FDIC really 140 00:07:33,160 --> 00:07:36,760 Speaker 9: is standing by unwilling to be involved much in a 141 00:07:36,800 --> 00:07:39,960 Speaker 9: restructuring solution. There seems to be a bit of a 142 00:07:39,960 --> 00:07:44,120 Speaker 9: standoff between the FDIC and any potential private buyers. Now, 143 00:07:44,120 --> 00:07:46,800 Speaker 9: these private buyers likely another big bank in the US. 144 00:07:48,800 --> 00:07:50,760 Speaker 9: It's more likely for them to come forward as the 145 00:07:50,800 --> 00:07:53,520 Speaker 9: stock price plummets, it looks more attractive for them to acquire, 146 00:07:53,560 --> 00:07:57,080 Speaker 9: but they seem hesitant to do this without some combination 147 00:07:57,320 --> 00:08:00,200 Speaker 9: of the FDIC taking on some of the loss is 148 00:08:00,240 --> 00:08:02,840 Speaker 9: you know, in some way minimizing their financial risks. So 149 00:08:02,880 --> 00:08:04,960 Speaker 9: a bit of a standoff I think between the FDIC 150 00:08:05,120 --> 00:08:06,480 Speaker 9: and any potential buyer out there. 151 00:08:06,680 --> 00:08:08,440 Speaker 2: Yeah, I mean, is there any sign that a rescue 152 00:08:08,440 --> 00:08:11,000 Speaker 2: deal for First Republic is in the works. 153 00:08:11,680 --> 00:08:15,080 Speaker 9: Look, you'd think that with the stock price trading around 154 00:08:15,160 --> 00:08:17,600 Speaker 9: near zero. I mean, it's down some ninety seven percent 155 00:08:17,680 --> 00:08:20,560 Speaker 9: on the year, that in some manner its assets are 156 00:08:20,560 --> 00:08:22,960 Speaker 9: going to look attractive to somebody out there. So the 157 00:08:23,000 --> 00:08:25,240 Speaker 9: lower it goes, the more likely someone is going to 158 00:08:25,280 --> 00:08:28,600 Speaker 9: come forward. It would be the more cheaper option for 159 00:08:28,720 --> 00:08:31,360 Speaker 9: the financial system broadly, if a buyer was to come 160 00:08:31,360 --> 00:08:35,120 Speaker 9: in versus the FDIC putting them into the receivership. If 161 00:08:35,160 --> 00:08:37,800 Speaker 9: the FDIC does go ahead and put them into receivership, 162 00:08:37,840 --> 00:08:41,880 Speaker 9: you know, the versus Republic shareholders get zero and then 163 00:08:41,920 --> 00:08:45,520 Speaker 9: the loan book will be chopped up and divested, probably 164 00:08:45,559 --> 00:08:48,400 Speaker 9: at a big loss. Now, remember the FDIC is already 165 00:08:48,400 --> 00:08:51,000 Speaker 9: sitting on thirty billion of losses from the first three 166 00:08:51,000 --> 00:08:53,760 Speaker 9: bank failures, so you can see the reason why they're 167 00:08:53,800 --> 00:08:56,240 Speaker 9: unhesitant to take on more losses. 168 00:08:56,800 --> 00:08:59,920 Speaker 4: Okay, how's it all playing out then in broader market. 169 00:09:00,760 --> 00:09:05,400 Speaker 9: Well, thankfully, yesterday's First Republic stock plunge didn't drive a 170 00:09:05,440 --> 00:09:08,080 Speaker 9: bigger risk off move in the market. I think that 171 00:09:08,160 --> 00:09:10,920 Speaker 9: was quite welcoming to see, even things like the Regional 172 00:09:10,920 --> 00:09:15,680 Speaker 9: Bank index outperformed yesterday, even with the stock price continuing 173 00:09:15,679 --> 00:09:19,000 Speaker 9: to plunge, So that was welcoming. But the bad news 174 00:09:19,080 --> 00:09:22,200 Speaker 9: is is that the problem facing First Republic in a 175 00:09:22,240 --> 00:09:26,760 Speaker 9: large brushstroke, is that their business model isn't viable with 176 00:09:26,760 --> 00:09:29,320 Speaker 9: a FED funds rate at five percent and they're making 177 00:09:29,840 --> 00:09:32,040 Speaker 9: way less than that on their loan portfolio. And that 178 00:09:32,160 --> 00:09:35,000 Speaker 9: is something that is shared by many regional banks out there, 179 00:09:35,440 --> 00:09:37,640 Speaker 9: and a lot of people argue that, you know, this 180 00:09:37,800 --> 00:09:40,640 Speaker 9: necessarily isn't going to turn around until we see the 181 00:09:40,679 --> 00:09:43,000 Speaker 9: FED cutting rates and make that cost of funding for 182 00:09:43,040 --> 00:09:45,640 Speaker 9: these regional lenders less. So you know, we could be 183 00:09:45,679 --> 00:09:48,440 Speaker 9: in for quite a long slog where it's just you know, 184 00:09:48,559 --> 00:09:50,920 Speaker 9: one small lender after another coming into trouble. 185 00:09:51,240 --> 00:09:53,400 Speaker 2: Okay, valerate t I tell our market supporter, thank you 186 00:09:53,440 --> 00:09:55,960 Speaker 2: so much for joining us with details of that story. 187 00:09:56,240 --> 00:09:59,000 Speaker 1: Now for one of our big interviews this morning, when 188 00:09:59,080 --> 00:10:02,280 Speaker 1: Credit sweez Co apps the next European bank to draw 189 00:10:02,360 --> 00:10:05,920 Speaker 1: the markets fearful, I was Deutsche Bank, but in earnings 190 00:10:05,960 --> 00:10:09,240 Speaker 1: out today, the corporate bank posted the best quarter since 191 00:10:09,280 --> 00:10:13,199 Speaker 1: its turnaround started. But it has also stepped up cost 192 00:10:13,240 --> 00:10:17,120 Speaker 1: savings and is avoiding any share buyback as it braces 193 00:10:17,160 --> 00:10:20,960 Speaker 1: for volatility. Deutsche Bank's chief financial officer, James will Malka 194 00:10:21,200 --> 00:10:24,040 Speaker 1: has been speaking to Boomberg's Manus Cranny, and Manics began 195 00:10:24,080 --> 00:10:26,880 Speaker 1: by asking him why the bank is holding back when 196 00:10:26,920 --> 00:10:28,720 Speaker 1: it comes to that share buyback idea. 197 00:10:29,160 --> 00:10:31,480 Speaker 10: Well, let me take you back to fevery second, where 198 00:10:31,520 --> 00:10:34,800 Speaker 10: we announced a decision not to pursue a repurchase in 199 00:10:34,840 --> 00:10:37,160 Speaker 10: the early part of the year. We think that was 200 00:10:37,240 --> 00:10:40,400 Speaker 10: the right decision and prudent given that we were cautious 201 00:10:40,400 --> 00:10:43,480 Speaker 10: about the outlook for twenty for third twenty three, and 202 00:10:43,520 --> 00:10:46,880 Speaker 10: we had some model changes that were coming. If I 203 00:10:46,920 --> 00:10:50,240 Speaker 10: fast forward to today, what has changed. We think the 204 00:10:50,720 --> 00:10:54,160 Speaker 10: outlook is a little bit more clear. It's we've gone 205 00:10:54,200 --> 00:10:58,200 Speaker 10: through some turbulence, but we can see the way forward. 206 00:10:58,640 --> 00:11:02,400 Speaker 10: Our step off from ACP ratio is better than we'd anticipated, 207 00:11:02,679 --> 00:11:05,240 Speaker 10: and I think we have more visibility into the model 208 00:11:05,280 --> 00:11:07,760 Speaker 10: outcomes that are that are coming down the pike. So 209 00:11:07,880 --> 00:11:10,040 Speaker 10: to your point, we now have the confidence to move 210 00:11:10,080 --> 00:11:12,720 Speaker 10: forward as a management team. We've an engaged in a 211 00:11:12,760 --> 00:11:16,760 Speaker 10: dialogue with our supervisors and intend to move forward in 212 00:11:16,760 --> 00:11:18,760 Speaker 10: the second half of the year with a buyback. 213 00:11:18,960 --> 00:11:20,960 Speaker 11: Will you move forward with pace? Will it be in 214 00:11:21,000 --> 00:11:23,480 Speaker 11: the third quarter? I mean credit suitez imploded, UBS is 215 00:11:23,480 --> 00:11:26,280 Speaker 11: on a technical pause. Do you just have cover to 216 00:11:26,320 --> 00:11:26,960 Speaker 11: be cautious? 217 00:11:27,920 --> 00:11:29,719 Speaker 10: Well, as I say, I think we made the right 218 00:11:29,760 --> 00:11:31,840 Speaker 10: decisions at the time. Yes, we're not gonna We're not 219 00:11:31,840 --> 00:11:34,920 Speaker 10: gonna be sort of definitive about timing an amount. But 220 00:11:35,640 --> 00:11:39,360 Speaker 10: our goal is to is to frankly execute on the 221 00:11:39,400 --> 00:11:42,559 Speaker 10: capital plan that we shared with investors last March, and 222 00:11:42,600 --> 00:11:45,520 Speaker 10: do so, you know, as quickly as possible and as 223 00:11:45,559 --> 00:11:46,520 Speaker 10: prudently as possible. 224 00:11:46,600 --> 00:11:48,480 Speaker 11: You've up the cost cuts from two to two and 225 00:11:48,480 --> 00:11:50,880 Speaker 11: a half. How fast will they be delivered? And wor 226 00:11:50,920 --> 00:11:52,199 Speaker 11: and what does it mean for jobs? 227 00:11:52,720 --> 00:11:55,880 Speaker 10: Look, we're gonna we're working on this right away. Today. 228 00:11:55,880 --> 00:12:00,000 Speaker 10: We're announcing a reduction in force in our senior management layers. 229 00:12:00,040 --> 00:12:04,040 Speaker 10: We're announcing a streamlining of our mortgage platform where we're 230 00:12:04,080 --> 00:12:07,199 Speaker 10: taking some management changes of actions in our management also 231 00:12:07,240 --> 00:12:10,720 Speaker 10: to concentrate the ownership, if you like, of the cost base, 232 00:12:11,640 --> 00:12:15,120 Speaker 10: essentially moving forward on executing the plans we have and 233 00:12:15,600 --> 00:12:18,120 Speaker 10: going further into the cost base. We'd started to talk 234 00:12:18,120 --> 00:12:21,719 Speaker 10: about that again in February. What you see here as 235 00:12:21,720 --> 00:12:25,480 Speaker 10: a management team that will always work on the cost 236 00:12:25,559 --> 00:12:28,960 Speaker 10: base to deliver better outcomes for shareholders where we can. 237 00:12:29,880 --> 00:12:33,440 Speaker 11: March will be etched on our mind as a month 238 00:12:33,440 --> 00:12:37,839 Speaker 11: in which volatility and banking was really quite frightening. Credit 239 00:12:37,880 --> 00:12:41,360 Speaker 11: Suite imploded, You've uped you liquidity buffers. What is the 240 00:12:41,360 --> 00:12:44,520 Speaker 11: biggest consequence of Credit Suite and the attack on your stock? 241 00:12:45,120 --> 00:12:48,120 Speaker 11: Do you need to build ni consistently on the liquidity 242 00:12:48,200 --> 00:12:51,280 Speaker 11: buffer as a result of that one day and that 243 00:12:51,320 --> 00:12:51,880 Speaker 11: one attack. 244 00:12:52,160 --> 00:12:54,840 Speaker 10: I think we need to communicate more clearly what the 245 00:12:54,880 --> 00:12:58,480 Speaker 10: liquidity buffers mean, because I think the market doesn't understand 246 00:12:58,559 --> 00:13:02,559 Speaker 10: just how conservatively can capitalized and how liquid the banks are, 247 00:13:02,679 --> 00:13:06,160 Speaker 10: especially the globally systemically important banks are. So let me 248 00:13:06,200 --> 00:13:09,040 Speaker 10: talk about Deutsche Bank for a second. Our capital and 249 00:13:09,120 --> 00:13:13,160 Speaker 10: liquidity ratios improved during the quarter, which I think speaks 250 00:13:13,160 --> 00:13:16,040 Speaker 10: to the resilience, the stability of our balance sheet and 251 00:13:16,080 --> 00:13:18,840 Speaker 10: the tools we've built to manage these things over the years. 252 00:13:19,480 --> 00:13:21,480 Speaker 10: But to your point, I don't think that there are 253 00:13:21,520 --> 00:13:25,040 Speaker 10: actually changes needed in the regime that we operate within. 254 00:13:25,600 --> 00:13:27,360 Speaker 10: I think what we need to do is help our 255 00:13:27,760 --> 00:13:31,160 Speaker 10: counterparties and our clients and the public at large understand 256 00:13:31,320 --> 00:13:35,400 Speaker 10: just how conservative the stress scenarios are that we manage 257 00:13:35,440 --> 00:13:36,000 Speaker 10: the balance. 258 00:13:35,800 --> 00:13:41,160 Speaker 11: Sheet to Switzerland has a megabank, Credit SWEE ubs, does 259 00:13:41,200 --> 00:13:42,920 Speaker 11: Germany need a megabank? 260 00:13:43,800 --> 00:13:47,840 Speaker 10: Germany has a leading globally systemically important bank with a 261 00:13:47,880 --> 00:13:51,120 Speaker 10: set of capabilities are that are unique to our market 262 00:13:51,360 --> 00:13:53,960 Speaker 10: and that we think we can we can execute as 263 00:13:54,000 --> 00:13:55,880 Speaker 10: a strategy supporting our economy. 264 00:13:55,920 --> 00:13:58,040 Speaker 11: But will there'll be more pressure on you now to 265 00:13:58,160 --> 00:14:01,559 Speaker 11: look for a deal to grow in size or will 266 00:14:01,600 --> 00:14:03,040 Speaker 11: you not be hurried or harried? 267 00:14:04,400 --> 00:14:06,480 Speaker 10: I would say we won't be hurried or harried. I 268 00:14:06,559 --> 00:14:09,360 Speaker 10: do think there are benefits of scale in our business, 269 00:14:09,360 --> 00:14:13,000 Speaker 10: and I think we've been consistent about about that feature 270 00:14:13,160 --> 00:14:17,680 Speaker 10: of our strategic landscape. But we've also been consistent about 271 00:14:17,720 --> 00:14:23,520 Speaker 10: talking our strategy, our execution and really making Deutsche Bank 272 00:14:23,560 --> 00:14:26,200 Speaker 10: the best it can be, which I think also prepares 273 00:14:26,240 --> 00:14:29,120 Speaker 10: it to be a participant in consolidation over time. 274 00:14:29,560 --> 00:14:33,600 Speaker 11: That week, two weeks of sheer angst around Credit SWEE 275 00:14:33,760 --> 00:14:38,240 Speaker 11: saw major movements of deposits and acids around the banking system. 276 00:14:38,760 --> 00:14:42,280 Speaker 11: Your deposits dropped in the quarter. I need to understand 277 00:14:42,400 --> 00:14:45,840 Speaker 11: was there an exodus of deposits around the credit sweete 278 00:14:45,840 --> 00:14:49,240 Speaker 11: time or was it flicking into money market funds? Defining 279 00:14:49,480 --> 00:14:52,240 Speaker 11: the deposit scenario at Deutsche Well. 280 00:14:52,160 --> 00:14:54,000 Speaker 10: It's interesting. There were a lot of movements going on 281 00:14:54,080 --> 00:14:57,560 Speaker 10: during the quarter in deposits, much of which we see 282 00:14:57,560 --> 00:15:02,760 Speaker 10: as a normalization of posit balances in the industry relative 283 00:15:02,840 --> 00:15:05,800 Speaker 10: to relatively to high balances at the end of last year. 284 00:15:06,080 --> 00:15:09,480 Speaker 10: You know, the central banks are draining liquidity from the market, 285 00:15:09,920 --> 00:15:14,200 Speaker 10: interest rates are moving, making alternative investments more valuable than 286 00:15:14,240 --> 00:15:17,400 Speaker 10: deposits to and so there's a lot going on. We 287 00:15:17,480 --> 00:15:21,560 Speaker 10: had a four percent reduction in deposits during the quarter 288 00:15:21,840 --> 00:15:25,720 Speaker 10: from a relatively high level, frankly in line with the 289 00:15:25,720 --> 00:15:27,080 Speaker 10: market as we see it so far. 290 00:15:27,880 --> 00:15:30,640 Speaker 1: Okay, So that was James von Maltka, their Deutsche Banks 291 00:15:30,640 --> 00:15:33,760 Speaker 1: at CFO this morning. Thought very interesting interview with Malus 292 00:15:33,800 --> 00:15:37,160 Speaker 1: Cranny there in terms certainly of an increase in cost 293 00:15:37,160 --> 00:15:38,160 Speaker 1: casting for Deutsche Bank. 294 00:15:38,280 --> 00:15:39,920 Speaker 2: Yeah, and I suppose looking at this point of where 295 00:15:39,960 --> 00:15:42,440 Speaker 2: Deutsche Bank is, given that it is in the in 296 00:15:42,480 --> 00:15:45,840 Speaker 2: the kind of throes of this of coming out really 297 00:15:45,880 --> 00:15:47,960 Speaker 2: of its turnaround plan that has been announced, and also 298 00:15:48,000 --> 00:15:51,080 Speaker 2: to see where the how it is assessing the turbulence 299 00:15:51,120 --> 00:15:54,440 Speaker 2: that had seen on the market and that lenders need 300 00:15:54,440 --> 00:15:56,240 Speaker 2: to communicate more clearly. I think it was one of 301 00:15:56,280 --> 00:15:58,640 Speaker 2: the interesting lines out of that interview as well, So 302 00:15:59,120 --> 00:16:01,240 Speaker 2: great to hear those. It's from James Vanka on the 303 00:16:01,320 --> 00:16:04,000 Speaker 2: day that we have these results from Deutsche Bank. Up next, 304 00:16:04,320 --> 00:16:06,760 Speaker 2: the CBI to be renamed. Is it game over for 305 00:16:06,920 --> 00:16:11,400 Speaker 2: Microsoft's Activision deal and PWC's one billion dollar accountant? 306 00:16:13,240 --> 00:16:16,800 Speaker 5: Now the paper review on blue Bird Daybreak Europe. The 307 00:16:16,840 --> 00:16:19,040 Speaker 5: news you need to know from today's papers. 308 00:16:19,480 --> 00:16:22,240 Speaker 1: I'm Blue Moosley and Goens joins us now with the details. 309 00:16:22,320 --> 00:16:25,920 Speaker 1: Let's start with the Financial Times story. So the CBI 310 00:16:26,040 --> 00:16:29,880 Speaker 1: to be renamed as part of route and branch reform. 311 00:16:30,360 --> 00:16:33,640 Speaker 3: Yes, indeed, Caroline and the paper has actually spoken to 312 00:16:33,720 --> 00:16:37,640 Speaker 3: the new boss of the CBI, Rain Newton Smith. Now 313 00:16:37,680 --> 00:16:40,960 Speaker 3: she says the organization will be renamed as parts of 314 00:16:41,040 --> 00:16:45,360 Speaker 3: effort to show it has reformed its workplace culture. Now, 315 00:16:45,440 --> 00:16:50,720 Speaker 3: this follows those allegations of bullying and sexual misconduct among staff, 316 00:16:50,760 --> 00:16:54,920 Speaker 3: which we've talked about here on the newspaper Review Now. 317 00:16:55,000 --> 00:16:58,160 Speaker 3: Speaking to the newspaper at the end of her first 318 00:16:58,280 --> 00:17:02,040 Speaker 3: day on the job, which was yesterday, Newton Smith did 319 00:17:02,120 --> 00:17:05,680 Speaker 3: not set out this clear vision for the CBI's future, 320 00:17:06,160 --> 00:17:09,840 Speaker 3: but she did say she was consulting leading members over 321 00:17:09,920 --> 00:17:14,480 Speaker 3: how to refocus the organization and also crucially, how to 322 00:17:14,640 --> 00:17:19,160 Speaker 3: gain back trust and asked whether this meant a smaller 323 00:17:19,240 --> 00:17:23,200 Speaker 3: CBI possibly in the future, she replied, it's day one, 324 00:17:23,600 --> 00:17:26,560 Speaker 3: but I think that could well be where it does 325 00:17:26,680 --> 00:17:31,000 Speaker 3: all end up now. She also apologized for failing victims 326 00:17:31,520 --> 00:17:35,440 Speaker 3: and has admitted the CBI failed to sack staff who 327 00:17:35,600 --> 00:17:40,119 Speaker 3: sexually harassed female workers. She also said those female workers, Caroline, 328 00:17:40,320 --> 00:17:44,840 Speaker 3: were extremely brave to come out and also, you know, 329 00:17:45,160 --> 00:17:46,960 Speaker 3: it was a very difficult time for them. 330 00:17:47,119 --> 00:17:51,280 Speaker 1: Yeah, Okay, is it just me or does does it 331 00:17:51,320 --> 00:17:55,320 Speaker 1: seem a little problematic? I think that you have something, 332 00:17:55,600 --> 00:17:58,600 Speaker 1: you know, of a great deal of concern in terms 333 00:17:58,600 --> 00:18:02,760 Speaker 1: of how women potendly were treated in this organization, and 334 00:18:02,800 --> 00:18:05,080 Speaker 1: then you know, you have a woman appointed as head 335 00:18:05,080 --> 00:18:08,040 Speaker 1: of the organization to apologize for that treatment. I don't know, 336 00:18:08,200 --> 00:18:11,560 Speaker 1: it strikes me it's quite a difficult thing to have 337 00:18:11,640 --> 00:18:14,240 Speaker 1: to do and a difficult ask for that individual who 338 00:18:14,240 --> 00:18:17,200 Speaker 1: obviously is well known because she was the chief economist 339 00:18:17,240 --> 00:18:19,240 Speaker 1: at the CBI for so very long, and then that's 340 00:18:19,280 --> 00:18:20,119 Speaker 1: quite problematic. 341 00:18:20,440 --> 00:18:22,880 Speaker 3: Well, Caroline, I don't think you're the only one who 342 00:18:22,920 --> 00:18:27,440 Speaker 3: thinks that's problematic. Some people are really questioning whether Ray 343 00:18:27,560 --> 00:18:31,080 Speaker 3: Newton Smith, as you said, a former employee and the 344 00:18:31,200 --> 00:18:35,960 Speaker 3: chief executive Committee member once before, is the right person 345 00:18:36,040 --> 00:18:39,679 Speaker 3: to lead the organization through the scandal at the moment. 346 00:18:39,880 --> 00:18:43,000 Speaker 3: She worked for the CBI actually for nine years before 347 00:18:43,040 --> 00:18:47,080 Speaker 3: briefly leaving in March to work for Barklead. She's back now, 348 00:18:47,320 --> 00:18:50,840 Speaker 3: but extremely big job and as you say, someone already 349 00:18:50,920 --> 00:18:54,680 Speaker 3: from within the institution is the right person to take 350 00:18:54,720 --> 00:18:57,840 Speaker 3: this forward. She seems to have the focus to want 351 00:18:57,880 --> 00:19:00,640 Speaker 3: to do that. So maybe we just have to see 352 00:19:00,720 --> 00:19:03,480 Speaker 3: how the rebrand and the renaming plays out. 353 00:19:03,560 --> 00:19:05,280 Speaker 2: Yeah, it was certainly a big challenge ahead for her 354 00:19:05,400 --> 00:19:07,719 Speaker 2: and for the future of that organization, as we've been 355 00:19:07,760 --> 00:19:10,200 Speaker 2: reporting as well. Let's go to the Telegraph nextly, and 356 00:19:10,359 --> 00:19:13,359 Speaker 2: Brittaan accused of being closed for business after blocking fifty 357 00:19:13,359 --> 00:19:15,960 Speaker 2: five billion pounds Microsoft Mega merger. 358 00:19:16,240 --> 00:19:19,399 Speaker 3: Yeah, major blow for Microsoft. Now, the Telegraph says, one 359 00:19:19,440 --> 00:19:23,119 Speaker 3: of the world's biggest companies activision Blizzard has launched this 360 00:19:23,480 --> 00:19:28,720 Speaker 3: furious response which branded Britain clearly closed for business after 361 00:19:28,880 --> 00:19:34,000 Speaker 3: its merger with Microsoft was blocked. Microsoft also warned the 362 00:19:34,040 --> 00:19:38,399 Speaker 3: decision to block the acquisition by the competition's watchdog is 363 00:19:38,480 --> 00:19:44,280 Speaker 3: really discouraging technology innovation and also investment here in the UK. 364 00:19:44,800 --> 00:19:46,600 Speaker 4: So furious backlash there to. 365 00:19:46,640 --> 00:19:50,640 Speaker 3: This activision Blizzard it's a video game maker behind Call 366 00:19:50,680 --> 00:19:54,280 Speaker 3: of Duty and Candy Crush, which I've spent many hours on, 367 00:19:54,800 --> 00:19:58,639 Speaker 3: warned that blocking the deal threatens the Chancellor. Of course, 368 00:19:58,760 --> 00:20:02,600 Speaker 3: Jeremy Hunt is ambition to make the UK the next 369 00:20:02,880 --> 00:20:06,879 Speaker 3: Silicon Valley. The British regulator is concerned the deal would 370 00:20:06,880 --> 00:20:09,960 Speaker 3: give the firm too much power in the cloud gaming 371 00:20:10,080 --> 00:20:14,760 Speaker 3: sector and says the tech company actually failed to calm 372 00:20:14,920 --> 00:20:18,919 Speaker 3: concerns over this. Now, if that merger went ahead, Microsoft 373 00:20:19,000 --> 00:20:22,320 Speaker 3: will have become the third biggest gaming company by revenue, 374 00:20:22,359 --> 00:20:27,000 Speaker 3: behind China's ten Cent and Japan's Sony. So this would 375 00:20:27,040 --> 00:20:31,439 Speaker 3: become absolutely massive. Great piece by a Bloomberg opinion column 376 00:20:31,480 --> 00:20:34,679 Speaker 3: as covering deals, Chris Hughes, he asked the question, you 377 00:20:34,760 --> 00:20:39,080 Speaker 3: know the UK regulator has turned down this acquisition but 378 00:20:39,160 --> 00:20:42,960 Speaker 3: cannot withstand appeal, so we know Microsoft is working aggressively 379 00:20:43,040 --> 00:20:44,240 Speaker 3: to appeal the decision. 380 00:20:44,400 --> 00:20:47,880 Speaker 1: Okay, and then I feel like saying, mohahaha. The time 381 00:20:48,000 --> 00:20:51,840 Speaker 1: says PwC to invest a billion dollars on a I 382 00:20:52,440 --> 00:20:55,800 Speaker 1: bean counters, you called it a billion dollar accountants. 383 00:20:56,160 --> 00:21:00,480 Speaker 3: Well, Caroline, PwC has now become the latest bits. It's 384 00:21:00,520 --> 00:21:03,480 Speaker 3: not the only business. It's the latest business to turn 385 00:21:03,520 --> 00:21:07,760 Speaker 3: to artificial intelligence. And it's announced plans to invest one 386 00:21:07,840 --> 00:21:11,240 Speaker 3: billion dollars in this AI technology and that will be 387 00:21:11,320 --> 00:21:14,640 Speaker 3: over the next three years. Now it wants to automate 388 00:21:14,680 --> 00:21:18,640 Speaker 3: parts of its audit, tax and consultancy services in its 389 00:21:18,800 --> 00:21:22,280 Speaker 3: US business. The Big four accountant will work with a 390 00:21:22,400 --> 00:21:27,080 Speaker 3: Microsoft back open ia, IAI apologies and they of of 391 00:21:27,160 --> 00:21:31,000 Speaker 3: course the creator of chat GPT, which I feel like 392 00:21:31,040 --> 00:21:34,639 Speaker 3: has become a big talking point at the moment, and 393 00:21:34,680 --> 00:21:38,160 Speaker 3: they want to basically generate this AI to make things 394 00:21:38,440 --> 00:21:43,840 Speaker 3: more efficient. So PwC envisions the technology being utilized for 395 00:21:44,000 --> 00:21:51,920 Speaker 3: writing reports, preparing compliance documents, analyzing and evaluating business strategies. 396 00:21:52,359 --> 00:21:55,359 Speaker 3: So this is really interesting because right now people are 397 00:21:55,480 --> 00:21:58,000 Speaker 3: doing those jobs if you think about it, and this 398 00:21:58,080 --> 00:22:01,720 Speaker 3: could become an automated thing. But EC's saying they don't 399 00:22:01,760 --> 00:22:05,280 Speaker 3: want to replace workers with tech. However, this seems to 400 00:22:05,280 --> 00:22:06,360 Speaker 3: be the way they're going. 401 00:22:06,440 --> 00:22:08,800 Speaker 4: But listen to this backlash to this too. 402 00:22:09,359 --> 00:22:13,040 Speaker 3: They're saying that, you know, using generative AI in areas 403 00:22:13,119 --> 00:22:17,800 Speaker 3: like tax preparation requires professional validation and it might create 404 00:22:17,840 --> 00:22:21,280 Speaker 3: compliance issues. So even though we are moving to the 405 00:22:21,320 --> 00:22:25,040 Speaker 3: tech sector and businesses are investing, this. 406 00:22:25,119 --> 00:22:28,160 Speaker 2: Is Bloomberg Daybreak Europe, your morning brief on the stories 407 00:22:28,200 --> 00:22:30,800 Speaker 2: making news from London to Wall Street and beyond. 408 00:22:31,080 --> 00:22:35,040 Speaker 1: Look for us on your podcast feed every morning, on Apple, Spotify, 409 00:22:35,119 --> 00:22:37,080 Speaker 1: and anywhere else you get your podcasts. 410 00:22:37,119 --> 00:22:40,120 Speaker 2: You can also listen live each morning on London DAB Radio, 411 00:22:40,200 --> 00:22:42,919 Speaker 2: the Bloomberg Business app, and Bloomberg dot Com. 412 00:22:42,920 --> 00:22:45,720 Speaker 1: Our flagship New York station is also available on your 413 00:22:45,720 --> 00:22:50,439 Speaker 1: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 414 00:22:50,680 --> 00:22:52,000 Speaker 4: I'm Caroline Hipka. 415 00:22:51,840 --> 00:22:54,280 Speaker 2: And I'm Stephen Carroll. Join us again tomorrow morning for 416 00:22:54,400 --> 00:22:56,760 Speaker 2: all the news you need to start your day right 417 00:22:56,800 --> 00:23:05,520 Speaker 2: here on Bloomberg day Break Europe.