tv BBC Business Live BBC News December 21, 2016 8:30am-9:01am GMT
this is business live from bbc news with ben thompson and sally bundock. make or break for monte dei paschi. the world's oldest bank needs to find over $5 billion to avoid the prospect of a government bailout. live from london, that's our top story on wednesday, 21st december. a bailout of monte pasci would see investors facing compulsory losses. it presents a tough choice for the new italian prime minister. also in the programme, a new twist in malaysia's 1mdb scandal. we will have the latest from singapore. and as economies grow, so too does demand for office space. we'll meet the man behind the firm that matches firms with work spaces — being dubbed airbnb for offices.
so we are asking where would you like to work if you had the choice? a coffee shop or somewhere more scenic? let us know. just use the hashtag bbcbizlive. sally, where could be more exotic than here in the business live studio? the clock is ticking for the troubled lender banco monte dei paschi di sienna. the italian bank is seeking over $5 billion in new investment to help it stay afloat. today is the final deadline for investors to buy new shares. the new italian prime minister has sought parliamentary approval for an emergency bailout package worth $20 billion if that investment money doesn't materialise from the private sector. that would be contentious because investors who already lent the bank money will be penalised
under eu laws that came into force earlier in the year. poor quality loans are one of the biggest issues facing italy's banking sector. in total, the country's lenders are sitting on $370 billion worth of bad debt. that's about 40% of all the non—performing loans in the eurozone. with me is nicola marinelli from the london business school. he was a former trader for italy's third largest lender, banca monte dei paschi di siena. is that right? that's right. zbluf the inside track on this one. today is very critical as ben outlined. it is very critical as ben outlined. it is the chance for retail investors to get on board. tomorrow, we are talking about institutional investors and hedge funds. do you think they will come up with the funds they need ? it doesn't look like it. apparently the latest reports are that the bank
is not actually getting the amount they are hoping for. they were hoping for 1.5 billion euros. but it looks like probably there won't be more than 800 million. if they don't get the1.5 more than 800 million. if they don't get the 1.5 billion euro today from retail investors, does that give the wrong signalfor retail investors, does that give the wrong signal for tomorrow? well, it certainly does especially because there are no anchor investors a p pa re ntly there are no anchor investors apparently for the new shares. there we re apparently for the new shares. there were some names floating around like the qatari investment funds and probably some other hedge funds, but the latest news is that none of them is actually available. so probably eve ryo ne is actually available. so probably everyone is basically thinking that there will be a state intervention. now, talk us through how that will work. on the one hand it will break some eu laws and of course, it will be politically very difficult as well. so just talk us through that process. it is a difficult situation
for the government, but the banking recovery and directive that eu level allows for some other choices. for example, recapitalisation of the bank that is pre—emptive based on the fact that the bank, monte dei paschl the fact that the bank, monte dei paschi, failed some stress tests. so this could be done with a mix of private money and public money. bailing in, not all the creditors basically. so also the depositors above 100,000 euros threshold, but only the most junior creditors above 100,000 euros threshold, but only the mostjunior creditors and the equity holders and so on. that's something that is more palatable for the government. just briefly, you've worked for this bank. where has it gone wrong? well, there have been several things going wrong. for example, initially the acquisition
ofa example, initially the acquisition of a bank. it was part of abm am roe. it was done at the wrong price and there were scandals with trading, but they were not really big in terms of size. what is really bad now is that they have a huge amount of non performing loans because they have a big portfolio of loa ns because they have a big portfolio of loans in italy and the italian economy hasn't grown very much and after the crisis a lot of smes have been struggling and the portfolio, the one they want to sell now is around 30 billion euros and that really is a big... so a bit of a mountain to climb? exactly. thank you for your time and when we get news out of italy today as to how that sale goes, we'll fill you in. in other news: us president barack obama has permanently banned new oil and gas drilling in us atlantic and arctic waters in one of his last major
environmental protection actions before leaving office next month. mr obama invoked a provision of a 1953 law which will be difficult for president—elect donald trump to reverse. volkswagen has struck a deal with the us authorities over some 80,000 vw, audi and porsche cars with three—litre diesel engines. the agreement is another step towards allowing the german car—maker to put the emissions cheating scandal behind it. injune, vw agreed to a $15 billion settlement for another 475,000 vehicles affected by the scandal. the new agreement will cost volkswagen an estimated $1 billion. a strike by airport baggage handlers and check—in staff in the uk planned for friday and christmas eve has been called off. more than 1,500 members of the unite union employed by swissport had been due to walk out for 48 hours in a row over pay and conditions. there's been another twist in malaysia's1mdb
investment fund scandal. mariko oi is in singapore. nice to see you. what's happening now? well, sally, as you mentioned 1mdb is malaysia's state development fund which was set—up by the prime minister to supposedly help the country's development. but as we have been reporting, it has been investigated in a dozen countries including in the united states where it has been allegedly linked to a hollywood movie, the wolf of wall street. the authorities found several banks may have broken the law while doing business with 1mdb including swiss bank, bsy which has already been kicked out of the country and former private investor bankerfor bsi country and former private investor banker for bsi who has country and former private investor bankerfor bsi who has been country and former private investor banker for bsi who has been facing trial and he has been found guilty
of tampering with key witnesses. so basically he was facing money laundering allegations and he has been found guilty that he urged his witnesses to destroy evidence, and he faces his sentence is tomorrow, but he also faces a separate trial in which he faces charges of money laundering which, of course, is a lot more serious next year. thank you very much. i know you will stay across that story for us there in ourasia stay across that story for us there in our asia business hub. back with them as soon as there is any developments there. this is what markets are looking like across asia. it is brighter for the japanese economy. the government upgraded its monthly economic assessment, a day after the bank ofjapan raised its view of the world's number three economy for the first time in over a year. that's down to a pick up in exports. in the us, the dow within touching distance of the 20,000 level and germany's dax posted its highest levels this year. now yesterday's move in the ftse 100
to its highest levels since mid—october were primarily driven by a weak pound, a rebound in oil prices and a decent rally in the banking sector. we'll talk more on that in a moment, but first, samira has the details about what's ahead on wall street today. as we move closer to the holiday break, things are beginning to take a slower pace. but there are still a few bits happening that we need to note, including micron technology reporting earnings. now investors are expecting the chip maker to report revenue growth for the first time in more than a year. the recent improvement in pricing for chips and flash memory chips is really expected to continue for the first half of 2017. also reporting earnings wednesday, consulting and outsourcing services provider accenture. now strong demand for its cloud services is expected to boost the company's bottom line.
they have been investing heavily in digital services to gain market share, as it faces stiff competition from rivals like ibm, infosys and tata consultancy services. joining us is simon derrick, chief markets strategist, bank of new york mellon. nice to see you, simon. how are you? i'm very well. full of the festive spirit? i'm always full of the festive spirit. what about the markets? i think they are full of the festive spirit given the that fa ct the festive spirit given the that fact that we are approaching 20,000 on the dow. 12 months ago, the federal reserve had hiked rates. oil prices, everything going on. we have just had the federal reserve hike rates again and nobody cares! all we are talking about is politics and what donald trump is going to do. a huge shift this year in what the market focus is on and probably a
good thing as well. we have stopped focussing purely on interest rates, politics and the spending partners of governments have become a big story, we are having to re—think everything about the way we look at markets. the joy, you know, investors are markets. the joy, you know, investors a re not markets. the joy, you know, investors are not looking really at interest rates and policy anymore, they are all looking at trump, it makes a change that we don't have to look at them for a while either. that's been the story of the year, when rates would go up, if, when and by how much? that moved and it is about spending. he shifted the focus with regard to interest rates from what the central bank is going to do, but what is happening about the borrowing costs for governments? it will make for an interesting 2017 because first of all we have seen to what mr trump is going to do. i think that's going to be fascinating and i'm interested, given the fact that he's so keen to revitalise us industry, what he is going to do about a strong dollar, that could be about a strong dollar, that could be a drag on some of the exporters. i
think china, currency policy next year will be a big story and european politics. 0h, year will be a big story and european politics. ch, of course. that's the political risk of 2017, isn't it? that's where the shift will be for us next year. 0k, simon, you're not off the hook. you have got to come back in five minutes and share more of your thoughts and views on things. yes, including sherry! still to come, hot property. why demand for office space could give us a better measure of economic growth. we meet the firm that matches empty offices with firms needing to expand. you're with business live from bbc news. people who buy drones could have to register it and take a test to prove they can fly it safely under new rules proposed by the government. do you think you'd pass the test? probably not! there were 59 near misses involving drones and airliners
have been reported in the uk over the past 12 months. our technology correspondent rory cellan—jones has this report. earlier this month, amazon made its first delivery by drone. just one potential use of an exciting new technology. but after a number of reports from pilots of near—misses with drones, there is mounting concern about safety. if people don't use drones responsibly and follow the rules and regulations that are in place, obviously, that is a safety issue, first of all, but could also affect the long—term future of drones as well. there are already plenty of regulations. for example, i cannot fly here because we are too close to buildings and people. while professional users of drones have to register with the civil aviation authority, anyone else can just buy one and start flying. the government is consulting on regulations which would mean new drones would have to be registered, users would have to pass a theory test like that for drivers, and there would be tougher penalties for using drones in no—fly zones. peter, an experienced drone owner,
believes it is already too complex. if you put in too complicated rules, you will scare people off and deny the future industry this pool of talent that we need. there will be thousands of new drone owners this christmas. whenever new rules come in, they are being told they will be safer if they follow the drone code. can you fly a drone? have you tried? no. actually, i'd love, to try. my hand, eye co—ordination, it is forward , hand, eye co—ordination, it is forward, back, up, down. hand, eye co—ordination, it is forward, back, up, downlj hand, eye co—ordination, it is forward, back, up, down. i have been in public parks where there has been one circling above us and it worried me to bits and there is some child miles away manning this thing and i'm thinking, "don't get it get stuck on my head." a warning about borrowing for
spending during christmas, it is a worry, citizen's advice have a report out today. you're watching business live. our top story. the clock is ticking for italian lender monte dei paschi. the world's oldest bank needs to find over $5 billion in new investment, otherwise it faces the prospect of a government bailout. this could prove a contentious move by the new italian prime minister, as eu laws would force investors to take compulsory losses. a lot at stake today. we will keep you up—to—date. how can you measure the health of an economy? well, there are the official stats, of course, but they tell you what happened in the past. so it's said that looking at demand for office space can give you a more—immediate assessment. when economies are growing, more people are in work, and that means demand for office
space grows, and so does the rent. commercial property space is worth a whopping 11 trillion in the us alone. the tech industry is one reason behind the growing demand for office space, accounting for 20% of all office leasing in the first half of the year. but in the uk, the number of people working from non—conventional office spaces has risen to its highest level since records began. tech start—up ofixu aims to take advantage of this. it is an online marketplace allowing hosts to list all types of workspaces for any type of work for as long as they need. and the founder and chief executive of ofixu dan hinden is with us in the studio. did i say it right? it is ofixu. we have been struggling with monte dei paschi this morning!
you love saying that! it rolls off the tongue! this is the latest in several tech start—ups that you have been involved in. you were involved with another company. we are doing really well, aren't we! that rivalled a b&b sometime ago. this latest offering is like that for office space, is that one way of describing it? yes, i went to work for that company, a rival in europe, and my learnings we re rival in europe, and my learnings were that it is easy, and it should be, to attain and maintain listings oi’ be, to attain and maintain listings or property hosts onto a platform where they can start earning income on otherwise under utilised space. why would you not be able to do that? it brings you up to date with
ofixu today. we have looked at these start—ups, we call them disrupters, they are changing the way it has a lwa ys they are changing the way it has always been done. office space is one of those but is ripe for change, because why take on a big overhead with a fixed contract for five or ten yea rs with a fixed contract for five or ten years when you don't know if you will need it, you might need more or less ? will need it, you might need more or less? there is a computer-based $16 billion valuation, the co—working market is booming, but there is still a lot of underutilised space, 4.2 still a lot of underutilised space, 11.2 billion‘s 11.2 million visitors is that employed just the owner, so there is an document for freelance oi’ there is an document for freelance or contractor types, who would prefer not to work in a coffee shop, because it is not as conducive as a nearby spare desk. we engage with all of those types of spaces in all environments globally. how do you
manage the bits that you don't know about, when you i tried to rent a bit of space for a period of time, what the neighbours like, how noisy it is next door? how slow the wi—fi is, how difficult various other matters are? does that make sense? of course. there is a plethora of listings on our platform, 85 cities, with different hosts. there are going to be different rules and regulations for each office space, you may not be able to run —— bring your pet in, you may not be able to rent for under a month, but the host. you let that on their rules or regulations of. the host says what they want, but you get those who review it afterwards? absolutely, the ratings and reviews side will drive the decision on the consumer side. those who have rented space
will rate and review those listings. ican will rate and review those listings. i can see why this is great news for businesses. as far as landlords are concerned, i imagine they are less happy, because it brings the rent down, and they are only paid for when it is occupied? it comes up a lot. the landlord might say, we will sublease our space, if we do it to a company and they have seven desks but only three are being used, what goodis but only three are being used, what good is that to me? are you not paying a fixed overhead? you are, but if the landlord is flexible enough with the leasing contract, there is no reason why he can't go in with the tenant and say, we are happy for you to co—worker with another company, and we can split the income. there are plenty of land laws that are winning to do that. but there are so many areas we can
push you with this. dan, from monte dei paschi. —— from ofixu. in a moment, we'll take a look through the business pages, but first here's a quick reminder of how to get in touch with us. you can stay ahead on our page, with the breaking business news. we will keep you up—to—date with the insight and analysis from our team of editors around the world. we want to hear from you. editors around the world. we want to hearfrom you. get in editors around the world. we want to hear from you. get in touch on the bbc web page. we are on twitter and facebook. on tv and online, whenever you need to know. what other business stories has the media been taking an interest in? simon derrick, chief markets strategist, bank of new york mellon, is joining us again to discuss. what is your office like? what would
you like to see? a coffee machine in my office, those espressos when i need them. that is not happening any time soon! dougalwould like his bed in his office. i could have done without! scott says, somewhere that is calm and inspirational, where you can see the sea. that is quite specific! we would like a window. it would be nice to have a real window. let's look at this story, in the daily mirror. this is one of our tabloid newspapers. £1 per second, the numbers behind carlos tevez‘ proposed wages in china. that is quite phenomenal. it is. the statistics, he will earn more per
week than cristiano ronaldo and lionel messi combined, or the same amount. they worked out that he could buy a brand—new porsche 911 everyday. i work in the city of london, even i think that this remarkable. even you! do they get this money back? presumably they must they? in terms of sponsorship, sailor shirts, that kind of stuff, tv rights? clearly, you have to sit there and think about how this works through. until i read the story, i had not even heard of this team, so i am not sure how the sponsorship and everything else works. football in asia, premier league football, is huge. the sponsorship for the british clu bs, the sponsorship for the british clubs, the support, absolutely
amazing. £1 a second, it is not bad going! i and whizzing through this andi going! i and whizzing through this and i am coming up with all thought. let's look at apple in the indian press. looking for manufacturing in india. their slice of the smartphone pie. in many developed economies we talk about the two horse race between apple and some song, you look at this graphic and you realise how many makers there are, and why apple is such a small player in india. many makers there are, and why apple is such a small player in indiam makes the point that we tend to think of the high—end mobile phones, you are going to talk about far more user—friendly phones if you are going out to india, for example, when you are talking about that networks that cannot support a lot of the functions. they are talking
about india overtaking the us in being the second largest market in the world for smartphones, so it makes sense for apple, if it has stalling sales, to start trying to get into india. the save santa's sherry campaign has been launched by the wine and spirit trade association, sales of sherry has more than halved in the last decade. iam glad more than halved in the last decade. i am glad we have got onto the serious issue! this has been the big story, and my specialist area. it is a key question. we leave whiskey. there are those revisionists that wa nt to there are those revisionists that want to go down this route, but sherry is the traditional drink, along with a mince pie and a coward oi’ along with a mince pie and a coward or the reindeer. every year, and every year he drinks it. amazing. the carrot goes as well. we'll see you again tomorrow. after the quiet, stagnant weather
over recent days and weeks, wings are beginning to step up a gear. lots going on. today, some blustery wind and the scoreless showers. you can see the speckled shower clouds, rattling in towards northern ireland and scotland. to the south, a fuchsia lips of cloud, bands of rain, with some brighter spells between. some spells of sunshine. the north—west corner will see the worst of the weather, the liveliest of the weather. some strong wind, gales at times, and the showers rattling in from the west. some heavy and thundery ones, wintry ones over higher ground, we could see some acumen leading snow in scotland. for england and where is, some sunshine, but for yorkshire,
link and, the midlands, the south west, rain through the afternoon. it is heavily towards the far south west and south wales, into the rush—hour. the wet weather moves east across southern parts of england through the night. we will see the odd folk patch behind, and the showers continue for northern ireland and scotland. tomorrow, the further south you are, not a bad looking day. still quite blustery across northern ireland and scotland, the showers continue. still someone to it once, and a range of temperatures. for the end of the week, look at this. the deepening area of low pressure has been named barbara. it has prompted the met office to issue an amber warning for the strength of the wind. it could cause some problems for the christmas getaway. across the far north—west, we could see 90
mph. heavy rain moving quickly south and east. there could be some more stormy weather as we go through the christmas weekend. stay tuned to your local bbc radio 2 and, there could be some travel disruption. this is bbc news. i'm joanna gosling. the headlines at 9am: the hunt for a killer — german police say the man who drove a lorry into christmas shoppers in berlin is still at large. vigils are held to remember those who died when the truck smashed through a christmas market on monday night. i'm robert hall in berlin. as police release their only suspect they're urging the public to be on heightened alert. in mexico, at least 29 people are killed and many more injured after a huge explosion
at a fireworks market. the last rebel enclave in aleppo is evacuated as syrian government forces plan to take full control of the city. also, an increase in the number of people reporting historical child abuse. figures seen by the bbc show the numbers reporting allegations in england and wales has more than doubled in the past year.