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Speaker 1: This is Bloomberg Daybreak here for this Wednesday, the twenty

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Speaker 1: ninth of March in London. Coming up today, Banking on

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Speaker 1: an overhaul, Financial officials outlined plans for a raft of

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Speaker 1: regulatory changes, testing times markets are probing banks for weakness.

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Speaker 1: According to the Bank of England's Bailey and raided French

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Speaker 1: bankers could face more than a billion dollars in fines

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Speaker 1: in a tax broad pro a UK green tax, putting

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Speaker 1: the brakes on a combustion engine ban. Those other stories

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Speaker 1: we're looking at in today's papers, and I'm Leanne Gerns

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Speaker 1: class the five million euro Deutsche Bank trade that may

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Speaker 1: have triggered Friday's global route. That's all straight ahead on

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Speaker 1: Bloomberg Daybreak Europe. The business news you need to start

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Speaker 1: your day in just one fifteen minute podcast on Apple, Spotify,

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Speaker 1: the Bloomberg Business App and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Caroline Hepke. Here are the stories we're

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Speaker 1: following today. Top US financial officials have outlined major plans

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Speaker 1: to overhaul regulations in the banking sector. Answering questions from

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Speaker 1: US lawmakers. The FED Vice Chair for Supervision and Michael

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Speaker 1: Barr suggested that capital and liquidity standards would need to

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Speaker 1: be strengthened. The Democratic Senator Elizabeth Warren quiz officials have

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Speaker 1: a listen to this telling Exchange Vice Chair bar let

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Speaker 1: me start with you. Do you believe we should strengthen

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Speaker 1: our financial rules going forward? Yes? I do, SA Chairman Gruenberg,

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Speaker 1: what about you? Do you agree with President Biden that

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Speaker 1: we need to strengthen our banking rules? I do agree, Senator,

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Speaker 1: Under Secretary Liang. Do you agree with the President on this? Senator,

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Speaker 1: I agree that we do need to prevent these types

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Speaker 1: of bank failures. Well, I'm asking you, of course we

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Speaker 1: need to prevent them bo supervisions, but that's not by

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Speaker 1: simply wishing it. It's by stronger regulation as their right.

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Speaker 1: I agree, Senator. Okay, good so, Senator Warren there speaking

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Speaker 1: to the FED Vice Chair for Supervision Michael Barr, the

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Speaker 1: FDIC Chair Martin Gruenberg, and the Treasury Under Secretary for

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Speaker 1: Domestic Finance Nellie Lange. But any proposals will meet stiff

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Speaker 1: opposition from Republicans who say that regulators failed to oversee

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Speaker 1: the dangers of higher inflation and rising interest rates. Meanwhile,

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Speaker 1: the UK's Chief Secretary to the Treasury has once again

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Speaker 1: sought to reassure markets over the stability of this country's

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Speaker 1: banking sector. Speaking to Blueberg, John Glenn says that it's

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Speaker 1: not wrong to assume that the challenges facing the US

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Speaker 1: banking sector also apply to Britain. The structure is very different.

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Speaker 1: We've got a small number of very large banks and

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Speaker 1: their capital requirements are very rigorously enforced by our regulators,

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Speaker 1: who obviously had a step change after the financial crisis

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Speaker 1: fifteen years ago. So I don't want to be complacent,

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Speaker 1: but I do think that that means that we're in

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Speaker 1: good shape. But obviously we've got to keep aware of

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Speaker 1: all the challenges in different banks and the different profile

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Speaker 1: of concentration of customers, the different liquidity challenges and issues

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Speaker 1: that they all face in different ways. So John Glenn,

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Speaker 1: they're speaking to Bloomberg's and Marie Hordan in Washington as

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Speaker 1: US bets against European banks have hit a seven year high.

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Speaker 1: Reflecting on those trades, the Bank of England Governor Andrew

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Speaker 1: Bailey yesterday told MPs that markets are testing the sector

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Speaker 1: for any signs of trouble, but very strong view with

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Speaker 1: the UK banking system is that it is in a

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Speaker 1: strong position. But capital and liquidity wise, I think there

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Speaker 1: are moves and markets to if you like, test out firms.

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Speaker 1: I would not want to say that those in my

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Speaker 1: estimation are based on identified weaknesses more than testing out.

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Speaker 1: I mean there is quite a bit of testing outgoing

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Speaker 1: on at the moment, so testing well. That was Andrew

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Speaker 1: Bailey speaking to the UK's Treasury Committee. He echoed John

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Speaker 1: Glenn's view of the UK banking system, saying that it

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Speaker 1: remains in a very strong position. He also described the

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Speaker 1: collapse of Silicon Valley Bank as the fastest passage from

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Speaker 1: health to death since bearings the Clubs, of course in

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Speaker 1: the nineteen nineties of that institution. Meanwhile, when it comes

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Speaker 1: to other issues, so regulators believe that a single five

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Speaker 1: million euro bet on Deutsche Bank credit to Folk swaps

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Speaker 1: is what triggered Friday's global market were out. The trade

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Speaker 1: launched a sell off that wiped out one point six

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Speaker 1: billion euros off Deutsche Bank's market cap and more than

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Speaker 1: thirty billion euros of European banking stocks. It is unclear

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Speaker 1: though who placed the relevant bet, but there is no

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Speaker 1: evidence so far of anything nefarious about that trade. But

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Speaker 1: interesting to understand what happened on Friday. Meanwhile, just this

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Speaker 1: morning we learned that UBS has named Sergo A. Motti

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Speaker 1: as its new CEO. That news comes a week after

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Speaker 1: the bank stepped in to buy the troubled lender Credit

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Speaker 1: Suie for three point three billion dollars. Now, Ralph Harmers

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Speaker 1: will remain at UBS and works alongside Sergio E. Motty

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Speaker 1: when the new year CEO starts at work next week.

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Speaker 1: And Mattie, of course, was the group Chief Executive Officer

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Speaker 1: at UBS for nine years, repositioning UBS after the severe

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Speaker 1: challenges arising from the global financial crisis. He was in

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Speaker 1: charge twenty eleven to twenty twenty, so the return of

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Speaker 1: that CEO. Now the Bank of England has been distracted

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Speaker 1: from taming inflation by working on climate related goals. This

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Speaker 1: according to two of the Central Bank's former senior staff

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Speaker 1: Bloomberg's U and Ports reports. Now is the Bank of

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Speaker 1: England suffering from mission creep. Former Deputy Governor Paul Tucker

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Speaker 1: thinks so he's warning the UK Central Bank is involved

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Speaker 1: with too many things beyond its core remits of taming inflation.

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Speaker 1: He also says it was too slow to assess the

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Speaker 1: financial threats related to the trouble at Credit Suiee and

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Speaker 1: Silicon Valley Bank. Speaking in the House of Lords yesterday,

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Speaker 1: I said the issue is also a problem for the

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Speaker 1: US Federal Reserve and for the European Central Bank. At

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Speaker 1: the same hearing, former BOECHI economist John Vickers said there

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Speaker 1: is a reputational risk from the climate goals. He wants

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Speaker 1: a streamlining of the bank's commitments in London, I'm you

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Speaker 1: and parts Bloomberg Day britt Europe and now to another

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Speaker 1: banking issue. So French banks including BNP, Parabat and Socita

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Speaker 1: General are facing fines totaling more than potentially a billion

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Speaker 1: euros after an investigation into tax fraud and money laundering.

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Speaker 1: It follows raids relating to a dividend strategy where shareholders

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Speaker 1: transferred stop for a short period of time to investors

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Speaker 1: based abroad in order to avoid a dividend tax. Bloomberg

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Speaker 1: has approached the five banks name for comment at no

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Speaker 1: response on that yet, But that part of really an

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Speaker 1: ongoing issue around a dividend taxation and tax pros. But

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Speaker 1: it has now encompassed these French banks also, so a

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Speaker 1: pretty interesting story today. Okay, those are top stories for you,

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Speaker 1: so lots on the banking crisis. We will be speaking

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Speaker 1: to Bloomberg's finance reporter Nobila Ahmed on that next on

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Speaker 1: what the regulators said both in the US and the UK.

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Speaker 1: But I also want to say, hands up anyone out

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Speaker 1: there who might have lost a yacht. The Alpha Naro

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Speaker 1: Is has been abandoned in a dock at in Antigua

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Speaker 1: and Barbuda for the last year. And this was the

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Speaker 1: kind of interesting story that I picked out this morning

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Speaker 1: because the lawyers for Russian billionaire Andrea Guriev say that

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Speaker 1: their client doesn't own the vessel. It's been stuck there

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Speaker 1: racking up bills of about half a billion dollars and

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Speaker 1: now apparently it's going to be auctioned off by Antigua

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Speaker 1: and Barbuda unless somebody claims it by the thirty first

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Speaker 1: of March. Have a look on the terminal the Alpha

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Speaker 1: naro pretty splendid. It's got an infinity pool and bedrooms

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Speaker 1: for a dozen people. And yet of course it's been

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Speaker 1: caught up in the sanctions issue with Russian billionaires potentially,

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Speaker 1: although we don't actually know who the owner is right now.

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Speaker 1: That story on the Bluebeg terminal this morning, So let's

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Speaker 1: turn our attention then to capital rules. Boil down the

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Speaker 1: hearings about the collapse of Silicon Valley Bank in the

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Speaker 1: United States and the UK on Tuesday, with more US

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Speaker 1: hearings to come, and actually so far the op shot

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Speaker 1: is whether there will be more stringent rules around bank

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Speaker 1: liquidity and capital requirements. That didn't mean know that the

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Speaker 1: regulators avoided criticism and questions about whether they were really

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Speaker 1: paying enough attention. Joining me now to discusses our finance reporter,

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Speaker 1: Nobila Ahmed, good morning, thank you so much for your

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Speaker 1: time this morning. And Abila, what were the key points

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Speaker 1: then for you from these hearings? Caroline, what was really

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Speaker 1: interesting here was that there was so much finger pointing,

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Speaker 1: in recriminations and blaming. So the policymakers blamed the regulators,

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Speaker 1: regulators blamed SVB, So there was a lot of finger pointing.

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Speaker 1: But two themes really emerge, which was that a textbook

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Speaker 1: case of mismanagement was what was described as happening at

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Speaker 1: SVB and that's what led to the failure. And on

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Speaker 1: the other hand, regulators obviously drop the ball a little

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Speaker 1: bit as well. So there's a lot to say here

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Speaker 1: about you know, post financial crisis, a lot of very

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Speaker 1: stringent regulations came in for banks under the Trump era.

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Speaker 1: Some of those were eroded. So the question here is

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Speaker 1: about who is to blame that regulators have sort of

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Speaker 1: let slip their supervision of particularly these smaller banks. Yeah,

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Speaker 1: absolutely blame to go around for everyone. Then, but will

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Speaker 1: banks have to deal with tougher US regulations as a

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Speaker 1: result of this? What are the options on the table,

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Speaker 1: and truthfully, will it get support, particularly in the United States.

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Speaker 1: There's a lot of debate about that as and you're

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Speaker 1: sort of hit the nail on the head there because

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Speaker 1: Congress is still very divided about this, and the Republicans

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Speaker 1: are saying, we don't need extra supervision. This is not

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Speaker 1: a about that, This is about something else, and it

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Speaker 1: wasn't our fault that some of these stringent rules were eroded.

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Speaker 1: Democrats are saying, or we absolutely do need extra supervision.

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Speaker 1: What we do know is that the FDIC will embark

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Speaker 1: on a comprehensive review of bank deposit insurance, and its

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Speaker 1: chair said that, you know, the decision to cover all

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Speaker 1: uninsured deposits was a highly consequential one and that has

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Speaker 1: implications for the system so that is something that they

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Speaker 1: will be looking at. We are actually we are going

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Speaker 1: to be facing banks are facing the toughest sort of

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Speaker 1: biggest overhaul of regulation in years, and you know, everyone

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Speaker 1: is saying that there is a need to strengthen capital

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Speaker 1: and liquidity standards. There needs to be greater supervision of

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Speaker 1: banks with assets larger than one hundred billion. Remember SVB

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Speaker 1: had assets of about two hundred and eleven billion odd,

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Speaker 1: So that is something you know that is being talked about.

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Speaker 1: We're talking about FREDS, The FED stress tests will be enhanced,

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Speaker 1: and we need to have more scenarios that cover it.

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Speaker 1: It's amazing that the stressed US the banks already go

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Speaker 1: through didn't have anything in there about interest rate risk.

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Speaker 1: So the fact that interest rates have been rising for

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Speaker 1: twas this is really what brought SVB down because they

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Speaker 1: bought up those bonds when rates were low, and then

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Speaker 1: as rates rose, the value of those were eroded and

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Speaker 1: people when went to take their money out of the bank,

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Speaker 1: they weren't able to cover the deposits. Basically, yeah, and

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Speaker 1: I'm sure you caught this shade. Billionaire Andre Estevez, who

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Speaker 1: is the chairman and the co founder of Banco BTG

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Speaker 1: PAC twelve, which you know in Brazil to talking about

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Speaker 1: how any junior analyst from Latin America would have been

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Speaker 1: able to manage that kind of risk around interest rates.

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Speaker 1: So look, everybody's got a view on this. In the

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Speaker 1: UK though, Andrew Bailey describing svb's collapse you know as

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Speaker 1: the biggest thing since Bearings, which is kind of huge

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Speaker 1: obviously given the speed of the collapse of Bearings in

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Speaker 1: nineteen ninety five, underlying that there are tougher rules in

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Speaker 1: the UK, you know, does that work that sort of

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Speaker 1: you know, it's not our problem kind of message. Well,

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Speaker 1: I think everyone is rushing to say that, and you know,

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Speaker 1: probably the Swiss would have said that under up until

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Speaker 1: the events of last week. So yeah, I mean, look,

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Speaker 1: the global economy and global banking is so interconnected now

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Speaker 1: is you can say that, and maybe it's just a

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Speaker 1: warning sign to everybody to sort of clean up their

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Speaker 1: houses a little bit. But regulation is does very country

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Speaker 1: to country, and the US is a unique market because

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Speaker 1: it is also obviously very very big, and it's many

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Speaker 1: many banks of different sizes. The UK market is not

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Speaker 1: as diversified. But he did say that the banking sector

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Speaker 1: in recent weeks has shown that it is robust in

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Speaker 1: the UK, but even then, the UK may still have

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Speaker 1: to consider forcing banks to hold more liquid assets, for example,

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Speaker 1: so they can meet rapid demands for withdrawals. Because one

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Speaker 1: of the things that came out of this was how

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Speaker 1: quickly people moved to pull their money and how quickly

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Speaker 1: they were able to do that. Yeah, absolutely, SVB. It

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Speaker 1: was staggering that you had they not had the regulator

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Speaker 1: not stepped in on the day that they were going

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Speaker 1: to that the losses the withdrawals scheduled for that day

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Speaker 1: were huge, Libido. I'm sure you know the figure off

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Speaker 1: the top of your head, one hundred billion dollars and

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Speaker 1: actually they were able to withdraw around about forty on

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Speaker 1: so you know, it's huge that last day. Yeah, yeah,

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Speaker 1: on the final day of what happened. Nabila, thank you

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Speaker 1: so much for being with me this morning. Nobila armed

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Speaker 1: our finance reporter. They're just sort of digesting those hearings

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Speaker 1: that we had in the US, and indeed they continue today.

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Speaker 1: So my thanks to her for being with me. Up next,

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Speaker 1: a UK green tax, putting the brakes on a combustion

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Speaker 1: engine ban and the job's most at risk from chat

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Speaker 1: GPT now the paper review on blue Bird day Break Europe,

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Speaker 1: the news you need to know from today's papers and

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Speaker 1: Johnamy now Blueberg's Leanne Garin's is in the studio. So

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Speaker 1: the Times headline Leah, let's not there. The UK to

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Speaker 1: impose green tax on imports from polluting factories. Yes, indeed, Caroline,

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Speaker 1: So Grant Shaps, the Energy Secretary, will announce the new

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Speaker 1: measures as part of a package of proposals that is

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Speaker 1: actually going to be unveiled tomorrow. And I didn't know

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Speaker 1: if you know this, but tomorrow has been dubbed Energy

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Speaker 1: Security Day, So that's something Grant Shaps is going to

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Speaker 1: be delivering under new government plans to hit net zero

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Speaker 1: by twenty fifty cheap imported products made in polluting factories abroad,

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Speaker 1: so not here in the country could face these new

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Speaker 1: green import taxes. And he's also going to say that

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Speaker 1: middle income families will be given grants to make their

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Speaker 1: homes more energy efficient, as up until now we know

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Speaker 1: that it's been for lower income families, so he's bringing

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Speaker 1: up that to middle income. And basically the scheme Caroline,

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Speaker 1: they're saying is going to mirror a similar plan which

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Speaker 1: is in place in the European Union and is it

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Speaker 1: going to be backed with enough money though? And also

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Speaker 1: you only have to look at the Climate Chain's Committee's

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Speaker 1: review that's out this morning, that comes out twice a year.

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Speaker 1: I was totally damning about the government's policies, saying the

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Speaker 1: country in the UK is already suffering the effects of

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Speaker 1: government failures because they're not preparing for extreme weather. So yes.

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Speaker 1: And also, Caroline, this will have to be done internationally

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Speaker 1: because if they're gonna, you know, tax countries that have

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Speaker 1: more lax environmental rules, I probably just can't be a

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Speaker 1: blanket ban. So that's probably going to be a lot

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Speaker 1: of obstacles in the way. Yeah. Absolutely. Also is it

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Speaker 1: just inflationary double digit inflation of the UK that's a

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Speaker 1: really difficult yes. Okay. The Telegraph says the net zero

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Speaker 1: bound on petrol cars is in chaos after a Brussels

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Speaker 1: climbing Yeah, exactly. So is this news another blow for

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Speaker 1: grant chefs ahead of tomorrow, ahead of Energy Security Day?

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Speaker 1: Now are looming ban on the sale of new petrol

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Speaker 1: and diesel cars could really be under threat? Now this

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Speaker 1: comes after Brussels water down its own restrictions amid opposition

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Speaker 1: from the German auto industry. So experts and politicians are

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Speaker 1: warning that the British rules which were due to take

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Speaker 1: effect in twenty thirty, are now completely untenable after this

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Speaker 1: European climb down, which some papers have dubbed a back

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Speaker 1: room compromise to keep some of the car companies and

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Speaker 1: automakers happy. The pain of the transition exactly, and we

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Speaker 1: have to make sure that right now when we look

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Speaker 1: at the transition, it's for high end vehicles who can

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Speaker 1: invest in these new E fuels like Porsche. So a

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Speaker 1: lot going on in that way too. This is Bloomberg

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Speaker 1: Daybreak Europe, your morning brief on the stories making news

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Speaker 1: from London to Wall Street and beyond. Look for us

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Speaker 1: live each morning on London DAB Radio for Bloomberg Business

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Speaker 1: Alexa play Bloomberg eleven thirty. I'm Caroline Hebka. Join us

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Speaker 1: again tomorrow morning for all the news you need to

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Speaker 1: start your day. Right here on Bloomberg Daybreak, Europe