Transcripts For BLOOMBERG The Pulse 20150427

We are here in london. Im guy johnson. Francine and im francine lacqua. We begin with Deutsche Bank dramatic rebound. The german lender plans to reduce cost and cut back its ownership of its consumer unit. Guy for more, lets go to hans nichols from frankfurt. Where is the bank trimming cutting, where is it looking to grow . Hans they are going to be cutting in retail units. It is not just postbank. Deutsche bank itself, their retail outlets will drop by about 200. There are currently about 730. They are trimming back the investment bank, but they are also redeploying some 50 billion to 70 billion in assets into relationships and clientbased services. They are looking to shed about 200 billion in assets. That is going to get their Capital Requirements to about 5 . Before, their goal was to have a return on equity of 12 . In 2015 they came in just north of 3 . A lot of that is litigation costs. They were hit by 1. 5 billion. We are heading into a press conference shortly. We want to find out where the job cuts are, how many, and what is the overall strategy in terms of the investment bank. Francine that is what we dont know, we are still trying to find out. You are also speaking to the coceo later on. Hans we will bring you that interview in about two hours time. We will see how long this press conference goes. We are going to really press him on what his clients want to hear and who are his competitors. Before, Deutsche Bank was a onestop shop. Are they trimming back, where are they trimming back . Do they still think they are spaced for a handful of Global Investment banks and they still want to be one of them . What are they going to do about fixed income commodities and currencies. Will they continue to invest there or is that just a oneoff revenue bone because of oneoff revenue boon because of quantitative easing . Francine thank you so much hans nichols with the latest on Deutsche Bank. That News Conference starting in about half an hour. Guy one of the political questions at the moment is why european banks are reacting the way they are. Deutsche bank making significant changes to its business model. The twitter question that we have is are european banks overtaxed . Francine you can tweet us. We had that great story on hsbc. Our newspaper reports suggesting that hsbc will have to sell off its retail bank unit. This is something weve talked about a lot. There is regulatory pressure to break up hsbc. Last week, they announced that they would change headquarters, or they were reviewing the possibility of changing. Guy you have to have a separate board, a separate structure. Why do you want to have that business when the regulatory structure is so onerous . Why dont you just go elsewhere . They employ a lot of people in the u. K. , but deutsche is a derivation on that as well. Every regulation, heavy capital cost. Francine the power struggle for the wheel at volkswagen has ended. Ferdinand piech has resigned. Chad, why did piech lose this time . Chad good morning. It seems that he simply miscalculated. He had a history of running this company for two decades. He was used to getting his way. He pushed out other executives when they didnt follow what he wanted. He thought he could do that in this case. The difference is that Martin Winterkorn was in a position of strength. Volkswagen last year reported record profit and record sales. Mr. Winter corn was able to line up the other power players on the nonexecutive board that runs the company. Essentially the labor leaders. Even some of mr. Piechs own relatives, including wolfgang porsche, his cousin. They all backed mr. Winterkorn. Guy lets talk about mr. Piechs strategy. He has acquired all kind of businesses. Ducati, they run a group that makes everything from the soft to golf to all kind of other cars. He built an empire. The stock is up today. Is that because there is no more empire building . Chad thats exactly why the stock is up today. He did create a 12brand empire. He started in the luxury car segment, buying porsche. He didnt buy audi, but he was the one who made audi into the behemoth it is today. They are number two in luxury car sales fighting with bmw and mercedes. He also bought man ansd d scania, and he expanded significantly in china. China is now volkswagens largest market. They have more than 12 factories there. One of the reasons why the stock is up today is, investors hope the empire building is done. Empire building is very expensive. That would perhaps leave more money for investors pockets. Francine where do we go from here . Does piech still have any influence . Chad the thing to remember is that his familys Holding Company control volkswagen. That is where a lot of his power comes from. He is still sitting on the board of this Holding Company and has some veto power over decisions. He can continue to fight if he wants. None of us know what he will do. He could continue to fight for what he wants to take place at volkswagen. Francine chad, thank you so much. Chad thomas with the very latest on this political wrangling at the top of volkswagen. Guy it is a fascinating story. What else is on our radar this monday morning . Hsbc shares are up in london and hong kong after a sunday times report that it may sell off its u. K. Retail bank. Also, this follows from an early report that the company has plans to review its domicile in the u. K. Newspapers say hsbc is considering spinning off the retail bank. They may consider moving from the u. K. Francine apple is expected to report that earnings are up by more than 20 when it posts secondquarter results today. Strong sales in china are suspected to drive the boost. Net income is expected to be 12. 6 billion. Guy as greece continues to deal with its debt crisis, air berlins chief executive has told bloomberg that a greek exit from the euro would have a minimum impact on the travel industry. This is not very important. If there is a bus blown up in tunisia that could add to the situation. [indiscernible] francine still ahead, hsbc shares jumped the most since 2011 in hong kong. Details behind the move next. Guy an i. T. Tie up. Gemini greece we will speak to the cap gemini ceo. Francine happy birthday to the a3 80. We will look at the airbus jet having a midlife crisis. All that and much more coming up on the pulse. Guy welcome back. You are watching the pulse. We are live on bloomberg tv, on the radio, streaming on bloomberg. Com. Hsb shares in london are up. Shares in hong kong jumped the most since 2011. The move follows reports that they may offer the u. K. Retail bank. Stephen engle joins us from hong kong. Stephen i guess this follows on from the reports late last week that this institution is considering where it is going to be domiciled. I guess spinning off the u. K. Bank may be part and parcel of that. Stephen it could help facilitate that move. It has been the buzz in hong kong. The stock surging as much as 6 the most in one session since 2011. It is now at final settlement in hong kong, up about 3. 6 for the day. That is on top of a more than 4 gain on friday. That news from the chairman saying they are considering moving the domicile outside of london and analyst we have spoken to say the logical choice would be the original birthplace of hsbc, the former Hong Kong Shanghai banking corporation, being hong kong, which was founded here in shanghai. The other news that came out yesterday, the sunday times stating that the banking could be spinning off its u. K. Retail business, recreating midland bank, that hsbc acquired in 1992. This price tag, according to the paper, 20 billion pounds. By no specifics how should i say, no source of this information given in the sunday times report, other than to say that the deal is not necessarily imminent. Francine stephen, when the story broke on friday that hsbc was reviewing its headquarters a lot of analysts were saying they have to find jurisdiction which would welcome such a big group. With it comes a lot of regulatory concerns. Would there be any concern from hong kong about this . Stephen this is what the Hong Kong Monetary authority came out and made a statement on friday following those comments from hsbc saying we would take a positive attitude, should hsbc decide to move. They also cited the deep historical links that the bank has with the territory. I think you can read between the lines to say that hong kong would welcome the head orders back here for hsbc. Francine Stephen Engle there from hong kong. Guy the hong kong and shanghai bank, i guess they feel some sort of responsibility. Francine they feel like it is coming home. Maybe regulators have Something Else to say. Guy they are up for it. Here in the u. K. , 10 days away from the election. Conservatives are dedicating the last full week of campaigning to highlighting the success of their strategy. Labor plans to unveil some i guess you could say some fairly big schemes. The housing story is really interesting. We have seen how things stand out. For more on the u. K. Election the director of a think tank joins us now. This last week, do you anticipate that it moves the dial . Nothing thus far has really changed in this election. Weve seen everybody preaching to their bases. It sounds like labor talking about firsttime buyers. The conservatives talking about the economy sounds pretty much true to form. It is very rare in the last few days of election campaigning to shift unless you think of netanyahus victory in israel. Youve seen the conservatives trying to use the idea that a vote to labor is a lastminute win tackett win tactic. Theyve neutralized it. Each side has affectionately has effectively neutralized the other side. They are actually at parity. Every result we have is within margin of error. Roughly speaking, there are 175 vulnerable seats in the u. K. Election. About 7580 are likely to change hands. They are only going to change hands by on average 8000 floating voters in each constituency. Of those 8000, 4000 will have decided to move from one party to another. 4000 havent yet decided, but will vote. Normally, those movements cancel each other out. I see nothing within the present offers that says that one side will prevail. Francine the problem is, we dont really know the policies we are looking at. The combinations with other smaller parties mean that five votes either for labor or the tories, i dont know what im voting for. Stephen phillip what youve got in my opinion is an election that is too complex. People use very simple intuitions to decide on their vote. These foundational intuitions are set very early on. The trouble is, they are based on a very Standard Base campaign. They only appeal to their bases. As a result, what weve seen in the past few weeks is desperate appeals to the center. They are too little, too late. Labor looks more austere than the conservatives, but the conservatives have made loads of unfunded tax proposals. But it is too late. The foundational issues have been laid. When crosby said, we are scraping the barnacles off the boat, all he did is restore the conservative ship, if you will. The same old course is one theyve always lost. They havent been able to command the majority since 1997. What we are seeing is two old parties unable to innovate. This is true across europe. In europe, because they dont have this system, the barrier to entry for new parties is much lower. Europe is fragmented in very dangerous ways. You are having sweden, 15 of the population voting for a clear nazi party. In france front nationale, it looks like they will win the president ial election. People are going for the extremes. Both of the main parties, left and right, are on longterm downward trends. Neither can speak to the new reality. Britain is just facing this for the first time. Because our political system facilitates against new entrance, it is just beginning to break. It looks like we are going to have a coalition and we dont know what it will be. People in my view will vote with their base intuitions. Guy the labour party says it wont form any kind of coalition , whatever form that takes, with the snp. So they are going to struggle to create a government that has any longevity. The conservatives are going to struggle under the current terms as well. What are the chances of the two parties coming together . Phillip dont believe a word that is said about labor and the snp. The reason labor has accepted it is going to lose its seats is that it fears the tory attack line that the snp and labor are one and the same. You can back what miliband has said and have a confidence in supply relations. He might rule it out, but it is not up to him. If the snp decides to back him he hasnt done a deal, and yet they have said they will keep labor in power, so nobody breaks their word. Could even be an unwritten confidence and supply deal. They presented to the house of commons and the house of commons passes it. Guy would that shift labor to the left . Phillip i think youd have to say yes. They dont want to face another election. I think it would undoubtedly shift people to the left. I think that going to the extremes, either right or left, is the future of this sort of politics. The majorities are no longer bound where the main parties are. Guy are the english are the tories going to rebrand as the English Party . Phillip it would be the southeastern English Party. We are looking at, remember you cant, the party of the right umip,kip, the party on the right, if they come second in even 50 they have the ability to overtake the tories in some key areas. The north, i think, is going to be lost by both labour and the conservatives. Francine very quickly, why is David Cameron not polling better . It has been a success by a lot of measures. Phillip my own take on this is that what cameron did fatally is he gave up on his own individual distinction from everyone else. When he gave up on transformative conservatism, he lost his definition. The conservative party is the most Unpopular Party in britain. His brand was very different. Because he reverted to type reverted to the core vote, his appeal is no longer enough to pull the conservatives over the line. Francine thank you so much. We are back in a couple minutes. We also just found out that mr. Rajoy of spain says there will be elections by year end. Francine welcome back. The search for survivors of nepals deadly earthquake has entered its third day. Dozens of aftershocks have hindered rescue efforts. The quake killed more than 3200 people and injured as many as 5000. Guy Deutsche Bank plans to reduce costs to cut back its ownership of its consumer unit postbank. The german lender will reduce the number of countries it operates in by as much as 15 by 2020 and close 200 branches. The chief executive officers are under pressure from investors as the banks stock has been one of the worst among its global peers during their tenure. Francine we will be back in a couple minutes. Francine welcome back to the pulse. Im francine lacqua. Guy im guy johnson. Rescue efforts in nepal are in their third day after an earthquake killed over 3200 people on saturday. The death toll is still rising. Dozens of aftershocks are hampering relief agencies. The risk now is that waterborne disease, the damage to nepals water and Sewage Systems has been expensive. Francine lets get to bloombergs battery pearson Natalie Pearson in new delhi. What is the latest . Theres been a piece of good news. A group of climbers that were trapped on Mount Everest have been helicoptered out to base camp. They had been trapped earlier in the mountain when an avalanche blocked their way down. Back in the capital, in kathmandu, the situation is still bad. The death toll has climbed above 3200 people. It is expected to climb further. Many parts of the country are inaccessible due to poor infrastructure. Guy what happens next . We hear concerns surrounding waterborne diseases, the sewage system. What are people saying and doing . Natalie that is a big concern. There is no water supply. There is also no power supply. If you dont have power, you cant pump water out of the ground. Most of the pipes have also been damaged. Those who have drinking supplies , bottled water, are ok, but those supplies are running low too. Cholera is endemic to the area. Authorities are worried about the outbreak area outbreak. Francine how much aid have they received so far . Natalie china and india have been leading the efforts. Theyve been shipping in supplies. An entire aircraft full of water came in today. Medicine, tents food, these are the things the government has been asking for. Francine natalie, thank you so much. Guy right. We have two important gatherings for european leaders today. Ecb and eu officials are holding a joint conference on european integration in brussels. The eu president the Foreign Policy chief, and the European Commission boss will be in kiev for a summit on the situation in ukraine. Lets join jones hayden now from brussels. Jones, what can we expect . Increasingly, people are focusing on ukraine and the need for action. The story with greece maybe overshadowing ukraine at the moment. Will this refocus attention . Jones i think for today ukraine may be the bigger story, at least for a little while. The ceasefire had problems over the weekend. We had some violations. It seemed like we had the most violence in a couple months in Eastern Ukraine. The international monitors said they still consider that it is holding, but it is the worst violence theyve seen since february. Now, the eu leaders are there in kiev. This is the first summit since the eu and ukraine solidified their relations with an Association Agreement last year. Ukraine is hoping they get another big boost of support from the eu. Francine what does the ukraine hope to get out of the summit today . Jones they are actually asking for a peacekeeping force to go to Eastern Ukraine to help with the situation there. They also would like some more Financial Aid from the eu. The eu just last week gave them a tranche of 250 Million Euros. At this point, they are reluctant to send any forces. They are trying to do this delicate dance with mr. Putin in moscow and make sure that relations in the area gets moved out on an even keel. Francine jones, thank you so much for all of that. Guy another eurogroup meeting ended in acrimony on friday. Things arent getting any easier for greece. Joining us now for the latest is bloombergs Athens Bureau chief. Nikos what now for greece . What is the next deadline . Friday went really badly. Nikos negotiations between Greek Finance Ministry officials and creditor institutions resume today. Differences remain. The chances for an imminent deal would pave the way for the dispatch meant of bailout cuts. For the moment, the greek government relies on the cash reserves of pension funds, original governments, and cities, to stay afloat. It is clear that the dangers for an accident are elevated. Greeces Prime Minister said in an interview yesterday that it is absolutely necessary to reach an agreement by the beginning of may, or else the government may consider measures that it is currently trying to avoid. He didnt specify what kind of measures, but it is clear that the clock is ticking. Francine what are the Key Takeaways from the latest opinion polls . Are we seeing a shift . Nikos the government enjoys an undisputed lead over the opposition. The polls over the weekend confirmed this. It is also true that the majority of greek people who understand the euro area want a compromise with creditors. Im not sure that the governing parties in parliament also share this view. It will be a challenge for the greek Prime Minister to reconcile the two different views on what is next for greece. Guy nice to see you as ever. Thank you very much indeed. We will have more of little bit later. Francine we are also getting some news out of Deutsche Bank. Hans nichols will have an interview with the coceo, and should jane, as soon as anshu jain, as soon as the News Conference finishes. They are seeing heavy litigation in 2015. They are expecting 3. 5 billion in cost measures by 2020. Guy anchushu jain will be questioned by hans nichols later. Coming up, we are going live to the London Stock Exchange. We are speaking to the ceo as it rolls out a new Business Support Program across europe. Francine also coming up, we will be talking to the ceo of cap gemini after a mass acquisition in the states. Francine welcome back to the pulse. Lets get now to more of an i. T. Tie up. Cap gemini has agreed to buy an american i. T. Firm. Igate investors will receive 48 a share. The stock closed at 45 on friday. We are joined now for his first interview of the day by the cap gemini ceo. Thank you so much for joining us. Give us a sense on how concerned you are on your. Is this a play into the arrest the cause of weakness in europe or just an opportunity . The first point is, on europe , things are slightly improving. We recalled our First Quarter figures with some growth in europe, including france and holland. We think things are due for a moderate improvement. Cap jenna my [indiscernible] it was a long known strategy that we were looking for u. S. Movers. Now we will grow in the u. S. By 33 . It is not yet in line with the market. The i. T. Service market in the u. S. Is the first in the world. We want to go there. Guy can i ask you whether or not the strength of the dollar made you think twice about the transaction . Frankly, it did, but as you can imagine first, the u. S. Is the biggest market, with nearly 24 of the group revenue. It is the most profitable. In the u. S. , we have an important tax credit deriving from 2000. With the help of that, we will have a very good utilization of our tax credit. Francine u. S. Law means that in the next 30 days we could have a counter bid. Would you be prepared to go higher than what youve offered so far . I think it is the right price. What i would say is that the Service Business is a people business. You dont buy a factory or licenses. You buy people and motivated people. Beyond the unanimous vote of igaete board of directors, i have met with 20 executives. I think we are in a unique position. You may look at this as a French Company but we have a strong indian platform too. We are very multicultural. I think igate people like that. Compared to a lot of u. S. Players, we do not [indiscernible] it is what we call the one team approach. The acquisition went extremely smoothly. We had full retention incredible growth. My view is to offer a counter bid within 30 days in the people business is tough. Guy do you think the only way to grow your business in this space is by m a or other areas or are there areas where you can grow organically . Of course. Today, we announced that we are growing in the u. S. By 12 organically. We are growing in the u. S. Organically 12 . What we said is, in this i. T. Market there are very hot segments like the crowd integration. We looked at acquisition targets. They are both very expensive and somewhat volatile. We will do special hiring programs. We will innovate and develop new offerings. The Digital Investment will be more organic even if i would not exclude very tiny acquisition on top of that. Francine how exactly is this going to help you compete with ibm . Today, frankly ibm has many weapons. We are probably competing against some of the largest indian players. I think today we match pretty well the competition. Our win rate disclose last february was above 50 , which was quite good. We will be a bit bolder. We are very strong in financial service. This transaction reinforced our manufacturing. Francine thank you so much. The cap gemini ceo there. Guy the London Stock Exchange group is rolling out a new Business Support Program. Joining us now is the ceo of the London Stock Exchange in a bloomberg exclusive. Good morning. You guys are too big, sorry. Elite was designed specifically for this army of european minnows. As we call it, we are here to help them on their journey from startup. There are 23 million of these in europe. We thought it was time that an Exchange Group such as ourselves helped these Young Companies immediately poststartup phase to raise the capital, to grow to make themselves known. We beta tested the concept in italy. Weve launched in the u. K. Last year. In december, we decided to go paneuropean. This is the first cohort of 25 Companies Joining the elite program from the wider european market. We even have an israeli company. What we do provide, and this is important, this may actually be one of the very most important things that we are doing at the London Stock Exchange group, helping these minnows these ambitious, driven, high achieving Companies Grow the global status. Guy who would you describe your competitors at the moment in dealing with these companies . Is it other exchanges, or is it u. S. Money that is pouring into europe, the accelerators that are working to drive these companies forward . How do you position yourself compared with what is happening toward the private end of the spectrum . Xavier theres nothing quite like it in europe. In terms of competition, no one has tried it. Elite was designed to help bring these companies to a level of Financial Communication to refining the business plan. It is to be successfully introduced to private investors. They are looking to raise debt equity, and we help them do so by introducing them to the appropriate type of investors. Once theyve gone through the program, once theyve refined their Financial Communication and brought it to a global standard, working with our 175 partners and the London Stock Exchange, theres nothing quite like it in europe. We think it has enormous potential. Frankly, if you look at the growth potential, we think this is something that has rightfully attracted the attention of policymakers including the European Commission. We think it is key to solving the growth conundrum in europe. Job creation and growth is only going to come from the small and midsize enterprise segment. Youve heard me saying this before. It is time that an Exchange Company dedicated some real attention and resources to that particular segment. Francine following the announcement on friday about a just easy looking at about hsbc looking at new credit quarters, how concerned are you that this will drive banks away from london . Xavier it is hard for me to comment on this situation. I really dont know. I would leave any questions to any hsbc spokesperson. Going back to the wider theme of taxation, i think we see in the unitedsee in the United Kingdom in the last few years the huge benefit that lessening the taxation of equity for example, the repeal of stamp duty, the inclusion of aim stocks, the enormous increase in liquidity and the reduction in the cost of capital afforded to Companies Seeking to raise equity in the u. K. , and the enormous impact this has had on growth and job creation there is no doubt that from a fiscal standpoint there is a definite impact of measures that can be taken, positive measures, to help lower the cost of capital. On the other hand, the deductibility which is afforded to death. We argue that the recalibration of the physical treatment of debt versus the quadruple taxation of equities has a huge role to play in developing longterm investment, sme growth, and job creation. Guy you said a few days back that within a couple of years you could see yourself doing a deal with one of the big four western exchanges. Could you put a little more flesh on the bone onto that idea . You talk about the industry being a Cottage Industry. How much potential for a deal is there . How many exchanges do you see Going Forward from here, and how do we take this from being a Cottage Industry into a more fully formed enterprise . Xavier you mentioned the word Cottage Industry. There is no doubt that the Exchange Industry today with a small number of exceptions which we believe we are part of it is true that the Exchange Industry remains a nationally driven industry, with the greatest cohort of the exchanges operating only within the boundaries and the borders of the Regulatory Environment of the country where they are headquartered. The launch of elite this morning is exactly about that. It is about breaking down the barriers to offer companies, entrepreneurs, to offer them a streamlined lowcost effective , paneuropean environment. In that context, we are happy and grateful to european authorities for supporting the launch of elite. In regards to the wider context, i do think we are in a bit of inflection at the moment. We have Companies Operating at the National Level and focusing on domestic issues. It is a small group of globally positioned International Companies to which we belong today. We are the fifthlargest Exchange Group in the world by capitalization and the fourthlargest by revenue who also cater to those very large investors, corporates governments organizations that are looking for efficiencies looking for relief, looking for access to global intellectual property, one of the reasons weve invested for example in global indices. That is another segment of our industry which i think is bound to continue to grow very fast. Guy thank you very much indeed. Francine xavier rolet, the ceo of the London Stock Exchange. We are back in two. The challenging task is to motivate all our staff. We dont manage numbers. We manage people. If you can turn a losing spirit into a winning spirit than the goal is achieved. Then we achieve the numbers. Guy air berlins ceo speaking to bloomberg. Anshu jain is talking at the press conference in frankfurt. More on that story from Deutsche Bank when we come back. Francine deutscher drops. Shares fall as germanys biggest Bank Announces plans for a massive overhaul. Coceo anshu jain is speaking now. Guy power steering. After more than two decades atop vw. Ferdinand piech resigns. Francine the search for survivors continues. The death toll in nepal rises to over 3200. The imf and governments around the world rush aid the one of asias poorest economies. We will bring you the latest from the region. Guy good morning to our viewers in europe. Good evening to those in asia and a very warm welcome to those just waking up in the United States. Francine this is the pulse. We begin with Deutsche Bank. Dramatic revamp. Guy big news coming out of the german institution. It is going to cut back on its ownership of the consumer unit postbank. Anshu jain coceo in charge of the investment bank, speaking now in frankfurt. We are going to have plenty more from him coming up on bloomberg. Francine hans nichols is at the News Conference. He will be speaking to anshu jain later. This is two coceos that have failed to deliver on their plan. It will be great to get not only the news from them, but a sense of whether they are disappointed about how the last three years went. Guy how are you going to make this one work . Some people would ask how much more should deutsche shareholders give these two. Is it time that we had a change at the top . Is this the last roll of the dice by these gentlemen . A lot of other banks reviewed their business and made major changes. Francine Deutsche Bank has been battered by investors. If you look at the share price, it has been lagging. Guy litigation costs have been spectacular. It has all come back and hit them really hard. The share price yeartodate is up by some 20 , but as you can see, of late, off. A significant amount i would have thought, but still a 20 rise. Francine be sure to stay tuned to bloomberg. We will bring you that interview with anshu jain. Thats a conversation you dont want to miss. That brings us to todays twitter question. Guy are european banks overtaxed and overregulated . Would they be better somewhere else . That is the question hsbc is asking. Deutsche bank facing some significant litigation. Many of these banks have a huge legacy relating back to the financial crisis and still are bearing the burden of it. Francine the power struggle for the wheel at volkswagen has ended. After two decades at the top, Ferdinand Piech has resigned. Lets bring in chad thomas. Why did piech lose this time . Chad this is really a shocking turn of events. It was just two weeks ago that mr. Piech was firmly in control of the automaker. He lashed out at mr. Winterkorn in an interview and tried to push him out. In this case, mr. Piech couldnt find support on the Supervisory Board that oversees volkswagen to push out mr. Winterkorn. Labor leaders have half the seats on the board, a powerful position. He also went to the state of lower saxony. They have two seats on the board. They basically said, we like mr. Winterkorn. We like what hes doing. They outvoted to stick with mr. Winterkorn. Even mr. Piechs cousin wolfgang porsche, also supported mr. Winterkorn. Mr. Piech wound up isolated on the board. His wife also stepped down from her position on the Supervisory Board over the weekend. Guy lets talk about strategy. His strategy has always been to build the empire. Talk about what hes achieved during his tenure. Chad he has created a 12brand but he met. Most important is what hes done in the luxury segment. He was instrumental in the purchase of porsche. He also helped build audi into the bahia it is today the dehembehemoth it is today. Audi is fighting with bmw and mercedes for the top spot. Mr. Piech ran audi before he was the volkswagen ceo. He is the person that built this company. He also purchased two large truck makers scania and man. He was also behind the push that volkswagen made into china. They have now about a dozen factories in china. Francine where do we go from here . Chad that is the real question francine. Mr. Piech still has power and influence. His family controls volkswagen through the Holding Company they have and he sits on the board of that Holding Company. He has some veto power over decisions that Holding Company makes. If he wants, he can continue to fight the decision that volkswagen makes in terms of whos going to replace him and who will be the chairman. He can continue to fight via that Holding Company. Francine chad, thank you so much. Chad thomas, our Berlin Bureau chief. Guy that will be interesting. What else is on our radar . Hsbc shares are up in london after a report that the lender may spin off its retail bank. The Company Earlier pledged to renew or review its domicile. The newspaper said hsbc is considering spinning off the retail bank for around 20 billion pounds. The chairman said the lender will consider moving from the u. K. , where a bank levy costs the firm 750 Million Pounds last year. Francine apple is expected to report that earnings are up by more than 20 when it posts secondquarter results today. Strong sales in china are expected to drive the boost. Net income is expected to be 12. 6 billion. We are expecting the strength of the dollar to hurt iphone sales. Guy greece continues to deal with its crisis. Air berlins chief executive has told us that greek exit from the euro will have minimal impact on the travel industry. For the travel industry, this is not very important. You have the buses blowing up in tunisia and these kind of things. People just come. People go to greece. The destination hasnt been affected at all. Francine rescue efforts in nepal are in their third day after an earthquake killed over 3200 people on saturday. Dozens of aftershocks are hampering International Relief agencies. Guy the risk now is of waterborne disease. Weve seen the electricity system affected, which is affecting the water system and the sewage system. Natalie pearson is in new delhi where a lot of the aid is coming from. Natalie, give us the latest. What do we know about the situation on the ground . Natalie the death toll has risen above 3600 people. More than 6500 injured. Those figures are expected to continue climbing. There has been one piece of good news. A group of climbers that was stuck on mount average has been Mount Everest has been rescued by helicopters. The situation in the capital is still very difficult. Power and water is still out. Francine natalie, what are you learning from the authorities . There is a fear of a disease epidemic in the aftermath. Guy natalie that is a big concern. A lot of the water pipes have cracks in them. Without electricity, they cant pump fresh water out of the ground. There are concerns about disease spreading. Cholera is endemic to the region. It is very difficult to even begin to assess the damage and think about how they are going to rehabilitate. The infrastructure is so weak in the country. Theres many parts of the country where roads have never reached. Assessing the damage is going to be difficult. Guy napoli where is the bulk of the aid coming from . Natalie a lot of the aid is coming from india and china. They have been flying in helicopters and relief. Guy and the longterm story here is what . It is very early in the day to be getting an assessment of this, but as you look at the damage and devastation, what are people saying about how long it is going to take to recover . Natalie chad natalie it is difficult to put an exact figure on it, but it is going to take a huge toll. Nepal is one of asias poorest economies. It doesnt have the resilience to bounce back easily. Even before the earthquake you were dealing with 16hour power cuts. That is like living most of the day without electricity. Roads dont extend throughout the country. They are a very agrarian economy and also touristdependent. The Tourism Sector is going to be affected by this. Kathmandu is the hub from which tourists depart to do their tracking. It is going to be a long time before facilities are available to welcome those tourists again. Francine Natalie Pearson there. Coming up, the mission in greece. Guy no new deal for the country. We will discuss the implications. Also, we will be talking about vw. Francine the chairman resigned. We will give you the details later on in the program. Francine welcome to the pulse. Guy another eurogroup meeting ended in acrimony on friday. Things arent getting easier for greece. The government seeks to pay pensioners. Joining us is nikos. Weve been through a whole series of deadlines. Friday ended pretty badly. What is the next deadline we are looking at . Nikos after fridays disaster greek Prime Minister Alexis Tsipras held course with german chancellor Angela Merkel over the weekend. Negotiations between Greek Finance Ministry officials and representatives of creditor institutions will resume today. Differences remain. There is no sign of a compromise anytime soon. For as long as the deadlock remains, theres always the chance of an accident. Greece needs to pay over 1. 5 billion euros this week in pensions and salaries, and make a payment of over 200 Million Euros next week to the imf, and another 170 Million Euros the week after. If budget revenue comes in below target, or if regional governments and cities do not permit their cash reserves soon enough, greece may realize that it doesnt have enough cash to make one of those payments. The clock is definitely taking. Francine what are the Key Takeaways from the latest opinion polls . Nikos the government maintains a solid lead of between 13 and 15 over the main opposition party. However, the majority of greek people want the country to stay in the euro area and to strike a compromise instead of potentially catastrophic the challenge is to reconcile the greek peoples desire to stay in the euro area with his own partys redlines. Guy 55 of people in greece according to this poll still have a positive view of yanis varoufakis. Do you think if you were to pull inside the finance ministry inside the eurogroup, and inside the government more generally, you would get such a high reading . Nikos well, it is true that hes quite popular for a finance minister in greece. Finance ministers are usually really unpopular. Of course, fridays eurogroup meeting saw that mr. Varoufakis may be a hurdle in the path to compromise or even a liability for the greek government. It will be difficult for the greek Prime Minister to cut him loose, as this will be seen as a concession to creditors demands. Francine interesting. Thank you so much. Guy lets stay on greece. Lets get the view from berlin. Joining us now is the former chairman of germanys budget committee. And an mp. Good morning to you. Thank you for taking the time. Do you think the problem we have between greece and its creditors is a personality problem or a numbers problem . It is both. It is definitely a numbers problem. Personality wise, if you see what happened in riga, you could see that the finance ministers and my colleagues in other countries dont want to hear any stories from a professor telling them how the economy should be. That is what we do see right now. There has to be a political solution. You can neither do this by just going through the numbers, nor by being a professor. Francine what is the plan be that we need in place for greece . Otto here comes the big problem. If you have no plan b, you have a problem. If you have a plan b and you talk about it, you have a problem too. You have to live. That is what many politicians these days have to do. From my experience, whenever we have a problem, there are smart people in the governments trying to find a plan b. I think the plan b, or whatever you want to call it, has to consider one thing. It is about politics. Politics always means who is to blame. They try to find a solution where either nobody is to blame because that is how life is this is how things go, liquidity is down but right now the greeks dont want the greek study blamed. They rest of europe doesnt want to send greece underwater. Guy so just to go back through your answer, you think there is a plan b, but nobodys talking about it. My curiosity therefore is, where is it being talked about and do you think the fact that friday went so badly means that that plan b is definitely in place . Im trying to relate all these aspects together. Otto if you look back one or two years ahead of the package before they came out, nobody really was aware that they were already working on a solution. If you look at the ministries not only the german finance ministry, but the finance ministries in other countries, they do look on do we have a chance to do something comparable to what we did with cyprus . Is there a chance that we have to find a solution where the parliament gets to win . This is something i always try to keep in mind. In germany, you have to go through parliament. You also need a majority in parliament, and you need a majority by those members who get hit by their constituencies. Yes, there will be a plan b. They will look how this will be solved. The most important thing is politics, at least in germany, doesnt want a result that says this is how much we pay. They will look at the cyprus solution as one they could do. The question is how the debt is then brought into the budget . Francine what would be the plan b that germany would accept . If you are talking about approvals theres only one or two, i guess. What would be the optimum plan b in your eyes . Otto every time we hear the word compromise, compromise is a give and take. Both sides give and both sides take. That doesnt mean if greece doesnt show reforms not in all the areas that are wanted, but if greece doesnt show reforms at all and this is the situation right now. If you ask anybody, what did greece do, you will not get facts and solutions, not even on taxing the rich, what this leftwing government did say. So when this is there, probably by telling the people greece has accepted that they have to do some austerity measures, there are certain things that are hurtful for the greek people then it could go through. Otherwise, i dont see any chance, even with this large majority, that this goes through. At the end, Capital Market controls as they were in cyprus i recommend everybody to look at how cyprus was handled. There, you can find parallels. Maybe it is a little bit that the imf is the one who is going to stop the whole game. Guy do you think, from what you hear around berlin, that mrs. Merkel trusts mr. Tsipras . Otto no, i dont think that. Ms. Merkel is not somebody who is acting. We were in the coalition with her. She is not going along the position of trust. This doesnt mean she distrusts him, but shes going along the line what majorities does he have will he get through a certain draft of laws, will he find majorities and we heard this from the polls in greece will i still get a lot of support and the greek people hope im saving them from future austerity . He will say, the others forced us into this default, so lets blame them. And keep in mind merkel definitely doesnt want greece out of the euro. She definitely wasnt it is not trust. It is just a question, does it work, can i communicate it, and do i not have huge problems when i help greece . Nothing about trust, nothing about personal feelings. She is not that vein. Francine thank you so much for all of that insight. Guy coming up, we are going to talk about the greek people, the latest holding coming out of the country, and why varoufakis is still so popular. Francine in the last 15 minutes, fitch cut its rating on japan. The outlook is stable. They say this is because of insufficient structural measures area measures. Francine welcome back to the pulse live from london. Im francine lacqua. Guy and im guy johnson. These are the top stories. Francine the search for survivors have entered the third day. Dozens of aftershocks have hindered efforts after the earthquake. The quake killed more than 3,200 people and injured as many as 5,000. Guy a german lender will reduce the countries it operates in and close up 200 branches. The chief executive officer are saying the banks stock has been the worst performer amongst its global peers during the three yee tenure. Francine well be talking to him shortly. V. W. Shares are up following the resignation from the carmaker. The departure follows a feud that saw him trying to remove the c. E. O. Piech has been a power player at the top of the carmaker for two decades. Analysts say the move could accelerates efforts to empower regional managers with opportunities, particularly in the u. S. Guy some of the stories playing out, lets find out. Jonathan blanket red for the european indices, loss of. 4 on the ftse,. 3 on the dax and frankfurt. So many stock stories out there. Here on the ftse, were lower, but we could be much lower if it wasnt for hsbc. The biggest weighted stock the biggest gainer, 7 of the indices, and youve got a gain on the back of the news friday that could be pacing headquarters. Then the news over the weekend that they could be thinking about spinning off the u. K. Retail bank. Hsbc for the ftse 100 is lower. For the main stoxx 600 the biggest loser is right here in germany. Deutsche bank, a major overhaul, investors giving it a beating this morning. So there are the markets, we go lower. Some interesting things happening in the bond market. The classic risk aversion, yield in germany we go tighter. There you go, two basis point lower talking about being being tighter when i think about spreads, wider. Italy, yields go higher, up almost two basis points. 10year italian yield of 1. 46 in spain. The spread is around 130 basis points between spain and germany. Where do we go from here . Well, the guys at Goldman Sachs say bestcase scenario, no spread. It could widen to 350 basis points to 400 basis points. A lot of people are telling you at home there will be no contagion, thats not the view at goldman if there is indeed the scenario. A quick check for you, euro dollar a little bit weaker at 1. 0846. Back to you. Frape thank you so much. That was your asset check. Guy speaking of greeks, how are the people of greece reacting to the stalemate in negotiations with creditors, and whats the temperature on the ground in athens . Warming up nicely, i would have thought. Over the weekend, a greek Polling Company released its latest Opinion Survey with the findings showing 55 of respondents have a positive view toward varoufakis, the current finance minister. Francine for more, were joined by the director managing director of the polls. Thank you so much for joining us. How surprising is it theres so much guest when we hear from the euro group that actually theyre trying to bypass it . Guest probably because of that. Its still popular in greece probably because greeks believe that hes fighting against his colleagues within the euro group. So they still are supporting him. Guy 48 of those surveyed say they are worried about a greek exit from the euro area. 45 say they are not worried. My understanding to this point was until the bulk of the greek population still wanted to remain in the euro area. Im questioning that after i see your numbers. Guest they believe that they could remain in the group, but the same time, while 63 is afraid of the possibility before, they are not afraid. As you mentioned before almost half, which means that the majority of the total population believe that we could have it before, from within the eurozone. But this is still dangerous. The most important thing coming out from our poll is that Public Opinion feels a certainty and insecurity. You have to understand that this is easy for you to ask excellent questions but its very difficult for us to have clear answers. Francine why is that, because everything is mishmashed . When you also look at the support, i guess thats dwindling. Why is it so difficult for the polls to get a good grip of exactly the situation on the ground . Guest because of the volatile volatility, because of the uncertainty, because things are changing rapidly day after day, hour after hour, so what we are doing is actually to having a poll in order to take a photo at the specific moment. Next moment, things could be different. Guy what are the critical things greeks are concerned about at the moment . You dealt with some of them, but what are the things that we talk about a lot is the idea that maybe greece would struggle to pay Public Sector workers, struggle to pay pensioners . Where would that rank in terms of the importance do you think for the greek people right now . Guest i think the important thing is to feel secure to feel secure that the country will remain within the eurozone, feel secure that they are going to have the penchant, to feel that something is moving in the real economy. That is exactly why Public Opinion is asking from the government to compromise, even according to our poll, even if the government has to step back toward the calling red lines. Guy im still struck by some of the parties need democracy and are not polling better given the concerns that exist at the moment. Is that a surprise to you as well . Guest yes, look, if were going to have election the political point will be the situation under which were going to vote and most of all what will be the challenge. In terms of behavior, it is normal, but its very clear. If we are going to have those elections, we have to wait to see what the challenge will be. Guy if people want stability, if they want a deal done and want stability, why are they not saying that they would vote for the older party . The older party did deal with the euro group, and theyve been in power for years and years and years. Are people not hankering after that . They voted in the last election for a complete change. They voted for either. Im just wondering im trying to put the statement to where you say the people want stability, they want their pensions paid, they want everything to happen as normal. Yet at the same time they still support it. That seems spritely incompatible. Guest that is why i said before we have no clear answers. I believe the majority of greek people still believe that they have the situation. But they can come a compromise better comparing with the situation we had before. Day after day, week after week, this belief is greece, so it goes of instability and insecurity. Francine thank you so much for joining us today, managing director at alco poll, joining us on the phone from athens. Guy 10 days to go until the u. K. Election. David cameron out this apparently, apparently demonstrating some passion. My colleague has been watching him. Hes all fired up. Francine he didnt have his sleeves rolled up. Over the weekend he did, and he was talking passion over the weekend in the southwest of england. Today hes talking about Small Businesses and the revolution taking place in the u. K. On the Small Business front. He was saying thank you to the businesses out there that have been creating jobs, thanks to the plumbers and techies, thanks to the grafters. Grafters got quite a few mentions in this speech today. So really, it wasnt what he said, it wasnt the fact that he pledged more support to those Companies Going from startup to scaleup, the fact he talked about the need to have better bank, it wasnt all of that in the Small Business agenda. It was the way he said it. So when we went to questions from journalists in the room, it was all about the level of passion in David Camerons speech. People were asking what he had for breakfast, saying are we seeing your feisty side . Are you now more pumped up than you were . He said it was porridge he had for breakfast this morning. Francine youd hope hed be pumped up right . Anna a week ago, the paper was asking him questions about whether he did lack the passion, and there was conversation around that, and thats where some of the questions have been coming from. He tried to take it head on over the weekend, where he said, if you want political excitement, this is good in the context of your last interview, go to greece. But the u. K. Election is exciting enough for me. There is an interesting political dimension. We dealt with it on friday a little bit, but the hsbc story rumbles on of course, takes another turn but no sort is given, but suggesting the bank could be considering spinning off their u. K. Consumer unit. I thought the piece we got from mark gilbert was fascinating this morning. You drew my attention to it, which is talking about saying goodbye to hsbc, if you want to go, goodbye to you. Of course, thats why i asked the shallow business secretary on friday when we interviewed him, do you want them to stay . You cant take these things for granted. Francine i cant make my mind up. If they do leave, is this a positive or negative for the conservatives at this point . Anna all the banks seem to be trending a murky line, saying its very normal for banks to review their operations from time to time. Were not unduly concerned with the lines of the conservatives. You were getting similar platitudes from the labour party. I suppose they dont want to create the big stories for them right now, because politicians dont want to be seen to be jumping to the fence, to the defense of the big banking sector. But you can see the continuation of fridays rally this morning with this added twist of the story that does seem to give it some legs. Guy back to the middle and back. Francine im not very excited about it. Maybe you can remind us. Guy maybe the middle. This was before they bought. Its called the midland bank. Anna if you were a child with a savings account there, chicago assume guy was. Francine savers, both of you. Im so happy to be surrounded by savers on this monday morning. Anna, thank you so much. Our Bloomberg Politics anchor. Guy the volkswagen keeping the key to the company. Well give you the details about the end to this public spat, could be the end might not be after the break. Francine welcome back to the pulse. Guy v. W. Shares up this morning. Lets find out why. Martin briggs our analyst, joins us now. This is a huge fight. What was it about . Guest i think the main area they disagreed on is the u. S. Volkswagen was very successful in europe and in asia pacific. But in the u. S. Their market share was very small. They sell less than a million vehicles there. One of the main areas and the reasons for their lack of success there has been the model lineup. They havent got as many crossovers as many s. U. V. s and as many of the type of vehicles that people are demanding there. For example, the jetta is followed by the passat, and thats a very small market share here in europe. Customers want different vehicles there, and all the decisions have been made, and now theyre trying to empower more regional Decision Making for volkswagen so those kind of mistakes cant happen. Francine piech has picked battles before and won them. Why did he get this one so wrong . He didnt consult enough . Guest i think its the internal politics. Hes been very successful, but normally if he starts to say that hes not happy with the c. E. O. That would result in a c. E. O. s resignation. As youve seen from the result of what happened thats actually the opposite. People dont want them to leave. I think why it could be good for the company is the automotive world is changing. The products are becoming far more connected, looking to younger customers. If you look at what the competition theyre doing like b. M. W. And daimler, theyre targeting the younger buyers. These are the things that volkswagen hasnt pushed into. So thats an area that theyll maybe look to. Guy the focus hes going make is on the United States. He wants to crack the United States, and hes going to do it with different models or better connected models or what is v. W. In the u. S. Going to look like . Guest that will happen is the v. W. Group in the u. S. , there will be a focus on those two. Weve seen recently well see audi and porsche take the lead in terms of some of the product, and the next wave of development will be new, locally produced models, probably more sporty type of s. U. V. s and larger models. That takes a bit more time though. Theres not that many announced just for the u. S. , so thats something that will take a few years. In the short term, its the more Premium Brands that will be more successful. Francine its close to overtaking toyota as the number one carmaker in the world in terms of units sold. The concern for shareholders its actually profitability, theyre good at growing, but not so good at maintaining margin. Guest exactly, but half the problem is the market in europe. I think comparing audi with v. W. Audi makes double the amount of profit than v. W. Does, selling much lower units. In terms of strategy, theyre looking to upscale make the vehicles more premium, because in the long run v. W. Doesnt want to get into a battle of cutting prices and cutting margins. Moving it to higher segments and getting more will certainly be strategy. Guy yes are we done with empire builder . Guest theyve got brands now within the v. W. Group. I think that thats been successful for them, because any new segment that they see, they can go and attack that. But they certainly have enough now to have the cheaper end of it right up to the super luxury market. I think in terms of the acquisition, that will probably stop, and the focus should be more on bringing out new products within the brands. Guy no ferrari buy . Guest well, it was discussed last year, i think. If it adds value, then its something any company will look out to acquire. But i think in the short term given the kind of model and lineup and brands they have, thats going to be off the table. Frape martyn, thanks so much for joining us. Guy one of our big stories, but here are some of the other top headlines. The u. K. Government will oppose any financial takeover of the company. They told the firm it wants to remain a British Industrial champion with global reach. B. P. Has refused to comment. Francine the japanese Prime Minister is in the United States today. He will be discussing investment and trade when he meets president obama. Abe is also due to unveil new guidelines on the Defense Agreement and japan is willing to play a bigger military role in asia when hes addressing congress on wednesday. Guy i suspect hell be asked questions about the downgrade as well. Over the weekend, it was the white house correspondents dinner, where politicians and the press mingle and the president makes a funny speech. Take a listen to mr. Obamas jokes about the criticism he received from former republican Vice President , dick cheney. President obama a few weeks ago dick cheney says he thinks im the worst president of his lifetime. Which is interesting, because i think dick cheney is the worst president of my lifetime. [applause] francine coming up, were watching and preview our interview with the Deutsche Bank coc. E. O. Plus look ahead to apples Earnings Report and talk about a big investment in chinese maker show me. Francine welcome back to the pulse and bloomberg. Com. Guy we have a busy rest of the day in prospects for you. Hans nichols is going to speak in frankfurt after the press conference finishes. The deutsche story today is fascinating. Francine im really looking forward to the interview because they havent been stellar, those fillings, in the last three years, so it will be interesting to see hans nichols really trying to get his take on the coc. E. O. , why have you gotten it so wrong . Why do you still think you can get it right . Guy why are you the right man for the job . I guess thats the question he will ultimately get to. Francine this is what im watching for. Apples earnings are out after the u. S. Market closed. Its a story about the strength of the u. S. Dollar. Its a china story as well. Were expecting earnings to jump more than 20 , but it will be interesting to see whether for the First Time Ever iphone sales in china exceed the u. S. Theyre not actually breaking them up country by country, but analysts will kind of wade through it and well have an idea. Over the weekend, we had the indian businessman, he makes an investment, and we dont know how much, but investors are saying this may be him entering the indian market. Guy its been a really tricky relationship, india and the chinese manufacturerers, not always seeing eye to eye. The other thing we want to flag up as well is bloombergs coverage of a big gathering in beverly hills. The Milken Institute hosting a gathering of leaders from around the business community, government finance, philanthropy etc. Blackberrys c. E. O. Is going to be there. We have the allianz chief Economic Advisor amongst others. Francine im looking forward to that interview. Overall, the davos with the palm trees. Guy much better yeah. Francine thats it for the pulse. Keep it right here. For our u. S. Viewers, its surveillance. For this on this side of the atlantic were back. Nepal is destroyed by an earthquake. Aftershocks limit relief efforts. Climbers above the base camp on Mount Everest, they are evacuated. There are climbers still stranded at everest. Deutsche bank, they will slash costs, closing 200 branches and exiting up to 10 countries. Our hans nichols speaks to anshu jain this morning. And greece is broke. Can they make it to a key deadline . Good morning, everyone. This is surveillance. Were live from our World Headquarters in new york. It is monday, april 27. Im tom keene. Joining me, olivia, brendan is on assignment. Olivia a race against time in nepal. Searchers are trying to find survivors from the earthquake that killed at least 3600 people. International relief agencies warn the next big problem may be disease caused by tainted water. The quake that rocked nepal on saturday measured 7. 8 on the richter scale. Millions may be homeless, many in villages that are hard for aid workers to reach. Some of those villagers