Barclays is biting back. The lender rejects a Justice Department complaint, suing the bank after it refuses to settle in its misselling case. Good morning, everybody. Welcome. Almost christmas. I know. Hard to believe. You were up all night i heard. Super noisy neighbors. Party from the neighbors what can you do . Do you go in at 2 00 in the morning . 3 00 . Always puts your life in perspective when you wake up and others are coming up. Youve been up since 3 00. Never mind. One more day to go, and everyone is excited. Deutsche bank shares have hit the top of the stoxx 600. The german lender saying it reached this provisional 7. 2 billion deal to resolve the department of justice investigation into itsishan iss and underwriting of deals. Under the tentative agreement Deutsche Bank would make a 4. 1 consumer relief payment and a 3. 1 billion civil penalty. Lets get out to anetta in frankfurt with all the details. Investors like this settlement, why . They like that because the cash component, what the bank has to pay is 3. 1 u. S. , thats a lot less than people expected. The ballpark number rumored here all the time was something around 5 billion u. S. So you see there is relief in the share price reaction here. The other component of the, the 4. 1 billion consumer relief, its not a payment, just to make that clear. There is no cash payment as of today involved in that component. They are talking about, in the press release, about this coming from restructuring of already existing loans to u. S. Consumers, and that does not necessarily mean they have to pay money for that part of that deal. Goldman sachs for instance even made money out of their consumer Relief Program as well as they had in the doj settlement. Thats why theres so much relief in the share price reaction today. The cash component is 3. 1. The bank has litigations reserves higher than 5 billion euros. Theyre covered for that. Having said that, they also say the Fourth Quarter will see a hit of more than 1 billion u. S. For that settlement. So its just reserved for the Fourth Quarter, 1 billion u. S. Hit. So far the bank is quite restrictive in communication when it comes to that settlement with the doj. Thats because, of course, the doj has to come out with their own statement, the final statement expected in january from the doj. But so far a lot of relief from Deutsche Bank. Shares are actually still down year to date, but up from the record low, which they saw when the news dropped out in septembe september. Back to you. All right. Thanks for that update. Credit suisse reached a 5. 3 billion settlement over its sale of toxic mortgage securities. The swiss bank agreed to pay a penalty of 2. 4 billion as well as an additional 2. 8 billion in consumer relief. Credit suisse says it will book a 2 billion charge in the Fourth Quarter. Barclays has rejected a complaint from the u. S. Justice department and vowed to defend itself. It is understood the lawsuit was filed after settlement talks between the u. S. Government and the british lender broke down. Lets talk a bit more about all this. Chris wheeler is a banks analyst from atlantic equities. Hes with us. Good morning. Good to have you with us. Deutsche bank, theyre agreeing to a settlement, Credit Suisse is settling. Barclays not so at the moment. What are your initial thoughts . The initial thoughts on Deutsche Bank, its good news that the issue has been dealt with. Similar story with Credit Suisse. Barclays is more interesting, im wondering i would theyre pushing back. If we look at european settlements, they are substantially bigger than the u. S. Ones in terms of the amount of issuance those banks carried out, and maybe they feel theyre being too unfair to the european banks, i wonder if theyre also including Lehman Brothers issuance in this settlement given that barclays did not buy Lehman Brothers until january of 09. Maybe barclays feels they shouldnt be on the hook for anything lehman for anything did before that time. It took took time in the past for settlements. When looking at Deutsche Bank, they have assets of 1. 6 trillion euros, give or take. Hsbcs around 50 greater. Still one of the top ten banks in the world. Do you fear we will see ramifications in terms of contagion from the bad loans and high debt levels were dealing with . I think its receding. I think there was so much concern around Deutsche Bank in september, they had 500 billion of deposits, 2 00 billion liquidity. Still a strong balance sheet, the problem was their capital situation. Most of the larger banks can now cope with whats hitting them in terms of some of the litigation. Its taken a long time compared to u. S. Banks, but they are step by step getting away from what occurred during the crisis. I guess im more sanguine about it. Looking at Deutsche Bank shares at the moment, investors relieved but still some serious tasks to be take be by management. What does john cryan have to do straight off the bat in the new year to convince investors theres further upside to the stock . First, he has to tell them what hes doing in terms of the rest of the negotiation around commodity trading, et cetera. Obviously these are smaller issues. He wants to give comfort there in terms of what provisions hes taken. Secondly, hes trying to dispose of post bank, theres progress there. And then bit by bit progress, rationalization at the bank, cutting costs, making it more efficient and making sure you can see through all the noise and realize that actually there is a very strong leading European Investment banking franchise there. Unfortunately theres a long way to go for john. He said that himself. Probably another couple years before you see the benefit of what hes trying to do. You touched on some of the unique aspects of the barclays case. They rejected the claims. They want to fight them. Do they stand a chance to get this one dismissed . I dont think so. One journalist suggested to me this morning he was looking forward to the case going to court. I dont think well see that. I think the board has decided to play hardball for whatever reasons they think the settlement by the doj is unfair. We talked about that earlier, the sheer scale compared to u. S. Banks and this Lehman Brothers issue. Chris, thank you very much for joining us on this breaking development. Chris wheeler atlantic equities. We want to bring you up to speed on developments in the italian banking sector. The government has authorized a rescue plan for banco monte dei paschi. This after the doubled lender failed to raise capital from private investors. Speaking at a press conference, Prime MinisterPaolo Gentiloni said his cabinet approved a 20 billion euro fund to prop up the banking system. Shortly after, a capital injection will be received from the state. Gentiloni clarified the plan will work within eu rules hinting that bondholders will be forced to accept some losses. Want to bring you up to speed with whats taking place elsewhere in the world. Live pictures of the russian president , Vladimir Putin, as he is delivers his annual address. Its the end of theyear press conference to be exact. As of now, hes been talking about how russia 2016 gdp is down a half percent. 2016 inflation seen at 5. 5 . The budget deficit anticipated to be at 3. 7 . He is saying the budget deficit is seen as acceptable at those levels. I have to say, nancy, happy 2016 to the front page of the financial times. The story putin and trump calling for a nuclear boost. If you read this piece, its pretty shocking. Really shocking in terms of the rhetoric. Always unsettling to see a headline like that first thing in the morning. It is. Also the posturing, these Nuclear Posturing moves weve seen by moscow, and now following on from putin from moscow, you have the u. S. And mr. Trump following. Are we trying to go back to prereagan era . Reagan gorbachev era . Its not clear if they were timed to come in next to each other. It seems trump was responding. It is all this feather puffing. If one person is puffing his feathers, the other has to as well. We have arms, too. No we have more arms. Its such a shame. Takes such a long time to work towards nuclear proliferation. To move away from it now. Anothive been tweeting this article. I shouldnt be shocked, right . I kind of am that were actually talking about upping Nuclear Weapons in the west. Tell us what you think. Head online and look at that article. nancycnbc, and im at louisabojesen. You can take a look here at our european markets this morning. A little bit higher. Opened flattish. Just hanging on to very slight gains. Looking at our sectors, to the upside, real estate hanging on to most gains. Basic resources off by a half percent. Joining us now is graham byrd, pleasure to have you here. Thank you for joining us. One trading day now before christmas. A lot of excitement around the u. S. Rally weve seen. When you look at the european equities, we have seen a bit of an uptrend especially given the brexit fears in june. What do you think going into the new year . Is there reason to be confident on equities Going Forward . I think theres a lot of positivity thats come in weve seen a strong rally in the u. S. , from my perspective equities in the u. S. Are looking quite highly valued, but theres lots of reasons for that. Looking at the european markets, theres catch up to come. The positive thing coming through for me is a little bit more of Risk Appetite that has come into the markets. So weve seen a rotation out of defensives, out of the yield trade that we had before, and people moving that into some cyclical stocks. A little bit more of a bounce in some resources, positivity coming through around the trump expenditure plans. You tend to invest in smaller, medium sized firms. Small cap firms tend to do better in a raising rate environment. Weve seen that with the russell index. How does that play out here in europe considering that rates are expected to stay where they are for longer . For the first time in a long time, you see that buy furcation of whats happening in rates in the u. S. And in the uk and europe. Im reasonably bullish on the opportunity set. Theres been a big disparity in the valuations of smaller companies, where people were pumping for growth. You have quite higher valuations. Within that, rotation towards value orient tated stoorientate think the uk economy has some positive sentiment around. A number of stocks can benefit from that. The other point is the weaker pound, which you can find smaller stocks which have more direct exposure to that, and how they will benefit from that going into 2017. Any particular names you care to highlight . Actually im looking at sector themes, specifically there. Technology has been a big player, of course resources. Im not a resources investor, but a lot of companies are exposed to resources, and also to Infrastructure Spending and so on that will benefit. On the technology side. Looking at the hypes, what are the big themes . A lot of talk about artificial intelligence. Thats probably early stage. A lot of technologies which have become mainstream, particularly multi channel communications, cloud based technology, and Remote Office type stuff. Some of the companies that are in there,. If you want to hedge yourself, so you want to still play the possibility of growth in tech or of a loser regulatory trump administration, at the same time you want to hedge yourself against some of the potential risks for 2017, what is the hedge . Im not a hedge fund, i dont specifically do that, but on the other hand what are the risks . I guess volatility coming back into the market always impacts the smaller cap indices than the bigger cap indices. So you can hedge against that. Some smaller Cap Companies will take a hedge against that portfolio because you see a greater beat generally on the index as a whole. Graham, thank you very much. Merry christmas. Thank you very much. Day early. Gram bird. In denmark its christmas on the 24th. Thats when we celebrate, the 24th. We do that. We like the two days, Christmas Eve and christmas day. 25th is more american. Depends which faith you observe, but i like celebrating both. Still to come on street signs, vals gets flowered and le pen struggles. Never a dull day in the french leak sh election. More after the break. Take one. Directv now. Stream all your entertainment anywhere anytime can we lose the all. Theres no cbs and we dont have a ton of sports. Anywhere, any. Lets lose the anywhere, anytime too. You cant download onthego, theres no dvr, yada yada yada. Stream some stuff somewhere sometimes you totally nailed that buddy. Simple. Dont let directv now limit your entertainment. Only xfinity gives you more to stream to any screen. Good morning. Welcome back to street signs. Weve been talking Deutsche Bank this morning. Investors welcoming that deal with the department of justice. Weve seen shares jump higher by 4 at top of the stoxx 600, also getting comments from the government saying they welcome the Deutsche Bank agreement with u. S. Authorities. They declined to comment on the details involved. Undoubtedly this is good news, not just for Deutsche Bank investors and management but the government as well. The french farright leader, Marine Le Pen is struggling to raise the necessary funds for her president ial campaign. One ratio that banks continue to decline to is the National Front for political reasons. The partys general secretary said he sought a loan of 27 Million Euros to pay for president ial and legislative Campaign Last year. Another protester threw flour at another candidate. Valls is trying to secure the socialist party ticket. Welcome back. Emily mansfield, eurowelcome. Last time you were here you were talking about juppe a couple days before the election, and fillon ran off with the vote, very much in the front running, huge margin. Is the same going to happen this time . Polls will surprise us and that someone we dont think will run off with the victory for the socialist party might run off . Theres always that possibility, of course. Certainly fillon performed well in the tv debates. That was a factor. In the last few days that caused some voters to vote for him. We could see the same thing happen with Party Socialist candidates. It does look like manuel valls will be the most likely candidate chosen. How about someone completely different, like macron, running as an independent. Hes come out quite far ahead in some of the recent polls. Right. I think what is complicated about this French Election is we have this leftwing primary happening to choose a candidate for the party, but then some candidates have chosen to bypass this and run directly in the president ial election. Even if he wins, he will be up against some formidable opponents, like macon in the center. He has a lot of buzz surrounding him at the moment. I would take a pinch of salt the poll that showed him as the most popular politician a few days ago. I have to wonder in macrons case, the fact hes somewhat on the right when it comes to his economic principles, but not so far as fillon. The fact that fillon is so hard right, neothatcher right, that may turn off some voters. And valls, or if we get another candidate, theres a lot of centrist votes who macron could appeal to. That said, he has a fairly narrow support base, liberal, urban voters. There remains questions if he can broaden that. When you look at fillons farther right views, some say thats good news in defeating Marine Le Pen. When you look at the latest terror attack in berlin, how does this impact the polls in france . Some might think its a boost for the far right if this becomes more centrist to voters concerns. What do you think . I think france has already seen three terrorist attacks on its own soil in the last two years. The issue of terrorism and security has already been at the top of the agenda for a long while. That has bled into le pens support already. Whether she can pick that up further, im not sure. I think the berlin attack, its one factor perhaps feeding into her support. One of many. As we spoke about last time you were on, he will pen doeslee the backing of the Traditional Party like fillon has. You still put her chances at 40 of winning the election. We shouldnt underestimate the populist surge weve been seeing, weve soon brexit and trump, and theres a significant proportion of french voters who may want to show theyve had enough with the establishment. The fact that fillon is running, hes running on quite a hard right economic proposal. Theres a a possibility the question is what will happen with left wing voters when theyre faced with a right wing candidate versus far right candidate. Do they decide to support the center right candidate to keep the far right candidate off the office or do they abstain or vote for le pen instead. Thank you very much. Emily mansfield. Merry christmas. You, too. Christmas weekend being upon us. Speaking of which, divers wearing santa claus red and white robes are welcoming visitors at a south korean aquarium today. I have not seen santas like this before. They were swimming inside a tank with stingrays as part of the seasonal sell breaks at the aquarium. The underwater performers are entertaining visitors there until the end of the year. You know the stingrays are like, guys, were the sane ones here. Get us back in the ocean. Leave us alone. You can find us on twitte twitter, louisabojesen. Im nancycnbc. And World Markets live, our all day long running throughout the place. You ha