Oldest bank italys Monte Dei Paschi requests a state bailout, after plans to save itself come to nothing. Plus it is a 660 billion relationship, but could trumps tough talk spell a costly trade war between the us and china . Welcome to World Business report. If you are tuning in for the first time, stay where you are. I know it is early in britain. We have nine minutes and here is a fascinating snapshot of all the latest in the world of business and money. Who put that on the autocue . We are going to start in italy. We have been following this for weeks now. The deepening banking crisis, because in the last few hours, one of the countrys biggest banks says it will request a government bailout. We are talking about Monte Dei Paschi di siena. Its boss has been flying around the world, desperately trying to raise money from investors to keep it afloat. But late on thursday the bank admitted it had failed. Itjust couldnt find enough takers. After a late night meeting, the italian cabinet has passed a decree creating a bailout fund. Lets give you some of the background to this. Monte dei paschi is not only italys oldest bank, it is the worlds oldest. It was founded in 1472, and became one of the countrys most powerful financial institutions. Fast forward 5. 5 centuries, and things arent looking quite so good. A string of bad decisions has left it with a pile of non performing loans, bad debts that borrowers are unlikely to pay back, totalling 47 billion euros. This summer, it was singled out in stress tests by the European Central bank as the shakiest of all 51 major banks in europe. Its share price has plunged. It has lost nine tenths of its market value this year. Deposits have been flowing out of the bank. This week it warned the money could run out within four months. The terms of this bailout could be politically explosive. Under eu rules, private investors have to suffer losses before taxpayers money can be used. Some 40,000 private investors hold monte bonds. On thursday, people in siena were expressing their anger at the situation. Translation there has been a lot of uneasiness, uneasiness at all levels. Firstly from an emotional point of view, because Monte Dei Paschi was the true daddy of the city, and it has been robbed in a very traumatic way. Translation i really hope that Monte Dei Paschi is able to save itself without the State Stepping in. Firstly, for the pride of the city, also because i doubt the state can improve the situation. The state would not stay in the bank. Siena has lost its bank and it will never be able to recover it, so it is agonising. Jasper lawler, Senior Market analyst at London Capital group. Great to have you here, thank you for coming in at this ungodly hour on friday. A lot of these private investors, as you and i were saying before we came on, are pensioners. This is going to go down like a led zeppelin, surely . That is the big points, the European Union require that investors take some of the hit for taxpayers have to pay. And fair enough, really. Why these banks need money is to pay off these are non performing loans, they need money to sell these non performing Loa Ns To Money to sell these non performing loans to people who are axa going to use it so they can start lending again, but why should they have two pay . Again, but why should they have two pay . Who are actually going to use it. There has been a fudge a rama in europe. Use it. There has been a fudge arama in europe. That is not all the investors, different kinds of investors here, junior and senior bondholders. The junior ones are the ones which will get hit. That is mostly the pensioners. And so ordinarily they would just have to live with that, but obviously that is politically toxic. You have the five Star Movement in italy, which would take advantage of their lost money. What they are going to do is compensate those pensioners for their losses, the reason being that those pensions were mis sold in the first place. These pensioners should not have been holding this kind of risky debt in the first place. Like a ppi repayment, if you will. This is the third bailout for this bank. Some would say when do you call it a day . On top of that, at this particular period of time, this is one of maybe eight banks which neither bailout at the moment. Absolutely. This is the third bailout for Monte Dei Paschi, and i would say it is the third time i would say it is the third time i would say it is the third time i would say just let the would say it is the third time i would sayjust let the thing go. Compensate depositors, make sure they have money, make sure the pensioners are not at risk. But every other investor, they wont like me saying this, but they took a risk by investing in the bank and at this point it has shown itself to be beyond recovery. 0bviously these other banks are in trouble as well. Very briefly, do big problems in italian banks equal big goblins for all of us, european banks . They have this the shown they cant raise money privately so that sets the precedent for other bailouts, not just for banks in italy, at this non performing loan issue is not just italy. They make up about 40 of the non performing loans in europe but 60 elsewhere. So there will be bailouts elsewhere. In those occasions we cant be sure that thesejunior occasions we cant be sure that these Junior Bondholders are going to be saved, and that will be obviously a problem politically in europe. Thank you very much and merry christmas, by the way. Merry christmas. Have a good one. To the us now, and as we were reporting this time yesterday, President Elect donald trump has chosen Peter Navarro, an economist fiercely critical of china, to head a new white house trade council. The appointment comes on top of his combative remarks during the Election Campaign about the impact of chinese imports on American Industry and jobs. So are we facing the real prospect of a trade war between the worlds top two economies . 0ur Economics editor kamal ahmed reports. It was a major theme of the president ial campaign, an america that had lost its way. Globalisation and the rise of china being blamed for economic stagnation and millions ofjobs for economic stagnation and millions of jobs lost. Today, for economic stagnation and millions ofjobs lost. Today, President Elect trump showed his hand, appointing The Economist Peter Navarro as his new trade adviser. Peter navarro is clear where he feels the fault lies. Everyjob clear where he feels the fault lies. Every job that american clear where he feels the fault lies. Everyjob that american corporations offshore to china or some other country becomes less of reason to up here and fight for fair trade practices. President elect trump is following through on his campaign pledges. We cant continue to allow china to rape our country, and thats what theyre doing. America and china are the worlds two largest economies. If a trade war broke out it could affect global growth. The trade between them is huge, it is valued at 660 billion. Us exports to china are valued at 162 billion. The country is americas Third Largest Export Market but imports from china into america are far higher, standing at 498 billion dollars. And this, according to President Elect trump, is the problem. A Trade Deficit with china totalling 336 billion. Mr trump says closing that gap would create a lot ofjobs in america. At, although people may blame outside forces, economists argue that the jobs market has changed and that cheap goods from china have been good for ha rd pressed cheap goods from china have been good for hard pressed us consumers. China, it may be just a good for hard pressed us consumers. China, it may bejust a, eno, we challenge them on some policies and they may announce retaliations, they may not, but it looks like quite a bit of friction with china in the months ahead. Chinas response, as ever, cautious. At caution with an edge. China does not appreciate being called an economic bully. Translation china and the United States as two large countries have shared interests. Cooperation is the only choice. With trumps promises ringing in voters is, fears of a trade war between two Global Economic giants can only increase. In other News Deutsche Bank says it has reached a settlement with the Us Department ofjustice over its sale of Mortgage Backed securities between 2005 and 2007. Under the terms of the agreement, it will pay a civil penalty of 3. 1 billion and provide 4. 1 billion in consumer pay outs in the United States. That is around half the 14 billion settlement the do] originally demanded in september. The Us Department ofjustice is widening its net on that investigation. It is now also suing barclays for alleged Mortgage Securities fraud. It claims that barclays misled investors about the quality of loans backing securities it sold in the run up to the financial crisis. Barclays rejected the claims, saying they were disconnected from the facts. Planned strikes by British Airways cabin crew on Christmas Day and boxing day have been suspended. Employees were due to walk out in a row over pay and conditions. According to the unite trade union, 4,500 workers employed on so called mixed fleet contracts, who have joined since 2010, are on lower pay than other staff. Talks at britains industrial conciliation service, acas, have led to a revised offer, which will be put to a ballot of union members. The airline says it welcomes the move. Dont forget, you can get in touch with me and some of the team on twitter. Im bbcaaron. I will be back to have a look at the papers from around the world. People sleeping rough are 17 times more likely to be a victim of crime than members of the public. That is according to Homeless Charity crisis. They also found 80 of Homeless People are regularly attacked and abused, some even urinated on. 0ur social Affairs Correspondent Michael Buchanan has more. London Commuter Trains provided a place of safety and shelter for one man who was homeless for five years. He would sleep on the carriages heading in and out of the city. He became frightened of the streets after being the subject of an unprovoked attack one night. After being the subject of an unprovoked attack one nightlj after being the subject of an unprovoked attack one night. I was in leicester square, got into a discussion with a young man about the fact that i was homeless. He became quite aggravated, i would guess, by the fact that i was homeless and i was saying that being homeless and i was saying that being homeless is individual, and people are homeless for different reasons, and in response he punched me in the face, and it was quite a hard punch. Is experience is quite common in todays survey. 30 say they have been deliberately hit or kicked. 31 say they have had things thrown at them. 7 were actually urinated on. Most were attacked by people they didnt know. It is notjust the incident itself, but it is the impact mac impact it has an individual, on their mental health, on their ability to even ask for help. We found that most Homeless People, who are rough sleeping, actually, they feel ashamed already. And surely if you are then urinated on you will feel even more ashamed and even more marginalised. Crisis says Homeless People rarely report crimes, as they dont think the police will take them seriously. They want officers to send a strong message to rough seas to make sleepers that their safety is paramount, and that any abuses they suffer will be fully investigated rough sleepers. Coming up at 6 00am on breakfast jon kay and Naga Munchetty will have more on the busiest day of the year on the roads, as people getaway for the festive season. Im james menendez. The top stories this hour as the hunt for the suspect in the berlin Market Attack continues across europe, German Police arrest 2 brothers on suspicion of targeting a mall in 0berhausen police in australia have arrested five men suspected of planning a Terrorist Attack in melbourne on Christmas Day. An experimental vaccine has been found to be highly effective against the deadly ebola virus. The trial was carried out in guinea which was most affected by the outbreak. Donald trump has said the us must greatly strengthen and expand its nuclear capability. He made the call which would be a break with decades of american strategy in a post on social media. Now it is time for our news review putin and trump call for nuclear boost. The Financial Times writes about how russias president and americas President Elect have both released statements mr putin saying moscow needs to strengthen its Strategic Nuclear forces and mr trump tweeting the us must greatly strengthen and expand its nuclear capability
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