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tv   Countdown  Bloomberg  April 27, 2015 1:00am-3:01am EDT

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manus: take gestural rises, and aftershocks have a rescue efforts. they rushed aid to one of asia's poorest economies. we will bring you the latest from kathmandu. anchor: deutsche bank. a planned to unveil details of their cost-cutting strategy after a record libor fine. we will bring you breaking news from the bank's headquarters in frankfurt. anna: a report that a lender may spin off a bank.
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all the details from our hong kong newsroom. manus: and a chairman resigns, ending a 20-year career. we are live in berlin, for the latest. hello. welcome to countdown. i am mark barton. caroline: and i am caroline hyde. manus: and i am manus cranny. mark: pensioners and civil servants. manus: and it equity target of 10%. of course, it abandoned its original target of a return on equity a number of years ago, so
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return on equity their of 12%. that was with the corporate bank side of the business. this is the strategy for deutsche bank. focusing on investment. this after they delivered their first-quarter numbers, the second-best revenue on record driven by the investment bank it should be said. a post-tax return of 10%, with planned growth leverage reductions, so this is reducing the amount of weighted assets on its balance sheet, which carry big capital requirements. the target there, 200 billion euros worth. everyone is in the same game here. barclays, ubs, credit suisse. all of the major banks are in exactly the same game of trying to do lever their balance sheet to stabilize what is called their buffer of tier one ratio at about 11%.
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that slipped ever so slightly in the first-quarter numbers. let's cross over to hans nichols, who is covering this story for us in frankfurt. those are some of the top headlines. a return of equity of 10% and a focus on the investment tank. this is an interesting strategy. deutsche bank looks at that site of the business. hans: and that is where we saw some strong numbers in the first quarter. of course, that was true across the board, with all of the volatility with what the boards and the ecb are doing. sticking with the numbers another one that caught my eye, they want to have a capital ratio all of the way up at 5%. it was at 3.1% when you look at what happened in the last quarter. now, you mentioned the 200 alien. we thought that would be 150 billion. these of the assets they used to calculate some of their ratios. we knew they were going to get rid of postbank but not deutsche bank so they are going to keep
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the deutsche bank retail arm and they will be looking for more. where will they be shutting down offices? a may be retreating from the 70 countries they work in, and just where there job opposites are. some job losses in the u.k. when you look at the quarter they have, and you leave aside all of the litigation costs though that is obviously weighing on the bank and their profitability, but when you leave aside those costs, they had a remarkably good quarter, even when compared to some of their peers. it was 10 .4 billion euros, and when you translate that into dollars, that was about 11.4 billion dollars, up 24%, and compare that to goldman. goldman was up quite a bit, as well, and then jpmorgan, they were up over 4%, and then you look at the profitability, the net income level, and there you see deutsche bank retreating. again, a lot of that is litigation costs.
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you sub goldman had a fantastic quarter. her income was up 40%, and jpmorgan of all of the way to 12%. another thing we will be looking for is how much cost-cutting they want to do. 2 billion is a member we saw in some of the analyst reports, and we will be looking at that number, as well, and manus, while i have been talking, maybe you have pulled it up on your screen. manus: yes let's look at it very briefly, and i know as that morning goes on, you will have more numbers. the target by 2020 is near double that number, 3.7 billion euros. where do those cost cuts come from? do they come from the operational side of the business? do they come from retrenching from the 70 countries they are present in? d consolidate from postbank. that is the other major headline coming in here, and as i said just a second ago, 3.5 billion
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by 2020. that is the target as we just mentioned, and 1.5 billion euros for growth, additional cost savings, as we said, this year, 1.2 billion, so they are going with about one third of these cost cuts this year, near 4 billion by 2020, and then the consolidating -- then deconsol idating. that was supposed to be the term around -- turnaround, the golden goose, but it obviously takes more to turn this around. hans: they will be refocusing. debt trading has been good for them. they did not shut up deutsche bank, in part because they need those retail deposits to keep their buffers and their ratios high. it is really that 5% ratio that jumped out at me. it is a huge increase from where
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they are now, even though there tier one ratio stance north at 11% and roughly the same range, so i guess the big question where would the cost cuts be centered, and how much of that will be headcount, and what is their strategy for wealth management? will they be doubling down for greater investment there? and then your old house, almost wish i was outside that bridge, because when we talk about banks, it is always great to have a bridge in your background. manus? manus: i have no doubt you will find something much more interesting. great work on this breaking numbers, and just one other line for our viewers, deutsche bank are aiming for a 50% payout ratio. that is reminiscent of the swiss banks that he was referring to, and make sure you stay tuned to bloomberg throughout the morning. midday, we will bring you an interview of the host ceo of deutsche bank, the strategy, the
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way forward. that is something you do not want to miss on bloomberg. catherine: rescue efforts in nepal, and the toll of those dead is rising. the risk of waterborne disease is also rising because of the damage to the water and sewage systems. bloomberg reporters have been on the ground. let's get to our reporter. what is the latest out where you are? reporter: we did manage to speak to a few and they fear that the
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number may go up. they are basically looking at the fear that there could be a bigger epidemic, because this is far beyond their capabilities in terms of handling it. catherine: some desperate pictures and different -- difficult times. live for us in kathmandu. mark: considering the sale of a
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retail unit, hsbc, the shares jumping the most since 2011 in hong kong trading. stephen engle has this story. good morning. stephen: yes, they are up the most since 2011 up 5.1 percent this on top of a 4.2% rise on friday. a lot of news here that got hong kong wagging because of comments. of course, the sunday times paper in london is reporting without naming its sources the information that hsbc is considering spinning off its retail bank unit for about 20 billion pounds, 30 billion u.s. dollars, and, again, the paper did not give the source for that information, but really here in hong kong, lots of speculation after it was mentioned that they could consider moving their retail bank out of the u.k. because of that bank levy in the
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u.k., costing the bank about 750 million pounds last year. analysts are saying hong kong obviously could be a choice for the new headquarters as it was the previous headquarters. it was cofounded in hong kong and shanghai back in 1865. the headquarters was here until 19 93, and then they moved to london, so lots of speculation here that perhaps hong kong could again be the home for hsbc. mark? mark: stephen engle in hong kong, thanks. let's move to another german corporate giant. manus: the largest comic are coming to the end of an era with the resignation. two weeks of turmoil at volkswagen. he is probably challenge the authority and ceo and the board
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members that the chief executive, and they pushed him out. let's get more on this story now with chad thomas, who has been following the developments. chad, walk us through this, because this is a long, long story at the top and a moment where he wanted everyone else to come on side with them. >> hi, manus. it really was extraordinary. it was only a few weeks ago that he looked like he was still the undisputed chairman of volkswagen. he is a man who has for more than two decades ruled this country and has been known for getting his way, and two weeks ago, he questioned the leadership of the company in an interview with a german magazine, and that through the company into turmoil, because he has a history of using such interviews to essentially fire top executives. that is what he did to his predecessor ceo. there was a meeting then about a week ago of some top leaders at
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the company non-executive leaders, some of the shareholders, and at that meeting that he attended, he had people throw their support behind the other. at the time, it was said there would be a contract extension. we have learned since then from various sources that we have been talking to that after that meeting, mr. piech continued to talk to people in the company in a push to have mr. winter tour removed. it was at this time that the top leaders and the company, including the ownership stake and also his very own cousin and they called a meeting. this meeting took place over the weekend, and they basically said to him that at this point, the game is up and that he had to go, and also his wife also was forced to step down from the
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board. manus: are we closer to understanding why he went? why he set this train in motion. you said, as you suggest there, some of you like to get his way and when a ceo got in his way he got them out of his way. why did he set this train in motion? reporter: that is really be million dollar question, and when you talk to people at the company, they really cannot answer it. volkswagen is having some problems. a are struggling a bit in the u.s. market. their profitability is not as high as they would like. that said, volkswagen as an entire company had record sales revenue last year, record profits last year, and this year, the company under the leadership is set to surpass toyota as the world's largest automaker. that is one of the reasons why he did not win here. in the past, he pushed out people who were in a position of
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weakness. here, they were able to point to all of the things going well in the company, and other top people in the company sided with him. manus: as you said, the mystery will roll on. i am sure it will unfurl as we get a little more details. lack to have you with us. catherine: today is the greek day of reckoning with state employee payments due this week, and the country is scrambling to find the cash, but more aid to europe's most indebted state remains elusive after the finance minister met a wave of criticism last week. the euro area finance ministers insisted on less banter and more economic reforms, and the so-called brussels group of officials and creditors will hold a conference call today with german chancellor angela merkel and her greek and apart
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saying they would stay in contact throughout the negotiations. i bloomberg reporter has been following the developments on the story throughout the weekend, and then talk to us about what happens before the call. ben: the finance ministers took the greek minister to task over his lack of progress over his kind of maneuvering, over his lecturing style and they told him look a enough is enough. if you go on like this, you are not going to get aid, and you're going to drive your country into a serious, serious finance crunch. he seemed emerging pretty shaken from that meeting, and he made some kind of fairly contradictory statements afterwards, so the question really is is this going to mark
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a sea change in negotiations, is it going to lead to a shift in approach from the greats, are they going to make the concessions that the europeans require, or are they going to stick to their guns, and if so, that is going to lead us into you know, increasing turbulence. pray possibly default and all sorts of unprecedented and uncharted waters. catherine: from madrid, thank you very much, indeed, and the three-year debt in terms of borrowing costs. mark: join our conversation on twitter and tell us the stories you want to hear more about. today, one of the trending topics, and the caroline hyde tv and manus cranny and at mark barton tv, that is where you will find us.
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mark: greece faces a cash crunch with payments due this week with pensioners. they said they would not release any more aid until the bailout conditions were met. let's bring in the head of economic research at it to be
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she securities international. brendan, good morning. after the rumble, when he was verbally attacked by his fellow european finance ministers, are we approaching this day of reckoning at the end of this month, when greece has to at least make this 1.5 million payment to account for salaries? guest: i think we are facing a very decisive points, and the biggest is whether there is actually going to be something fixed or not. i would subscribe very much to a view that even if this does end up with some sort of default we are not going to know the day it happens. they will probably ponder for a long time if it will happen on a given date, and what i mean by that is even if we talk about it before, i do not think you will find the announcement of a default in one day. it will be some sort of a negotiated holiday or
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postponement of one payment, and we are not going to find greece doing it with one day. it will be a gradual process of banks putting on some restrictions other currencies gradually coming in. catherine: so do you think they will leave, and is it manageable? brendan: it will not bring down the european monetary union. what it very much will do is create some rancor between france and germany, and, of course, there is the european central about 15% of its monetary base loaned out to greek banks so when mario draghi recently said that the european central bank, if they agree it is a central bank of greece. manus: as greek debt builds beware of a much bigger danger. you have warned of a turkish crisis, a potential looming
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turkish crisis. certainly, the touch paper for that would be greece. brendan: we have seen the turkey currency slide in the space of a few months. turkey was a destination, like greece was in the last bubble to a huge amount of carry trade with 08 euros and zero way dollars, and the exposure of turkish banks and turkish corporations internationally to nonstate entities is much greater than what we are looking at at greece now. it is mostly held in official holdings, so if it is any sort of crisis or credit event in turkey, and it probably is the most dangerous emerging-market situation at this point, the shock effect, i would imagine, is going to be greater than a coming out of greece. mark: let's talk about the fed brendan. it meets this week, no change
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expected. the year 1937. take us back to 1937. many commentators like yourself are focusing on this year, and there could be parallels between the present and the past. brendan: i think if there was such a thing as a market mind 1939 would be deep in the conscious and a primordial thought. you had a 40% crash of the stock market over the summer, coming out of a pretty well blue sky after a long period of what you would call today as fed qe, and just a modest slowdown in the u.s. economy, so this is very much something that people look at. we have had a number of articles in the wall street journal and others in fact saying that people aren't you worried about 1937, and the fed should not delay time -- tightening because of a concern that asset markets would be light 1930 seven, but
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the underlying danger here is there has to be so much pump priming of asset markets by central banks, there are a lot of markets that are very elevated, the fear is that once there is any sort of normalization of monetary policy started in the u.s. this could be cut short by a big fall in markets, and that is serious and i think some of the wall street journal's are underestimating that risk. on the other hand, is central banks do not move towards normalization you risk a bigger asset prices inflation somewhere down the road, so it is a difficult judgment call, and probably like so many other judgment calls, central banks will get it wrong. kathryn: we are looking that china is now looking at quantitative easing or nonnormal action to boost stimulus even further.
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are you expecting that to be coming out from the pboc? brendan: there is no reason for china to go into a qe, and interest rates are still at 2%, so they could still cut rates. i would see there are different ways in which to provide financing to local governments and allow government deficits to not come down so quickly, but i would caution. i think the big issue in china is the currency. it is very difficult to imagine an effective stimulus in china without currency depreciation and in a way that the chinese authorities are trying to have a two ways here, a chinese currency that builds up to a reserve currency, and on the other hand, a devaluation at some point seems pretty essential towards stimulating the economy. mark one good to have you today. brendan. coming up -- manus club the world's most valuable company, apple, that is, is due to report earnings.
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will the china sales beat those than those in the u.s.?
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♪ manus: welcome back to countdown. it is 6:30 in on day -- on monday. the dollar is flatlining this money, 96.94. you begin to see the kind of momentum. the market is the least bullish. we are down over the past five trading sessions. there are eight major currencies
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since october of last year, so the dollar is just coming off. it is a sort of rampaging movement. having a look at the dollar-yen again, we have got another shifts. call it flat, and you can see the overall movement, which is dollar/yen, that will bit stronger. this is the least short it has been since 2012. what we are seeing here is a real momentum. in other words, out of these short positions. we have the bank of japan meeting. 22 out of 34 economists say you will get more easily by october of this year but only three of them say you will see easing at the next meeting, which is later this week. have a look at the bottom of your screen. i will show you the taiwanese currency on steroids, of the most in 15 years. we are giving back just a little bit of the danes. this is, of course, the
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taiwanese dollar up. have a look at the longer-term chart, because it is quite spectacular. what you're seeing is a huge flow of money in taiwan, the biggest inflows since 2007. that is the one week chart. these are the biggest inflows since 2007. korean stocks are up. a move in the taiwan dollar, also a move in the korean won and again bounding along. stocks are up for the 15th straight day, so there is a big movement in both of those currencies. back to you. mark: the china central bank is considering unconventional policy including direct purchases of local government bonds, according to a market news report. the japanese prime minister shinzo abe is in the united states today. he will be discussing investment and trade when he meets president obama.
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he is also set to unveil new details of a defense agreement and that they are willing to play a bigger role in asia. and expected to report that earnings are up by 20% when posting results for the second fiscal quarter today come with strong sales in china expected to drive the boost. net income is expected to betrayal $.6 billion on revenue of $56 billion. manasquan a bit of breaking news early in the day on deutsche bank delivering $3 billion in cost savings by 2020. they are bringing a man in the know. is this enough? you had a look at this cost-cutting, the return on equity, and then the postbank acquisition. guest: it looks like a good strategy. i do not know about major
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surprises. they have turned down their return expectations. it is down to 12%. that is pretty common. what we have seen across the industry. 65%. again very much in line with the industry. they clearly think there is going to be more pressure there because the european minimum is free at the moment. and deleveraging the investment bank, getting out of postbank, and more importantly, just as jamie dimon was talking about in his letter recently reinvesting in wealth management and global money transmission, so i do not want to say me too, because it is a automatic plan, but it is not going to knock the cover off the ball at this point in time. caroline: with the unwinding postbank, going back to the market 2016, what sort of
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company will it be? do you want to buy into that? guest: i thought they might pay a to their shareholders as a dividends, because at that point in time, even if it is not earning a fortune, you can at least let your shareholders know if you want to sell it, or do we want to keep our deutsche bank share so i think the valuation, unless they do something extraordinary, is going to be pretty low, and let me put it this way. making money on investment which they boosted in 2010. a true majority shareholder. but it is not work. they feel they can get synergies. mark: which banking model is working right now? who is doing it best, as we look at the share price performance of deutsche versus its peers?
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what is the right banking model in these times? guest: i have to say, i'm forcefully i follow a a lot of banks, there are very few who are earning the cost of capital at this point. we had a great quarter. deutsche bank got the benefit of the dollar. i accept that. good numbers. very pleased with that. but as they always say, we like 60 in the first half, bullish in the second half, so i think at the moment, we saw these green shoots of better fixed income and m&a. i have to say that jpmorgan looks in really good shape, and has businesses away from investment banking but the pressure is immense, and you have to put that to one side. some other big banks still working their way through the crisis. if you look at the other model it is really clear the swiss
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banks have done a lot of work, but the regulator is just pushing the bar up and up and up, so you have to say, bets are off at the moment. getting some good-quality retail names. i am just not sure it will in the medium-term get to the cost of capital over the full year. manus: hsbc, big news on friday. another review. up 6% in hong kong overnight all on the chatter of the sunday times report that they may or may not consider divesting their retail assets here in the u.k. and that is a big question about the holding in the u.k. with the retail banks that we have to set them aside and look after them differently and capitalize them differently. what do you make of the story? guest: well, i have to say i was not a big fan of the vickers commission, because i always knew there would be consequences and i sat down with the hsbc had a few weeks ago, and i said you don't
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disclose what you make in the u.k. in terms of return on act on equity, and i said, will you invest more, and he said i am not sure, and the reason for that is because of the 25%. we will be disclosing that number, and he said, what do you think the next target might be for the politicians? is it 2.5 times the cost of capital, or will we get hit there, and i think they are looking at it like quite frankly, we're going to continue with some headwinds on regulation in the u.k., and we do not have full control of that bank and i don't think it is something they want to do particularly, but they will stay in commercial banking. being really clear, that is their core business. manus: i know you are in a rush to get in the conference, said we should let you know. thank you. christine: the airbus a3 80
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launched on innovation a decade ago and it has not had a single new customer order in two years. could the 10-year anniversary be the last major milestone? a report. reporter: the airbus a3 80 is having its 10th birthday. when it burst on the scene, it was labeled as the savior of the sky by those he made it. a major technological achievement with a wingspan just shy of 80 meters, the world is passenger jet. tearing up to 853 people, a top speed of over 630 miles per hour, but it does not come cheap, costing $428 million per plane. so has it been a commercial success? right now, there are 156 jets in
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service across 18 carriers. emirates has been the biggest carrier with 60 jets currently in its superjumbo fleet, and across the industry, there have been 317 orders, but 2014 was a tough year, with no new orders placed by a major airline. one black spot is the u.s. to date, no american carriers have ordered the a3 80. it could be discontinued in three years time. the plane with a bet on ferrying large numbers of passengers between major hub before they jump over to their final destination, but the aircraft's younger sibling, the a3 50 is outselling it. smaller and lighter, if life strictly to more airports, getting passengers to their final destinations faster. perhaps the era of the superjumbo is under threat. mark: let's get more from our reporter on the ground in to
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lose. good morning. why has the a3 80 had a problem selling their? reporter: i think they started off rather badly. first of all, there were production difficulties the first few years. you can remember that they flew for the first time in 2005 though we did not see any fleet airlines until 2007 so they have production problems, and just as they started into service, there is the big financial crisis of 2007 2008, and that may have slowed down other airlines from ordering it when they saw it takes to the skies. and since then, we have had one airline who is crazy about it, emirates, which is ordered 140 of these, but others have not come to it quickly, and as he sought with the tv spot, there were no orders in the u.s., and china has had only i've orders altogether, and japan not either.
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mark: passengers apparently do like this play. why is that? reporter: because it is a big claim, it has a smooth ride, and it is also a very quiet play. there's so much space on the play that they have used it that they just give more space to the passengers. now it is almost that all airlines have 10 of rest even for economy passengers, which means a little more space on this plane than they have on many other planes. i think it makes it very comfortable. mark: and what happens now? does the plane carry on? could it lead to commission? what is next? reporter: there has been one comment from the cfo of the company, sort of an offhand comment, saying that even if they were to stop building this plane in a couple of years, they would still have strong ebitda but the cfo of the company has said, no, no, we are going to do
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everything to keep this plane is strong. they're going to make improvements and they talked about engines, and that would not come for a couple of years and they are going out and marketing it differently now and encouraging airlines to use it differently to justify the cap and a bit more so they can make revenue. mark: good to talk to you from to lose today. caps on: of or some join the conversation on twitter. let us know what to think of the show and the a3 80. i am at caroline hyde. there is also at mark barton and at manus cranny. trading today, one central bank in particular. carney, crossing the finish line. 24 hours, i am impressed. mark: coming up, i will be speaking to the english rugby union. stay with us. ♪
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manus: welcome back to "countdown." we tried to bring you the news from our digital sources, and on, we kick it up with the tragic story from nepal . people are trying to figure out what this means for the people of nepal. in europe tragedies like this knocking at growth, the estimates are for growth in
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nepal to be dropped anywhere from 10% and 50 percent. it sounds almost grass to try to put numbers around such a tragedy, but the reality is as we go into recovery mode in nepal, the next position will be what about the economics for nepal to recover, the imf, and china and india ready to go, and last year, there was another landslide, the deadliest in a decade, 10% of power generation and that just gives you a little bit of sort of the challenges that will be faced by the people of nepal and the aid agencies as the world rushes to deliver aid. mark: not being in to decide about u.s. treasuries, and try flipping a coin. the government market has gone like that one week up, one week down, one week up, one week down. there it is. it is a lovely piece, as
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economic data continues. this is conflicting signals. there has been a theory for confusion. it is said the unexpectedly harsh u.s. economy has slowed, and a trend in emergency with spring, expect more of that. a flip of the coin. caroline: meanwhile, i have a really interesting story on china's young, no longer wanting to work for the government. that is where everyone was aspiring to go into work. now, become a tech entrepreneur. silicon valley, the colt is spreading, and jack has led the call in china. they are chasing riches as tech startups. we understand that with this civil investment exams, everyone is becoming investors.
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manus: we are going to be back in a couple of minutes. mark is going to be talking about bonds, it will new concept for you. back in a few. ♪
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mark: a retail bond by a sports club, the first time, to be listed on the market just four
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months after the club moved home to play in the arena, and joining us as david armstrong, the group ceo. thank you very much for joining us. what are you going to do with the money you are using on this, a historic day for a sports club. guest: it is the first am a rugby club or a sports club has come to the london stock exchange to raise funds, so our plan is part of a refinancing exercise. the businesses have their own financing structure, separate down in sheets. why we are doing this bond race is to refinance some of that balance sheet that is already there, existing debt, and also to build for future growth. mark: and it is all about future growth, isn't it? you have sent out this brilliant business plan, which,
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essentially, has the ambition, to me use your word, of changing the business of rugby. that is a big ask, isn't it? guests: well, it is, but in the acquisition we of made and the arena we have got, i think we have already done it. rugby was operated on one or two of your business auto -- models one constrained in size and with limited revenue streams, or were arrested from a sports organization, like a football club, where it maintained almost none of its income. what we did by acquiring the income is get the best. we own our own stadium. we also have a very significant conference business on the side of it. this arena is the only venue of its kind in europe where you can buy in a very significant acquisitions business with any sports team. mark: how has it been? many safe you cannot fill out the park, you cannot fill out this arena. >> are games come we were
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averaging about 18,000 fans, and it was more like 5700 or, so so far, so good. mark: the criticism came from the fans who were based around there. it is a track. have the fans stayed with you or have you tempted new fans from the coventry area? >> a bit of both, actually. about two thirds of our season ticket owners have remained loyal renewing their season tickets for next year, but we have also attracted a lot of new fans. something like 72% of fans came from the area. we clearly have captured their attention, as well. mark: being the biggest rugby team in the world, how close are you at achieving that aim especially with the french clubs, without closely are to achieving financial status.
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guest: we were the second turnover club, and at the end of this season, hopefully we will have moved into the number one spot, overtaking to lose, who currently have that spot. mark: does that mean you can take on the other clubs currently at a salary cap difference, which gives them a bit of an advantage. >> the clubs are so even, and a nailbiting finish coming up to the end of the season to see ends -- who ends up in the top four or the top six, and it is also working in delivering a lot of players into the english system but yes, the french to
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have a high salary cap, but i do not think it is just about the salary cap. we can compete. mark: i have to ask you about concussion. there was a willing in the u.s. about compensating players with head injuries. with the focus on concussion, is there a sense that rugby is at risk for lawsuits similar to the nfl? guest: that is hard to tell because we have not seen it yet. however, concussion is something we are taking very seriously. "and for nepal's are resting players appropriately, bringing players back into play only when they are willing to do so. it is a very professional one
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and a very grown-up one. i think we will see the incident of concussion reduced. mark: very well done. are you going to reach the top four? guests: we have our fingers crossed. mark: thank you. ♪
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>> nepal earthquake. the death toll rises to over 3200. the imf and governments around the world rush aid to one of asia's poorest economies. we will bring you the latest from kathmandu. >> deutsche bank revamps. europe's largest bank cuts costs. we will bring you the breaking news from headquarters in frankfurt. >> shares in hong kong trading rise the most in four years after a report the lender may spin off its u.k. retail bank.
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>> changing drivers. the chairman of vw resigns. we are live in berlin. ♪ welcome to "countdown." greece walked away empty-handed from talks. the crisis as the country faces the monthly payday for civil servants and pensioners. caroline: first deutsche bank announced its plan to cut back from 3.5 billion euros. there is news to shrink the security business to try and revive profitability. it is part of a massive restructuring. let's get more from hans nichols
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in frankfurt. where is germany's biggest bank trimming and growing? >> in terms of leverage ratios, they are going to cut two hundred billion euros. that is going to bring the leverage ratio up 5%. they want to read apply 50 to 70 billion euros for relationship driven business. most of the cuts appear to be on the retail side. they're are going to reposition themselves to ipo by the end of 2016. they will go from 730 branches down to almost 200 -- down by almost 202 0 to 530. here is the statement. we must remain client centric but focus on mutually attractive
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client relationships, remain global, but be geographically focused, and remain universal but avoid trying to be all things to all people. the new goal for return on equity is done to 10%. the old goal was 12%. you know what they did last year? 3%. it is more in line with expectations and achievable goals. caroline: more in line with other banks as well. chris was saying it is like jpmorgan in terms of strategy. there are still some questions left unanswered. i know you will be putting it to the co-chief executives. what don't we know? what would you want to ask? >> we want to find out where the job losses are and where they are going to be geographically. we know deutsche bank is in 70 countries. they are going to trim that i 50%. in terms of where these costs are going to come from, how much his head coin -- headcount,
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where it is going to be and what is the timeline? then you always want an update on their expectation for litigation costs. yes, the agreed to the 2.5 billion euro -- $5 billion fine. we still don't know what is going to happen with the currency rating exchange. caroline: do stay tuned to bloomberg throughout the morning. at midday hans will bring you an interview with the co-chief executive. tune in. you don't want to miss it. manus: rescue efforts after an earthquake killed 3200 people saturday and the death toll is rising. the risk of disease is rising because of damage to water and
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sewage systems. our reporters have been on the ground. we go to delhi following developments. give us an update on how rescue efforts are going. >> the death toll has climbed to more than 3200 people. things are dire on the ground. water supplies are low. fuel supplies are low. power still hasn't been restored to kathmandu. it is devastating at the capital that has been hit so hard. it is basically the hub of all the major drivers of the economy and people aren't able to stay in their homes. the structures are so weak and there are tents across the city for those able to find them. >> what are we learning from the authorities?
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as i was saying before we went there was a fear of an epidemic. the eight takes time to get in and there's -- aid takes time to get in, and there's this destruction in terms of sewage and water. >> it is a real problem. people can't get water out of the ground. they cannot run their pump. in many cases the pipes are broken. those who have access to drinking bottled water are surviving on that. the indian government has just flown in an aircraft full of water, but obviously distributive it is a problem. manus: thank you for that roundup.
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mark: should we go back to banks? hsbc shares jumping the most since 2011. steve engle has the story. good morning, stephen. >> good morning. friday we had the chairman suggesting they would perhaps consider moving their headquarters away from london. now we have the sunday times reporting the bank is considering possibly spinning off its retail business and re-creating the bank, which hsbc bought in 1992. the paper not citing the source of this information and saying a spinoff deal is not necessarily imminent. it follows the comment we got friday that they would consider moving the bank from the u.k.
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and analysts have said hong kong would be a likely potential destination. shanghai and hong kong back in 1865 when the banking corporation was founded. hsbc was in hong kong until 1993. it's viewed as positive for hong kong. the monetary authority already put out a statement saying they would welcome hsbc back into the fold. the market is responding. shares gaining five. it is a 10% gain. >> thanks, stephen. manus. manus: let's move the story
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along. let's go to germany. another huge corporate story. it is all about the power structure as europe's largest carmaker comes to that end of an era with the resignation. he publicly challenged the ceo. the board members back the chief executive. chad has been following developments. this is shocking. two weeks ago we knew he was removing his support for the incumbent ceo, but he has lost, hasn't he? >> this really is shocking. he has a history of challenging executives. he pushed out the leader.
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he pushed other executives as well when they were in a position of weakness. that is the difference. he can point to volkswagen and say under my leadership we are posting record sales and profits. they expanded the company. they purchased porsche, and that was key to winning the backing of many people. the powerful labor leaders backed him in the struggle, as did the state of lower saxony. ultimately, even his own cousin lined up with his own family and pushed him out. manus: what does all this mean?
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he built the company. he bought the brands that came in under his tenure. he is still a powerful men. what does it mean? >> that's a thing to remember. mr. piech and his family on the controlling stake in the company. he indirectly owns a stake himself. he sits on the board of the company. he is able to influence what happens. we have no chairman. it's unlikely he is going to quietly go away, so he will continue to influence the company through those holdings and it could throw things in a turmoil if he said, i want out. this is in the end of the story in terms of the influence at the company. manus: indeed, but the relatives
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get first refusal according to your story. i do read what you write. caroline: let's have a look at greece. the day of reckoning as tension holdings are due next week and the country is scrambling to find cash. we have been following all the developments throughout the weekend, not to mention the past few years. will greece actually managed to pay the pensions and salaries, because they are having to go to the ministries to try and get the money. >> the local government said they would be aiding the greek government. i don't think that's a problem right now. the thing is may 12 there is
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lone retention. that's what we should be looking at. on wednesday there has been some discussion that a share cut could be imposed on the collateral banks use and that is what we should be closely watching. >> closely watching payment this week and may 6 imf disbursement, but after another failure to strike a deal, the disbursement of funds on friday, is it may 6 we're focusing on? which. of dates should we pick? >> i the may 6 is fine. 780 million euros to the imf is more important. there is also some opinion polls
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about how the greek government is tackling issues. there are feelings of anger. the cash situation is dire. the deputy prime minister said over the weekend if an interim solution is not found in the next few days, maybe greece will take measures it is reluctant to at the moment. >>caroline: and still costs keep escalating. mark: china central bank is considering unconventional policy in direct purchases of government bonds according to a government news report. the maker of treatments for rare disease is purportedly in the deal for the takeover. the biggest shareholder has held
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talks with prospective buyers since last year. the company's value that $3.5 billion. the u.k. government said it opposed in the takeover. it has said it wants the firm to remain an industrial champion with global reach. bp declined to comment. speculation continues over the likelihood of greece's exit from the eurozone. if that were to happen, the impact would be minimal on the travel industry. >> this kind of issue is very important. you have problems but in this kind of economic situation,
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people don't care. the destination has not been affected at all. caroline: join us in the conversation. let us know what you think about the show. the devastating earthquake in nepal putting it on the map in terms of what is being talked about. up next, we will look ahead to the u.k. elections. our next guest says a minority government is the most likely outcome whichever is the biggest party. find out why after the break. ♪
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>> just over a week ago -- to go until the u.k. election. the next guest says the minority
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government is the most likely outcome. let's get more from the senior europe analyst. hi, david. i keep reading that the standing government gets a surge at the end of the campaign. we are running out of time for that surge. >> we are. i think the conservative campaign was built around study incumbency, hoping a recovering economy would strike a cord with voters and saying the country is safe in our hands, give us another chance. could gets late early around here. it's 10 minutes to go. caroline: interestingly you said you now believe u.k. government -- u.k. voters could see a movement over the last few days. is it more efficient for the conservative arty to fight on
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right-wing policies in terms of trying to woo the left from labor? >> i think we saw a small poll where he urged u.k. voters. i think that is probably the direction they're going to go in. it is the u.k. taking lots of conservative voters away. i think the strategy may switch in this direction. >> we're on for a constitutional crisis, the likes of which we haven't seen since the abdication of the king in 1936, the legitimacy of the labor coalition would be illegitimate. one in three people said they just wouldn't stomach it.
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david: it certainly going to be an interesting one. on the other hand, we have a huge election campaign to keep in the union. they have as much right as anyone to take part in the government. i think there is a reasonable point to be made about the sn p's view of the future. i don't think the litigious me -- legitimacy arguement holds water. mark: why don't we do grand coalitions? why can't we do a tory liberal
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government? what the ticket would make it very difficult. mark: is that what the polls are telling us? is that what they want? david: i just think we can read that in two polls. i think if the electorate wants it there would be some sort of idea. if we spoke about labor, i think people would throw their hands up. if we end up having more elections, the unity government might end up happening. manus: it's interesting, we are talking about clegg might be around for a second election. cameron might be around.
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what is your bet on a second election? >> i think it might last slightly longer. it might go through to q1. david: it might get that long. caroline: we're a business-oriented channel. we have the manifesto for small businesses. what are these parties saying about the offering in terms of a smaller entrepreneur? david: conservatives have believed small business is there for a long time. a number of former small businessman just left. the conservative attitude towards small businesses is for a much trust us to carry on, and we will favor small entrepreneurs and large
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businesses as well. hopefully you will become one of those large businesses. labor historically had a much more difficult job in the last 10 or 20 years. i think labor will probably have to flesh out their offerings in the next weeks. mark: did labor win a few more votes citing the referendum potentially to business? >> etiquette goes to a few of the arguments. on the other side of the coin, i think it feeds the labor side that they are not particularly loyal. they will move to where trading conditions are best. that's an argument labor has
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been starting to work out. caroline: they have been starting to steal thunder. mark: they allege cap's. that is 11 million versus the tories with 3 million that can actually buy. do you think that is a winner? >> they think there is increasing suggestion this is where there is an area of market failure. i think the market in london is a difficult situation, and it has huge knock on effects. i think there is a degree of political strategy. whether there is enough, i'm not sure. caroline: great to have you on. i'm sure we will have you back. mark: just getting some more about the applied materials
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which agreed to buy tokyo electron. it had in in review around the world. it seems it is insurmountable. stay with us. ♪
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>> welcome back. sweden tomorrow, bank of japan later in the week. have a look at the swedish krona. you have a decline in the euro. the dollar is setting up for a little bit of a dip. the market is the least bullish on the dollar since october of last year. a little bit of weaker data on friday. he will get a draft on how they
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see the economy. that's going to be important on making an assessment. you begin to see the momentum for the dollar down. bank of japan will have a meeting. they are not expected to do anything. 22 of the 40 economists we surveyed said they would be more quantitative easing from the bank of japan. the market belts, and when the market doubts it repositions. the market position is the least sure of dollar yen since 2012. it never really got the guts to get through the 120 level. here it is, and you begin to see reassertion of the dollar falling in the end rising.
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the market is the least sure of dollar yen than it has been since 2012. the taiwanese dollar rises the most in 15 years. at one juncture it was up the most in 15 years. this is the dollar down. that momentum is being driven by inflows. the biggest inflows into taiwan since 2007. just over $3 billion buying assets in taiwan. we are seeing a move on korean stocks in the korean won up for the 15th day. all going on in taiwan. mark: china's central bank is considering unconventional policies. the japanese prime minister
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shinzo abe is in the u.s. today. he will unveil new guidelines on a defense agreement. it is said japan is willing to play a bigger military role in asia. earnings are up by 20%. strong sales in china are expected to drive the boost. that income expected to be $12.6 billion on a revenue of 56 billion. >> greases scrambling to pay pensioners and employees this week after the euro finance minister said they would not disperse more aid until the bailout terms were met. let's take a look at what it is going to do to the euro. the head of global strategy joins us now.
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will the euro take it in its stride? >> yes we don't think this is driving the euro much. we think it is eurozone qe, and for the euro dollar the state of the u.s. economy are key factors. having said that, what we will look at is the meeting on may 11. ultimately, we think a deal is done. i think the market is taking it into stride. it is assuming there won't the a grexit. caroline: what about potential money flows coming into eurozone assets? we're hearing there is a sudden rush for european equities. is that going to keep a trough
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on the euro? we're not going to see the euro coutu parity because of a surge in demand for european equity? >> this is a good point. this is consistent with countries undertaking quantitative easing. the other thing is japan. there has been a strong demand for japanese stocks. however, the move in the opposite direction on the debt side is driving the euro. because of qe, you have low interest rates, club -- classic scenario for funding currency. we would say the best funding currencies are the yen and the euro because of qe. you are absolutely right to highlight the inflows. we would argue there are larger outflows on the debt side. mark: where du by?
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it has been down five or six weeks, hasn't it? it is 3.4% below its high. a lot of people have told us the dollar should be up, but it keeps going. questec think the point would be to compare it to a year ago. u.s. growth was very weak. we are having a similar scenario this year. growth has been down. i think what the market needs to do is look through that to q2. it has been the last year the dollar did ferry well as a result. if we are right and growth comes back in the second quarter, that is good to be bullish for the dollar, but ultimately it comes down to data.
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manus: there is another story that the chinese might consider quantitative easing. what do you make of that as a possibility? we had a conversation that the yuan would need to be a currency that goes lower for them to rebalance their economy. >> low growth in china is the issue, and this is what is trying to be addressed. our view is they will look at other measures of easing going forward. the chinese still stick to seven and a half percent growth. you mentioned the currency needs to weaken. our view is that is probably true but the markets priced that in already. it is quite a substantial amount of renminbi weakness.
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we would say they have probably gone too far. this is a currency that is controlled. it's not the yen. it's not the dollar. it goes where authorities wanted to go. we tend to think it's a line in the sand. we don't think we're going to see a sustained moves that is significantly weaker than currency per -- currently priced in the market. >> they talk about more stimulus from central banks. you have four of them this week. and he moves expected from your point of view? >> yes the one we think is most likely is sweden. we think it is interesting the bank seems to have got to a policy where they are trying to this inflation. a strong currency is something that would derail the goal. we expect more qe from sweden.
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another outside chance is japan. our baseline view is they won't do anything but they surprised the market before. particularly with inflation being lower in japan than authorities would like, there is an outside chance we get to move in the end. we recommend positioning for upside and dollar yen, even through -- either through a cash market or other options. >> thanks, stephen. up next, can china rain in its stock rally? stay tuned. ♪
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>> china securities reckless recommissioned announced a campaign to crack down on stock market manipulation in the
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latest effort to try to reduce risks. authorities had already placed curbs on market trading. let's take a look at the rally. i have gone back from 2005 to encapsulate the last double to 2015. today the shanghai compass it has hit a new seven-year high. it is on track for its eight weekly gain. since november 24, just five months ago the index has soared by 76%. in the last 12 months shanghai compass it has more than doubled. let's but what hundred 23 percent into perspective. that equates 20 trillion yen let's put that in for spec is.
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$3 trillion, which is more than the entire french stock market or the german market or the canadian stock market, which is worth $2.1 trillion. only venezuela's stock index has fared better. if you compare the first 15 months of this rally to the one to thousand five until 2000 and seven, there are interesting findings, because the current rally is outpacing the earlier one. that means the advance is steeper. again of 123% versus 77%. new account openings are higher,
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as is the measure of momentum. throw into the mix that valuations multiples have risen and the value of trading has surged at a faster pace. china has a lot to consider. can china rain in the stock rally? the gain posted an average retreat of 28% after policy intervention to curtail stock speculation since 1996. that's according to bank of america data. i will leave the rest to you. >> less than 10 days to go until u.k. voters head to the polls. the role of the scottish national party in any government is still high on the agenda. we are joined by anna edwards
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and ed miliband has been particularly emphatic. anna: he is being pushed on what kind of relationship labour party will have if trying to form a government. he insisted the labor government would not be written by snp. >> no coalitions, no tie-ins. >> one of those deals that would keep you going. >> i am not doing deals. >> we continue to talk about the snp. people are trying to push them. there would need to be a substantial change to revisit the referendum question. there were lots of stages we
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would have to go through if we wanted to hold another referendum. over the weekend he was not able to be at a rate his previous claim it was a once-in-a-lifetime experience. mark: mark cameron, has he been passionate about fighting what many consider to be a lack of passion? caroline: they are picking up a number of threads, talking about whether he had the passion for another term as prime minister. they asked whether he did back passion, and he said, he has always been able to portray smoothness. he likes to think they have got a plan. he was trying to put to bed questions. if you want political
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excitement, go to greece. this is him trying to be passionate. >> we don't always shot with a passion some people would like, but don't mistake that for a lack of drive in changing this great country and making it greater still. we have got 11 days to go. we have got 23 seats to win. we're the only people who can stop the prospects of ed miliband and the snp taking his right back to square one. >> he is gone already. do you think that is channeling margaret thatcher? >> he found his inner thatcher. manus: you just have to believe that. what is on the agenda today? small business, but what is this
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week going to be about? >> david cameron is going to be launching the small business manifesto. he made an apology over the -- no apology over the weekend about how he wanted to put the economy at the top of the election campaign. that is how it started, and they deviated since march. everyone deviated for the last three weeks. the small business manifesto will be about more loans, saying we're the party of crafters. ed miliband is going to be talking about living standards. more on the snp because they are talking in glasgow. there is more on that. if you're interested in the personalities, perhaps of most significance is an interview
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that has already been recorded. david cameron talking about how he proposed to his wife while watching mean streets starring robert ndeniro. apparently he cried at the sound of music. >> there is passion. let's have another look at the city of london. a beautiful day in the center of london. we are back after the break. take a look at what will be driving the stocks higher. ♪
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>> can deutsche bank announced plans to reduce costs by 3.5
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billion euros? they shrink the securities business in the name of reviving profitability. it is part of a massive restructuring. half the gold. -- hans nichols. hans: they want to grow in their relationships. they are going to trim 200 billion in assets that is going to bring their ratios up. they will have an ipo by the end of 2016. here's a quote from the ceo explaining what they are planning to do. "we must remain client centric but focus on climate -- client relationships, and remain universal but avoid training to
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be all things to all people. the new girl is having -- goal is having 10% return on equity. in contrast to what they had in the first quarter, it was 3.1% return on equity. they will also be closing down some branches. some of the retail operations will be coming back. i will be trying to figure out where those are so i can find a cash machine without paying. this is going to make the a prime robbery victim because i will be carrying around so much cash because i might not be able to find as many outlets. caroline: thank you very much indeed. to be sure to stay tuned throughout the morning. hans has a fantastic interview with the co-chief executive of deutsche bank. you won't want to miss that conversation. >> we're going to talk with tokyo electron. they scrapped the plan.
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from longevity terms this is the one they need to focus on. the doj was the hurdle. the irish ministry has apparently raised the growth target to 4% this year, up from 2.9%. >> if you look at the roadmap, yes, it does. ireland's property market climbed by 16% in december. they are cranking up the property market again. go on, dublin. i have nothing left. what have you got? >> hsbc is up 3%. the u.k. listed shares could
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rise. they could sell off the retail unit. midland bank could come back. now it's all about jonathan ferro. "on the move" is next. ♪
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quirks good morning. welcome home. i am john pharaoh. we are talking about a weekend filled with news. a deutsche bank overhaul. the biggest lender plans to reduce costs and cut back leadership. the shares dropped the most since 2011. he may spin off the u.k. retail unit. the former chief executive resigns after losing a power struggle.
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of course, the aftermath of greek finance ministers with the day of reckoning inching ever closer. futures are higher. the dax futures are up. greece has the experience getting trickier. >> indeed. austerity eventually has the impact. ireland will see a growth rate of 4% and it is up. we see how it opens. you have the swedish central bank and the federal reserve. you have the bank of japan and


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