>> day to live ecb's forum in portugal. the ceo expect some central banking action. >> and will most likely be action in the interest rates and the negative deposit on the ecb. electainian president vyes to step up anti-rebel operations. we will get reaction from the former jordan president. >> investors say yes. the ipo of the subsidiaries

later today is going to be announced. >> welcome to countdown. >> a warm welcome to the program everybody. it is 6:00 here in london. bloomberg reporters a standing by around the world ready to deliver stories. we are looking for clues from the ecb forum on any potential action. with detailskiev on the president-elect plans to stop separatist violence and caroline hyde is on the lookout for potential short sale. >> we have some big interviews coming your way today on countdown. how does a 44% return on your money sound? that is how much is happening. we will have an exclusive chat with the ceo of feder holk nielsen.

we will spoke to that speak to the former president of georgia. that is the first on bloomberg. >> let's get to one of our top stories this morning. just over a week to go one to the next ecb policy meeting and officials are in the portuguese town for the first ever ecb for him. um. we have been following developments over the last few days. any clues of any potential action? we need to get everybody up to speed. >> day two. big speech yesterday. it is about 3000 words long. the top line really is this which is about low inflation . i looked at commodity prices -- food and energy. the klein accounts for 80% of the total decline in euro zone inflation since late 2011.

the euro has been a big part of that. these are common factors across the euros are. zone. this would require adjustment of conventional rate cuts. we caught up with the ceo and he shares that view. >> the most likely would be interest rates and negative deposit on the ecb. what could be important is to work with and attention to be euro valuation. banking ina big europe. the rate cut is the minimum people expect next week. >> there was a variety of opinion and what is conventional tools he might use.

are we any further in terms of understanding of what might be delivered? >> yet to look beyond the common factors because when he talked about local factors, the big clue was in credit. and some ofraints these countries across the eurozone. the percentage of viable constrained smes. these are smaller and medium-sized enterprises with the possible turnout for the last six months that are unable to seek a bank loan. a minimum of 1% in germany to 25% in spain. as much as it third of smes and in portugal are financially constrained. they lead to lower inflation. the credit market picks up throughout the recovery. banks across the eurozone are raising capital. you want to make sure that credit supplies are there. the big debate is how to a dress

credit supply -- address credits apply. rate cuts is the big expectation. the unconventional tools is about how they address credit supply. >> we will find plenty of skeptical academics in portugal talking about the asset backed securities program and whether we will cc be buying asset-backed securities. we will have more on that later ron. thank you. >> the ukrainian resident elect -- president-elect of i to step up opposition against -- this is an interesting sort of shift in record from him, isn't it? >> it is. ukrainian central authorities

have up the ante in their conflict with russia. russia warned ukraine not to use more force in the east. the foreign minister saying that what be a colossal mistake but that is exactly what we have seen over the last 12 hours. ukrainian forces using helicopters, using paratroopers, trying to take back that regional airport in the east of the country as a train station there. there was fighting and not just those two spots but elsewhere in the city and the other cities in the east as well. russia or i should say the separatists have also escalated their contributions to this conflict. a number of pro-russian fighters were seen in the city yesterday. local agencies reporting as many as 40 trucks came in from russia into ukraine. identifyingrs

themselves as chechen volunteers. as you can see, there won't be any sitting down and friendly relations between ukraine and russia now that the president-elect is here. they are on a collision course and we will have to watch what happens next. >> sergei lavrov warns of a colossal mistake if they do not get it right. let's talk about the big issue which is gas. the twoand russia, countries seem to be inching towards a deal. give us some of the details. >> you might call it the other battleground really. gas and a deal between russia and ukraine. the two sides met with eu aviation in berlin yesterday. it looks like we have a tentative deal by which ukraine would pay $2 billion by the end of this week and another half $1 billion by the end of next week to avoid a supply cut that they don't pay, the russians warned

would come by the middle of next week. this would really be a starting point. russia saying that if russia pays -- ukraine pays that back debt, they would be willing to look at the price at which ukraine buys russian gas. that price went up 80% from the $268 they were paying under heavily discounted prices under the former reaching which was -- regime. we have to see where this goes. it is consistent with the kind of approach we have seen from the russian side when it comes to gas up until now. the kind of hard-line tough love approach. you must pay top dollar for cash, you must prepay, you missed a all of the debt. we are willing to negotiate on all of them. >> we are going to leave it there. we look forward to your interview with the georgian president.

>> the u.k. and lloyds banking group will unveil its sale of its psb units a little later this morning. sale mayn market for not cash in as much as originally hoped or will it? caroline hyde is here. what are we expecting to happen today? >> we could get an unveiling of the sale which could value the unit, a brand bot back to the dead -- brought back to the dead. it was folded. now, four point 5 million customers, 631 branches in the u.k. could be cashed in on. it have a value of 1.5 billion pounds making it the seventh biggest lender in the u.k.. 25% ofy to sell about the stake so we could see anything from up to about 375 million pounds being raised overall. >> as was the big question --

are we reaching? are they coming on the last moments of ipo. there is a bit of fatigue out there. ipo.killed off the market. >> i am guessing the irony is because it is a holiday. it was a disappointing share sale. they were at the bottom end of that pricing over also clearly there is some fatigue. a lot of these private equity backed share sales have not been performing as well. they are still trading below its initial offering price. the current retail entirely pulled their plans the shared sales. there was a portion coming into the market. initial share sales, ipos up 80% year to date across the world. europe has been the best-performing region with the shares have gone after the

initially set. financials have performed the best as well. maybe thet institutional clients, the pension funds, the asset managers will still be lured into the unit because you are betting on this u.k. economy, the potential rate increases that would make the money back the mortgages that much stronger. also, this is a bank that is not tainted by the previous insurance scandals. it is not -- it is a clean player in the area. maybe this is a force that actually money want to get into. we will see whether retail investors say yes to this and whether they are lured back by some freebies. >> i think has been months. me.aga disappointed they cashed in on the retail buyer. the people at home who are

customers have been offered bonus checks. tsb?put it into they are saying if you do buy shares in tsb when it shares sales, we will give you one free one for every 20 that you hold in about a year's time. in fact, we understand it has been in the reported press all this week and that they are going to be depending up to 30% on the retail bias. they could be looking at 100 million pounds coming. >> thank you. look out for that at 7:00 this morning. we might get an update from lloyds banking group. >> investors are playing detective as the search for clues at the remarks that the ecb forrum. we will see what the choices are for action when we return. ♪

>> time for today's company news -- the largest u.s. drug maker pfizer has abandoned its efforts to buy astrazeneca. saying the offer rejected represented its full value.

pfizer is now required to wait at least three months before talks can restart. the world's second business -- second-biggest mining company agreed to an investment with a company. it involves a potential mine and rail project. airlines has ruled out seeking bankruptcy and will instead accelerate an overhaul to help it break even next year. malaysia airlines shares plunge the most since 1998 this month. the government made that the company fail. the jetser says disappearance in march put additional stress in operations. >> welcome back the countdown. >> the ecb meets in southern portugal. the markets are increasingly looking for action next week. the central bank met with

jpmorgan, david leibowitz. forum, they pre-ecb bill it as something different. all the indicators are that we are going to get something substantial about this inflation. what will it take to actually move the markets convincingly? >> i think a lot has been priced thus far. if you look at why people are expecting action in june is because we see those longer-term expectations. with this finally occurring five years into this entire crisis, i am not sure that another interest rate cut is going to be the thing that moves the needle. i think we need something that gets credit creation going, it is going to look very different from the quantitative easing we saw in the u.s. and u.k. the point is to get credit back into the business. >> he seemed skeptical that

whether interest rates will do enough to stimulate the economy. other academics we have talked to over in portugal, at the ecb forum are skeptical whether an asset buying program will the thing to get credit flowing into businesses. is a saga that has played out for the past five years. we need to see decisive action on the part of the ecb. a what is the commitment from them that they're going to solve this problem. they're going to expand product to adulation. that is up for the markets to decide. with interest rates at zero bound, it is not helping in the periphery. >> how does that whole how does that- play into your perception as an asset manager when you look at the currency, when you look at the peripheral of europe? just try and draw some of those thoughts together. >> i think that starting with peripheral markets, we have seen

quite around the over the past few months. bondse cases, the 10 year of these countries are trading through the u.s. treasury. the question i ask myself is -- it isk to an extent, something similar we saw with european equity markets over the past year or so whereby everything else had approached its value. european equities were still cheap and investors float into that class. we have seen investors dive into peripheral debt now that default risk has essentially been removed. the question is are these overvalued? default risk has been removed and you think it is all about the ecb and whatever it takes? is that anything to do with the european elections we have seen over the last 48 hours? >> i think default risk is certainly much lower than it was a few years ago. it is a relatively insignificant. we saw,to the elections

think a key message is that europeans are unhappy with the current pace of growth and they were looking for new solutions. that don't see the answer and austerity -- in austerity. >> the leaders come together to discuss the kick in the posterior politically speaking. do you think that is going to play into your thinking all? the politics. >> politics around the world are always playing into my thinking particularly in places where emerging markets drive more volatility. we kind of know the state of play in europe. we understand why people are upset. we understand why the skeptic parties are starting to gain some distraction -- traction. if we can generate stronger growth that will make people happier. people want jobs and money in their pocket and that is two things they'll have right now. >> thank you. you can see our conversation about the big scenes around investments at the moment.

the ipos are very topical today. we will continue our conversation with david when we come back. ♪

>> welcome back. >> the time in london is now 6:23 a.m. david, let's talk about some of the scenes very topical in the

markets. we might get news about another ip euro in the london market in around 37 minutes time. some of them have had mixed fortunes. are we still riding the crest of that weight oave? >> when i think about ipos come i tend to put them in the same bucket as in doses they can be very good but when this irrational exuberance takes hold and there was an ipo, it must be a great idea -- that is when i question it. certain companies have come to market very good deals. there are good opportunities for investors just like we have seen very positive merger activity. we have seen some not so good companies come to the market and . it is something to be evaluated on a case-by-case basis. mna and retracement and technology and the ipos, is

about earnings? earnings you are seeing so far this quarter, are they enough to substantiate new money coming into the markets? >> earning growth is key. it is something that has grown to be allusive. equity markets to push higher, we need to see earnings growth materialized. . u.s. was a in the very sharp v-shaped recovery in earnings. that has not occurred in europe. for earnings growth to come in and take the reins and drive higher equity markets. >> are looking for more consumption to drive that? i know you were talking about the leveraging --deleveraging. >> we are almost at a point will receive changing consumer behavior. people have been deleveraging households. we need them to focus a little more on consumption.

doubled up create stronger nominal growth which should create strong revenues with profit margins where they are. that should still translate. you talk about emerging markets. some assets are cheap but they can always get cheaper. you still quite like a margin markets. -- emerging markets. >> emerging markets are screaming buy. the baby has gotten thrown out with the bathwater in a lot of cases. find those high-quality companies that are trading at a very low valuation. as long as you>> do find some low volatility. the gdp is holding an election this year and that is bound to great volatility. >> thank you very much. anti-china protest could ramp up again in vietnam as the country claims the country sank

one of its swimming vessels. we will have the story after the break. ♪

>> welcome back. let's get the john -- to john. >> i'm going to look at the euro-dollar. not much action on the price but plenty of news around it. day two at the ecb forum. yesterday delivered did very letter to temper -- little to temper expectations. at the very least, rate cuts are on the table but the question is

how much of that action is priced into the market. david liebowitz tells you it pretty much already is. >> thank you. these are the top headlines. the euro is nearly at a three-month low ahead of a speech today. european central bank president signaled yesterday that policymakers are ready to expand the meal is should they see inflation taking root. the confidence of u.k. service companies gross to a record this quarter according to the confederation of british industry. the survey shows expansion of businesses like hotels and restaurants and professional services. the industry accounts for 75% of the british economy. the prime ministers of pakistan forthe -- india meet today talks centered on trade issues. sharif attended the swearing in ceremony for modi as well as 3000 other guests.

tensions are escalating in the south china sea after weeks of cat and mouse. vietnam is accusing china of sinking one of its ships. david has been watching this story developed. david, what do we know so far? what are the details? we all know the fact of what happened right now, but each side has their own version to the story. what happened was earlier this morning we had this report out newspaper thatse a fishing boat was attacked by a chinese vessel. that has since been confirmed by the foreign ministry in vietnam. they said the incident took place late afternoon monday. some chinese vessels circled the ship from vietnam. one fishing boat was rammed with 10 people on board.

those 10 people were eventually rescued by vietnamese ships in the area. the chinese have responded and according to the officials, they came out with a statement about an hour back. esey are saying the vietnam send those ships to disturb an operation in the area. china has adopted a firm stance in dealing with these things. the fishing boat just overturned and they now ask vietnam to stop this behavior. it took me very serious. david, just give me a little more context on this because it all boils down to -- there was a chinese oil rig that was brought into the seas and that is part of the dispute, isn't it? >> right. it was earlier this month when they started drilling in that oil rig in this incident took place not very far from

there, about 17.5 nautical miles. the first it is not time we've actually seen a chinese ship ram into a vessel. it might not be the last. these are disputed waters. china maintains that the oil rate is within its territory. you can basically do anything it wants. them prime minister of vietnam was in manila, and he maintains what china is doing simply violates against international law. we are back to square one. tensions are quite high in this part of the world. >> thank you for that. >> malaysia airlines is carrying out a full review of its business following the disappearance of flight 370. it was struggling with losses and increased income occasion but aims to break even next year.

bankruptcy is not an option. >> i am very confident we can do that. malaysia airlines has been around for over 40 years. we have a world-class reputation. we are one of the only seven airlines in the world that has a five star rating. our cabin crew in the last 10 or 12 years -- >> the safety standards matter. >> the safety standards are on par with the very best airlines in the world. >> how realistic is a turnaround? it is a sell rating of the company and the sales dropped 18% recently. investors are not buying into the turnaround story. >> the turnaround story was moving along. 370 eight through 70 -- mh certainly did not encourage that. we have to go back and fix that.

>> you take a look over the past 12 months, shares have dropped 60%. flight 370e that disrupted the plan for 2014. i believe we want to make sure that regardless of 2014, we need to make a turnaround for 2015. i think it would be unreasonable to expect by the level of disruption caused by flight 370, any plan we have from september of last year will survive into 2014 now. let uscess will be recover as much business as we can. >> is bankruptcy and option -- is bankruptcy an auction? -- option? what do you think that people do make comments that bankruptcy is one way to allow you to restructure the airliner? >> depends on the rules that apply to malaysia airlines. in various jurisdictions, there

is chapter 11 bankruptcy which allows a company to reorganize itself while being protected by creditors during that phase. i am not sure because i'm not the finance guy what the rules are within malaysia for such a structured reorganization. interest in the energy division has brought its ceo to paris today. stay with us to find out what the french government wants from the ge. more when we return. ♪

>> time for today's company news. the chinese government is said to be pushing the country's banks to replace high-end service made by ibm by a local brand. this is because of china's dispute over u.s. over spying claims. areuple of agencies reviewing whether chinese commercial banks relies on ibm service compromises financial security. dime communications, south agreed to bempany, bought by the south korea's largest mobile messaging service. that shareholders were old more than two thirds of the combined company. -- a reversed takeover which valued at $3 billion. the company will be renamed and the new entity will be listed in october.

michael jeffries, the abercrombie & fitch chief executive who was paid $48.1 95%ion in 2011, earned less last year. byrcrombie sales have fallen -- for four quarters in a row as the company struggles to keep its brand relevant. welcome back. >> general electric ceo met with the french president to make his case with the acquisition. and nichols has a preview for us from berlin and. hans, will it be the last offer? >> here is what we know about the latest offer and that is the nuclear side of this, the amenities side of it, the nuclear component will stay in france. ge is not interested in the

transport side. the transport side was always going to stay a part of it. they are trying to send insurance is that a nuclear person national security reasons will stay in france. here is a quote from the head of operations in france. we will answer the government's legitimate demands to the remains french and the property were stays french and the exports be protected. is going to that happen tomorrow comes a little after one month after his first meeting when he tried to make the case initially to the french government. you will remember he had a sunday meeting that was supposed to be with the industry minister and that was delayed. we don't know if that was canceled or delayed. the following day, he sat down cominge president and out of that meeting was an official stance from the french government of neutrality. the really interesting thing to watch is how the president's government response to ge's

offer and the formal offer from zeman's in the context of the european election. last night, we saw the president talk about the need for less austerity and more growth. with the make the case -- will he make the case? to be too difficult in the current environment for hollande to accept a foreign company to come in and take a french jewel. >> what is the men's doing with the time they have had? have they had a chance to look over the books? >> i don't know how long would take a look over the books that they have the books. they got a three-week extension. extended to june 23 for the ge takeover. this is according to local reports. today butll not come they are still doing their due

diligence and they are getting awfully close. that theys a report plus an $7 billion asset swap so they would get alstom's energy business and they would swap some of their training transport business over to france. 7 billion is significantly less than the 17 billion that iwas offered by general electric. if it solidifies before the meeting tomorrow, we could see the present been a very difficult decision between countrya pan-european and the european giant or going with a bid may think is better. >> thank you very much. officers of one of the most prestigious military schools in the u.s. are being trade in such

-- trained in cyber security. west point is bringing tech savvy cadets to work for the military instead. they have formed a new cyber command unit. greta mark says the story. >> shall we play a game? >> in a movie made 30 years ago, young computer hacker from seattle comes close to stopping a nuclear war. lookingys, america is to hire tech savvy teenagers to work for the u.s. military rather than against it. some of these young cadets are potential players. the hackers in what they bring could be a great strength. >> one of the countries most orthodox institutions, they are allowing officers to think in unorthodox ways. >> long-term underlying principles that would teach them how to think and solve problems.

cyber attacks on u.s. infrastructure soared 1700% between 2009 and 2011. the pentagon established a special group to defend america online. general keith alexander, then head of the nsa, was placed in charge of this new cyber command. that is about to change. this year for the first time, west point seniors will be allowed to join cyber command is newly graduated officers. >> i want to see what i can do for the army as far as applying my expertise. these hacking club means are debts can compete with the brightest computer scientist of their generation. >> i think im or text savvy than the average person my age. skills may one day be applied to an active battlefield.

>> i see a future where there'll be cyberspace operations as well as physical world and cyberspace operations that intersect. ofamerica's next generation army officers will still fight wars with machine guns, but some will also use mouse clicks. come, we will tell you why the popular rally is caught up in a feud with e-commerce site amazon. stay with us. ♪

>> we cannot change who we are. >> x-men, the latest film in the marvel comic series had sales of 11 as $111 million over the extended all-day weekend. x-men pushed aside godzilla to claim the number one spot in the united states. welcome back. >> i thinkto say -- i have the first two x-men. they were another three or four. >> let's have a look at the papers. in over an hour until the equity daytrading.

let's start with you, caroline. >> this is an argument growing over the atlantic and the united states. j.k. rowling versus amazon. she has written a new book on a detective novel. it is the silkworm. it is listed in the u.s. is currently unavailable for pre-order. are in a because they bitter dispute over the pricing of this particular book. is the hardback cover. doingmazon is accused of is saying you cannot get a hold of a pre-order but advertises similar books at a cheaper price. this seems to be an ongoing saying they're abusing their powers particularly in the u.s.. it has been said by james

patterson, and best-selling author. >> this has been a rumbling disagreement between authors and publishers on the one hand and amazon on the other. we will see whether that 1 -- how that one continues. >> johnny. here in the u k may force high street lenders, if they decline businesses for credit, they have to pass it onto an alternative lender. this would be new legislation that george osborne had introduced into the u.k. it is to get more credit to businesses and this would be pretty big. >> that is quite shocking. >> does that mean peer-to-peer lenders? >> not much detail but they really want to do is the high street banks have almost a monopoly of the lending to some of these small businesses and

they want to break down exactly that. i doubt they would decline a loan of barclays and pass it on to lloyd's. >> we might be hearing that tsb might be selling shares to lloyd's. >> you were talking about books and authors. thes putting food on nation's table which is a common piece in the telegraph today. this takes place every year in the u.k. ladies -- one of the one of the reporters who was was running some panels there and was talking to some of the authors. she was remarking on the number of food writers. to them last week and they were talking about a number of food -- cookbooks that they have on their books right now. she was saying there were some

of these food writers that are very popular. these authors are really household names in the u.k. and this is one of the big scenes. inyou have come back to form terms of the great british bake-off. bedtime for cupcakes. let's have a look at this. i am on the independent. this is our business secretary. speculation about could he be the next deputy prime minister. will he be the next deputy prime minister? is in china. that basically saying china sends 100,000 kids every year here to the united kingdom or education tom etc -- education, etc.

5400 people across the china. the language skills are crossing the u.k. and the lack of language skills. i can barely order a copy in french but the lack -- it is causing the u.k. economy 48 billion pounds. that is what the inability to speak foreign languages of the current and next generation and shanghai ares in the top and the u.k. is number 26. work harder. >> there are a number of students in public sector is then in private schools which are coming from abroad. coming from china and hong kong. amazing. >> just over an hour until the markets open. a are going to be talking to

ceo who is here with us for expose a conversation. we will look out for any news from lloyd banking group at the start of the next hour as well. ♪ .

>> day two at the e.c.b. forum in portugal. the c.e.o. expects some action from the central bank in june. >> most likely to be action on e interest rate and negative deposit on the e.c.b. >> defying russia. vowing to step up anti-rebel operations. 'll get reactions from the former georgia jan president. >> and goodbye, i.b.m.. asking banks to remove i.b.m.'s service spying dispute.

and lloyd's may announce the i.p.o. of its subsidiary this morning. o warm wac -- welcome back t count count. -- "countdown." bloomberg reporters are across the world ready to deliver your stories that will drive your day. ryan chilcote is in kiev with details on the president elect's plans. caroline hyde is on the lookout for a potential share sale. plus hans nichols is in berlin with a story on china pushing banks to remove high-end i.b.m. service.

we're looking for details this morning from lloyd's whether they are listing their t.s.b. business. >> here it is. they do say yes, lloyd's will sell about 25% of the existing shares in t.s.b. they are the seventh biggest lender on the high street. about 4.5 million customers. a value of 1.5 billion. they are going to be selling anywhere up to 375 million pounds worth we understand of snares t.s.b. they are going to list on the main market they expect it to take place next month. it is interesting timing generally. last week we saw a rise in insurance. the share sell didn't go so well. they sold shares at the bottom

end and didn't get much appetite by the institutional buyer. clearly lloyds at the moment feels not only they have to meet european commission retirements to offload this, but of course e sales -- go ahead so now they are selling shares in it. they are saying this morning they are required to sell their remaining stake before the 31st of december because they are going to be selling at this point about 25% of the existing shares in t.s.b.. just starting with 25% to have banking business. that was something that was being widely discussed in the media and newspapers here in the u.k. >> the 31st of 2015. they have more than a year and a half. >> exactly. >> interesting also they are

talking about commilting to a 0-day lock-up arrangement. it was mentioned, the telegraph overnight was talking about how they might offer this bonus to retail investors giving an extra share in exchange for a lockup for a year. >> will get a free share. of course that's what -- really did depend on when they listed shares. they don't want to purely be independent on the institutional buyer. if they can convince the general public to buy into this, got an extra 20 pounds staying at home. >> maybe just try to stop a grand selloff that we try to see. >> thank you very much. caroline hyde on the latest from lloyd's banking group.

just over a week to go until the next e.c.b. policy meeting and central bank officials are in the portuguese town at the first e.c.b. forum. jonathan ferro has the details. it is the new jackson hole. the european equivalent of jackson hole. what kind of action are we looking for from the european central bank? what is being talked about? >> the expectation is significantly nire next week. we have had two very important speeches from mario draghi over the last couple of months. one was april 24 in amsterdam. that was very important. but yesterday gave really extensive detail on the reasons behind low inflation the policies they could use to address that. the decline in prices. a big factor has been the strength over the euro. 80% of the drop of inflation the euro-zone. that is significant. these are what they called

common factors. he was pretty straurd about it. if the exchange rate was tied to the financial conditions, the way to address that is with a rate cut. cut for the deposit rate. you can possibly do those kind of things. it is something the c.e.o. agreed on. at the very minimum, i will say the majority of people would expect a rate cut this week. >> as a minimum, there might be other tools used. perhaps lot more depended on where the e.c.b. sees inflation headed from here and how much they need to throw at this situation. >> they talked about base case scenario. he also talked about the risk to that base-case snare wrow. he talked about local factors. he talked about credit. credit in germany is much more

effective than credit in portugal and spain. the stats are pretty amazing. viable s.m., e.'s in germany. a minimum of them, 1% of those, 25% in spain, 1/3 in portugal. credit is localized. >> a number of voices skeptical. academics skeptical on the ground in porch gal. we were talking with the bank of england. talking about whether you can make this o'connor ventional tour work. -- this unconventional tour work. >> ukraine on a collision quours russia. ryan chilcote is in kiev with

the details. ryan? >> and step up the operations the central government has. not just infantry now that the central authorities are deploying. aviation. mortar fire as they try to take back that danesque airport in the far east over the country. also a train station in the city. pro russian forces getting reinforcements if you will by pro russian fighters coming from russia itself. a group of fighters identifying themselves as chechen volunteers have arrived and joined in the fighting. important to note these fighters escribed themselves as irregulars unsanctioned. we have seeing an escalation on both sides. just one day after of course he

became the president elect of this country vowing to unite ukrainians. anna? >> meanwhile, ryan, on another front, i guess between ukraine and russia, the two countries seem to be inching towards a deal on gas. tell us more about that. >> that's exactly right. the russian and ukrainian side met in berlin yesterday. the european union mediated those talks and agreed to a tentative arrangement which still has to be agreed to by their respective governments where by ukraine would pay $2 billion by the on the other hand this week and another half billion by the end of next week to yause to clear some of its $3.5 billion debt to the russians. interesting it is a conciliatory step from the russian side. they would like to see all of

that money paid. the price is 80% higher than they were a couple of months ago and they would have to prepay it. it would appear all of those points are negotiable if the ukrainians agree to pay $of this week $2 billion and next week another half billion. they have some accommodating steps when it comes to the battleground for gas supply. ukraine gets half of its gas from russia. 1/6 to have european union's gas comes through country. >> the chinese government is said to be pushing country's banks to replace high end service made by i.b.m. with a local brand according to people familiar with the matter. hans nichols has this story from berlin. hans, this masks the evenlation of a dispute with the united states over spying claims. >> there is no other way to look at this.

that is that boast sides are escalating. this comes a couple day a.f.s. the united states department of justice indicted five members of the people's liberation army on to companies like alkoa. alcoa. we think the china government, they are pressuring people, institutions like the commernl bank of china not to use i.b.m. and instead to use localer is verse. people according to familiar with the matter. last quarter they saw their revenues down some 20% in china. the first quarter of 2014. what they say and i.b.m. -- a lot of this is cyclical. this isn't a direct response to what's happening in terms of the snowden effect. the fallout.

eventually it will pick back up. also remember over the weekend, the consulting companies, groups like bane and mckenzie were put on notice by the chinese authorities not to hire them. when we are trying the put a dollar figure or a euro figure r a yuan figure on all of this fallout from snowden, it looks like we're getting closer to that $35 billion figure that was initially put out by a group in washington. the snowden effect. that's what would result in lost salse sales internationally and to china because of espionage concerns. now it looks like real numbers tabulating up. we'll see what i.b.m. reports what sort of effect it is having on their bottom line. anna? >> thank you. hans nichols joining us there from berlin. the astrazeneca/pfizer deal may be off. there has been no shortage of m&a in the pharma sector.

nielsen e peder holk right after the break.

>> time for today's company news. pfizer has abandoned its efforts

to buy astrazeneca for 69.4 billion pounds. saying the offer rejected by astrazeneca represented its full value. they are now required to work at least three months to start talks and restart. the second biggest mining company -- the $20 billion iron ore mine, port. it is the largest untapped iron re resort. they will accelerate an overhaul to help it break even next year. amid investor concerns that the government may let the company fail. they said it put additional stress on operations. welcome back to "countdown." i'm anna edwards. it is 16 minutes past 7:00. we have seen a lot of m&a

activity in the pharmaceutical space and other industries as well this year. here for an exclusive conversation with us is the head f the of the world leader of enzyme production, peder holk nielsen. biotech, science and technology, using so many prucks, things that we take for granted whether it is washington detergent or in our clothes that we wear. what can you tell us about what your business is doing? >> that was an interesting introduction. andinto a lort end products follow these markets. it is a pretty smart technology that doesn't waste resources. so everything we do out there is to save water, save energy, save resources. >> where is the strongest demand

coming from? >> we're seeing a strong demand for washing at lower temperatures which is about saving energy and biotopping is the key technology in that space. -- biotechnology is the key technology if that space. we have renewable energy. converting waste into fuel but also converting corn into fuel. and then last but definitely not least, we're making a major nvestment in what we call bioa g. >> you this bioag alliance with monsanto. how do you get around resistance, hesitance around manipulation of food products. particularly here in europe where perhaps consumers are a little less keen on their food being tampered with than they are in the united states? >> the technology we provide together with monsanto, we take the natural microorganisms to

have soil and breed them and inject them back. you just get an overdose of what is already there and then that will be working in europe. >> biofuels is obviously a big area of interest for you as well. tell me about how shale gas booms in the united states. does it mean people are a little less interested in biofuels at the moment or the reverse it is going into the liquid fuel market for american cars or cars in the emerging markets. politically, it affects because the americans, they are very excited about shale gas and it allows them to reduce the c.o. 2 arena. if it is like competing for the same green space as renewable fuels are.

there is a connection, it is like a physical connection out there. >> interesting. in europe, italy has seemed to be making a push to make itself or to create a biofuel hub in southern italy. is that a development that interests you? >> absolutely. the company that is pushing this in italy is a company where we own 10. of the shares. they built the first ever commercial plant for converting it into ethanol in italy. italy has turned out to be a hot spot for these things. it is very exciting to see what goes on in italy now >> ins of the business and how you're performing, the share price is up 80% in two years. you one of the highest margins in that industry, can the margin goes higher? is this something that you are still pushing for? >> i think they can go higher. we're not really a chemicals

company. we spend 14% of our -- >> i want to compare you to everything. from chemicals to agriculture. everything. >> but we are -- what we supply to commerce can be perceived as chemicals. we spend aven awful lot of money on research and development. i think margins can go up but the game plan we have is to invest more in growing a business. so the long-term targets we have given ourselfs is sustaining double digit growth and a marginor 24%. >> in mergers and acquisitions, are you looking for businesses -- are they expensive? >> we are always on the watch. i think the space, it is not like they we'll be acquiring anything so flarge the enzyme space already. there have been m&a activities

over the last two, three years. it is not unlikely that there will be more. >> thank you very much for joining us. peder holk nielsen joining us there from novo science. coming up, japan claims china sank one of its shipping vessels. ♪

>> welcome back to "countdown".

i'm anna edwards. tensions are escalating in the vietnam is speasm accusing china of syncing one of its ships. what do we know? >> good morning, what we know so far is we do have the facts straight of what happened. as you would expect, both sides have slightly different version as to what really transpired or what led to the incident. what happened is early this morning, about seven hours back in asia, there was a local report claiming that the vietnamese shipping vessel was attacked by a chinese ship. the vietnamese foreign ministry confirmed it took place late monday. yesterday afternoon local time. some 14 chinese fishing vessels circled a group of boats from vietnam. one boat was rammed.

it wasn't shot at. 10 people onboard were eventually rescued. fortunately no one died, otherwise tensions would be higher. the chinese responded. they said vietnam sent these ships to disturb a chinese firm's operations in the area. china has adopted firm measures to deal with these things and the fishing boat china claims simply just overturned and has asked vietnam to stop this disturbing behavior. let's leave it there. anna, back to you. >> thank you. coming up, britain's biggest mortgage lender says it will t.s.p. % stake in its consumer bank in a public offering next month. we'll be looking further into that story when we come back.

>> welcome back. i'm anna edwards. let's head to jonathan ferro for the fx check. >> flat on the day. second day of that e.c.b. forum over in portugal. draghi speaks at 2:30 u.k. time. that is one to watch out from that comprehensive speech yesterday. have gone from $1.40 to $1.36. expectations next week are right thereupon. b.n.p. paribas will continue to weaken. here is their view. given the e.c.b.'s record, there

is a risk of a short squeeze. that is the b.n.p.. back to you. >> thank you very much. these are the top headlines. the euro is near a three-month low. policy makers are ready to expand stimulus should they see inflation moving lower? the confidence of u.k. services companies rose to a record this quarter, according to the confederation of british industry. it showed expansion at businesses like hotels and accountants and law firms. it accounts for 75% of the british economy. and the prime ministers of pakistan and india meet today for talks centered on trade issues. along with throo 3,000 other guests. >> let's take a look at some of the recent m&a activity.

there has been plenty to talk about of course. not least of which are pfizer and astrazeneca. that one has been kicked to the curb for the moment. let's talk also about the hotel sector. plenty of weekend conversation about whether there had been a bid for intercontinental hotels. let's bring in james. good morning. >> good morning. >> he also happens to be a shareholderer in intercontinental. talk to me about the hotel industry and whether you think it is likely that we have seen some big activity around this business. they haven't confirmed or denied that. >> i think there will be an approach and the rumor is 6 billion and the prime minister said it is probably -- they will get a tax incentive to moving some of their revenue streams. they also have more in the bag left for shareholders. the issue of course why now and the large chunk of it is the economy is recovering. it is likely to be rising

etween 3.5% to 5% depending on where we are in the global economy. intercontinental has a portfolio of properties. it can go there generating significant cash for hareholders. at least 25 pounds a share. therefore any bid is cominging in significant premiums to last. >> it is interesting. the tax motivation that is being mentioned a lot around u.k. companies with u.s. interest in them. the -- u.s. companies don't want to take their money back to the united states now to have it taxed so they spend it on doing deals in the united kingdom. do you care what the motivation is if another company wants to buy holdings do you care what the motivation whether it is motivated by tax or growth? >> in a broader context of

course one has to care. the health to have u.k. economy is -- the quality emitted from the businesses that run within it. there are significant operational benefits. they can cut costs and streamline ongoing activities. tax is an important element in terms of affordability. it is about operational wisdom. >> you like these hotel businesses but just manage hotel assets? you can buy hotels that do both or hotels that just do one over the other? >> i prefer it as an opportunity to acquire much higher return on capital than sitting on bricks and mortar. >> other news that i know that is of interest to you this morning is the announcement of lloyds. they are going to be selling t.s.b. in an i.p.o. you're a shareholder in lloyd

banking group as well. will you be interested in this? >> certainly, from every angle. we know that the t.s.b. position has to be removed from the balance sheet by the end of 2015 as part of the deal with the e.u. of what they are permitted to retain now that they have got government support. the question was how are they going to do it rather than where are they going to do it? he has t.s.b. certificate to go with the lloyds one you have got. it is going to be difficult to see how value is maximized in that way. it is being discussed at 25% this morning. absolutely show what it is doing with to do and demonstrate what it is doing for shareholders and lloyds group. at the same time, a sensible deal for people who want to get in. >> in terms of a floatation tragedy, how does that work? selling a -- strategy, how does that work?

there is that overhang that suggests some shareholders might be concerned that share prices will be depressed in the short-term by the expectation that there will be more supply in market later on. this ybody who goes for will be busy thinking. therefore because t.s.b. is essentially a domestic business, you could see it beginning to ramp up. subsequent tranches might be higher prices rather than the current market assumption which is every i.p.o. is damned to hell. which is a sad perspective. >> things seem to have turned in terms of headline writing. up until last weeking much was made in a boom in i.p.o.s in the markets essential. just was a they didn't have a great time, they pulled their

i.p.o., people are asking questions about whether this is still the demand. >> i can it was premised on the expectation there was going to be significant recovery in the first quarter build building on what we had seen in 2013. the first quarter turned out to be rather weak. q 2 is likely to be weak too is there going to be a genuine recovery or is the second half going lead to yet more weakness and downturn? now i am absolutely in the positive camp but that doesn't mean anyone wants to overpay for an i.p.o. now. people are quite cautious. >> thank you very much for joining us. great to see you this morning. james from ccla investment management. stay with us on "countdown". coming up, as the unrest in the ukraine continues to escalate following sunday's presidential election, we'll speak with the former president about

developments in the region. that is a bloomberg first interview coming up next. ♪

>> time for today's company news. the chinese government is said

to be pushing country's banks to replace high-end servers made by i.b.m. with a local brand over spying claims. the minister of finance are reviewing whether chinese commercial banks' reliance on the i.b.m. service compromises security. international -- intercontinental hotels is listing a i.p.o. the share sale will take place before the next quarter. a south korean web company trading after it agreed to be bought by south korea's largest mobile messaging service. it will hold more than 2/3 of the company after a reverse takeover that valued it at over $3 billion. welcome back to "countdown." i'm anna ed w5rds.

the time in london -- i'm anna edwards. the time in london is 7:41. unrest in the country continues. ryan chilcote is in kiev with more. ryan? >> that's right. the fighting in the east of the country has definitely intensified. to discuss that and other things going on in the ukraine, i'm joined by the former president of georgia. he served from 2004 to 2013. during which he fought a five-day war with russia. mikheil saakashvili, thank you very much for joining us. i want to start by asking you what you make of the arifle of these chechen volunteer fighters that we have seen in the last 24 hours surface in the city of donetsk? >> it is normally a regular unit of fraction -- russian military intelligence. >> they said they were volunteers. >> some of them behaved like -- but also we had this in georgia

where armed chechens were sent by russian special services to fight but basically, certainly this is -- we're talking about no large scale intervention. he border has been diluted and every night, even this night, i heard from my friends, large numbers what i think are russian troops, but russia of course says they are not. we're talking about a military invasion here. let's not fool ourselves. >> this is a military intervention by russia? >> what else do you call it? their best units are inside ukraine. they are behaving like professionals, killing lots of eople. looks like it. that will be a tough challenge and a tough fight. >> you have met president putin before, at times when your

country, the former soviet republic of georgia, was at odds with moscow. poroshenko is going to have that same task ahead of him. what would you recommend to him going into that meeting? >> nfl, there are two aspeblingt -- first of all, there are two aspects. por she thinko is a reasonable guy. -- poroshenko is a reasonable guy. the problem is yause is pretty weak but putin has strong will. the west doesn't seem to have will. to confront him. many western countries don't want to lose profit. they have to switch off this cash machine. it will happen sooner or later.

the later it happens, the more price europe will have to pay for it. it is a deja vu. the same story all over again. >> we had one u.s. senator here who was here yesterday and said because of the disruption, there should be new sanctions. you obviously agree that. >> it is obvious. >> they are not going to come, are they? >> they are in organized crime and corruption. what they have to do here in ukraine, do fast reforms in terms of cracking down on corruption. people will not toll late business as usual here because -- tolerate business as usual here. that is another way to sideline russian influence. an astounding number of ukrainians are anti-putesen. - putin. it never happened before in the

history of ukraine. it is a new reality. it is a big blow for putin but now west has to capitalize on that. for europe, for the u.s., for democracy. it is a freedom -- what else could they do but get help and support? >> speaking of european rallies. we had the election last week. what we definitely saw was while the pro e.u. party still came out ahead, they came out ahead in a much weaker position. what does that mean for this part of the world? >> well, i'm -- the people's party and that party has won the election. that is the good news. the problem is that europe needs to put -- in place. how they react to elections here. to these events here. if there is no european policy. the problem this year, as i said, europe is quite strong, but they need to use this

strength. he will , putin, certainly break his neck eventually, but he will take down also part of europe. >> but the reality is weaker support for the e.u. within the european union itself means less enthusiasm for places like ukraine and georgia, your country, becoming part of the european union. that is a fact, isn't it? >> we are talking here about the discrepancies of the will. we are enthusiasts. we see russia, which is weak and doesn't seem to have any strong allies. i think this mood in europe is - even hitler's germany had -- right now we have putin -- >> putin isn't hitler, to be fair. >> he is talking about territories and talking about

reunited russians all over the place. exactly the same way like ermany talked about. they can get shale gas from europe. they can get from -- or sanctions to go away from georgia, from iran. they can apply sanctions. they can deprive them of a luxurious life in the west. they need to act now. this country, the future of this country -- and they will have to act no matter what the mood. >> mikheil saakashvili, we have to leave it there. that was the former president of the former soviet republic of georgia. he presided from 2004-2013 telling me that what we're seeing now in the east of the country is a very clear intervention of russian forces. back to you. >> ryan, thank you very much.

ryan chilcote in kiev with the former president of georgia. signs of stress in the i.p.o. market. recently public companies underperforming the broader market. our next guest will tell us what to weigh in on these new stocks. ♪

>> welcome back to "countdown".

i'm anna edwards. we're eight minutes away from the start of european equity trade. so far this year, companies have underperformed in both the u.s. and europe. that highlights stress in market. michael, i.p.o.s then, not all they are cracked up to be? >> well, there has been a loss of momentum, one would have to say, over the last few weeks. i was looking at some of these funky bloomberg indices that you guys put together. you put together an i.p.o. index which looks at the performance f recently i.p.o.ed companies. since the start of this year, they have been underperforming the broader market. so yes. >> because of technology? because some of them were in the technology space? there is another theme that -- >> it is certainly a driver of the underperformance in the u.s. which has been much sharper. in europe, you have had a much

broader i.p.o. offer. it is still there as well. >> is that because these things need to be -- there isn't the appetite to take too many i.p.o.s at once? >> also poist tend to do well when there is a lot of market momentum. we had this in the first few months of last year. we don't have that same kind of equity surge year to date. plus, of course, evaluations have moved up somewhat since then. >> let's talk about m&a. that is one of the other themes that we have seen very strongly this year. it is one of the side shoot things. u.s. companies buying into u.k. companies in particular to try and save on their tax bill or more other reasons and it can be a bit of both i guess. do you see that as something that is going to continue to be a driver of m&a activity? >> very much so. if you look at the s&p 500, there is about $2 trillion of cash sitting offshore. a move within the u.s. by

congress to close what they call this tax inversion loophole, to lock into a 20% tax rate over here opposed to a 35% tax rate over there. was a major driver in the astrazeneca-pfizer busted deal at the moment where they need to deploy this tax very quickly before that loophole closes. i'm looking at which companies have cash. which sectors. which companies are suffering these high tax rates and who the targets are. >> what is the time scale on closing that loophole? if that is what it is in u.s. taxation law? there is just a limited time frame? >> the legislation has already been tabled by the democrats in the u.s. it doesn't seem to have much support from the republicans surprise, surprise, at the moment.

there are big news story of the day. selling king group their t.s.b. business. a bank that liked to say yes back in the 1980's. i remember it well. >> so do i sadly. >> they are hot put together anymore. this time as a result of -- not put together anymore. what do you think about the listing? how is this going to go? >> it should go well. one of your previous guests said it is a pure play on the u.k. economy. it is doing very well. it is accelerating north of 3% growth this year. i understand. i've seen some pro forma? s that suggest it will come out well below the number on lloyds own books. it might be coming out quite cheaply. >> michael, thank you. we'll see if the markets have an appetite for it. that will do it for "countdown".

it is 7:55 in london. "on the move" is up next. stay with bloomberg as the market opens after that long weekend in the u.k. and u.s. we'll have more on the lloyds i.p.o. and plenty more from ukraine as well. ♪

>> welcome to "on the move their co-i'm the manus cranny in europe -- in bloomberg's european headquarters in london. all attention will be focused on southern europe where the ecb president mario draghi speaks again. our market team has everything covered. >> we are all eyes on ipos. shares in european exchange will soon be on sale.

more on this later. hans, over to you. here is the idea. if you're going to make assurances to keep the nuclear unit inside of france. we're going to keep an eye on these equity markets. we are playing a little bit of catch-up in the united kingdom. bets from the ecb, info.with this u.s. trade let's check out the markets with jonathan ferro. >> going toward a seventh straight week on that particular index. this is her market open right now. bit of a pullback. that is what you have on the cac 40. ignore these two, the markets have not opened yet. -- marches uparks higher.