guy: i see a very bad outcome. u.k. chancellor george osborne tells us about his fierce over greece. tejadative interest rates could hit profitability. and a business plan for britain. prime minister cameron prepares to address the british chamber s of commerce.

you're watching "the pulse" live from bloomberg's european headquarters here in london. i'm guy johnson. europe is waiting. the continent is holding its breath. key meetings on two political stories that have driven the 2015 news cycle. 2 european union is delaying new sanctions on russia ahead of tomorrow's peace talks in minsk. chancellor merkel and president obama had a united front in washington. greece, very much is topping the agenda too. in istanbul where finance ministers are concluding a meeting. they named greece as their top concern.

george osborne said he sees a growing danger of a very bad outcome in the greek crisis. >> it is clear that the risks to the world economy, the risks to the british economy of this standoff between the euro-zone and greece is growing each day. and i think the risk are a miscalculation or a misstep leading to a very bad outcome what is growing as well. and so here at the g-20, we are urging all parties to this dispute to try and find some common solutions and we're also at home stepping up our preparations for whatever the outcome may be. we have to make sure that the british people are best protected from whatever develops in this crisis because i'm clear that the greek exit from the euro would be very difficult for the world economy and potentially very damaging for the european economy.

we have to be prepared for that outcome. so we have to make sure that we choose a path of confidence and stability over potentially chaotic and disorderly exit. >> so the questions for the u.k. economy could be harmful? >> there is no doubt. the u.k. economy would be affected by a crisis in the your ozone. that's why we need to take steps to protect ourselves at home. that's why we step up our contingency planning. we go through our economic plan so that we are taking steps to secure and strengthen our economy, but the idea that britain or indeed the rest of the world is -- for what happens to the euro-zone is not true. >> george osborne speaking to sonya o'demonl istanbul yesterday.

u.b.s. shares under a little bit of pressure this morning as the swiss bank has warned that negative interest rates could hit the bank's profitability. >> we completed our transformation last year. i think we have still the strongest capital position among our pierce. when we reach our 13%, 10% -- we will return capital to shareholders. we believe that the -- happened. we believe it is a good sustainable -- going forward. >> there is no irony lost in these credit numbers. the investment bank profit sblet up 24%. 367 million swiss francs. this is piece of this bank that is bolstering the fourth quarter numbers. >> we have happy with the

performance not only last quarter but i would say over the last eight a quarters, the new model is working. the investment bang is -- bank is focusing on its customers. delivering returns about 20% returns on allocated capital. we're well above our target. very happy. >> let's talk about the volatility in the interest rate markets. you say in your statement while it is premature to draw conclusion about the quarter, we have had a solid start. did you make money? did you make a profit when they withdrew? >> we don't comment on the quarters. this is an exceptional situation we feel is important to give some indication. i think in a day like january 15, to make money, is quite

difficult because what we are focusing on is giving the best execution to clients. they like that one. it was important not to lose money. of course there were some positive effects in hedging the risks. one or the other, the swiss national bank could always fweand peg was always in the scenario when we were looking at the scenarios. therefore we have been benefiting from that. day-to-day training activity, i will call it, you know we didn't really make out of that. that was not a priority. during those days, it was important to serve clients. >> forearmed and forewarned is a good way to be. what is the impact of the action in foreign exchange and the interest rate market?

what does it mean to u.b.s.? >> first of all, i think that the a very good point, everybody is focused on the currency movement which is something we need to impact. negative consequences the negative interest rates. we cannot rule out more clients will be affected by that and clearly that has some kind of severe and in some cases devastating consequences for part of the economy. >> so sergio ermotti speaking with manus cranny. what else did he have to say about the s.m.b.? you were pushing him pretty hard on the subject.

>> i think as far as the s.m. sbmbings concerned, one is foreign exchange. we talked a little bit about the soft floor, 105-110. he very clearly labored. the issue is not u.a.b. about finding -- level for euro swiss. buying euros for the holidays. that was the action that he saw in that very, very short-term aspect. what i found interesting was his focus on the interest rate market the negative interest rate markets. if anybody goes back to bloomberg.com, he talks about a severe and devastating consequence for the economy if they have to impact more negative rates. to me, it was like a set of scales. on the right hand side there was a dividend that was ringing the doorbell of the investors. i'm paying like 50% of my profits. i'm giving -- dividends. but on the left hand side it was the challenges of the s. bhmbings has impacted on the banking sector in this country

which is how do you deal with negative interest rates? at the moment, that is minimal in terms of paying for the client at this stage. no job cut tonight. they may need to accelerate. they may need to move more quickly with their program. that seemed to come through with a direct impact from the swiss national bank. there is two ways that you benchmark a wealth management. not just for me. the standard way of looking at wealth management. how much new money did you take in? how much minute did you make from your client in that quarter? that is what is actually in the market. around this very, very issue, margins are dropping. the amount of money that wealth management is making on the web management business is 82 basis points. that is below target and they have abandoned gross margin as being a target. it is still a key performance indicator but they are not going to have a new benchmark that they are going to go for.

why am i focused on that? originally gross margin, they were hoping to make between 95 -- 1% on their clients' money ok? they are nowhere near that. number two, net new money. the third quarter was a blinder. nearly 10 billion swiss francs. this quarter it came in at 3 billion. it is the interest rates and the fact that wealth management is having a tough time. good news for the shareholders in your pocket. ring the bell. >> a billion dollar business. the products, at least f u.b.s. we are looking into those matters as part of our ongoing discussions with the authorities. it is difficult to predict the

timing on when we're going to get the resolution of those matters. >> beaten by the -- guy. it always happens when you're live. we had a conversation about litigation. so there is lots of stories out there, particularly on perhaps having -- -- there is a story out there, the department of justice is broadening its terms of foreign exchange investigation. how big is this business? how big is the f.x. business that the department of justice wants more information on? he made it very clear. this is not a multibillion dollar business. i can't queeze that down any further. we'll find out as time goes on in terms of what are the issues about investigation but i hop that was an interesting line. they will never tell you what they are doing at the department of justice at this stage. you want to get a quantum. is this like libor?

manipulating f.x.? the quantum of business that we do here is not a multibillion dollar business. guy: that is great stuff. thank you very much indeed. manus cranny joining us from europe after speaking to sergio ermotti. stay with us. we have still a lot to come. we have a big focus on the british economy today. british business just ahead of elections. we're live at the q.e. 2 center in westminster. later today we'll hear from the prime minister. before that, we'll hear from the business secretary chuka umunna and then we'll hear from ed balls, the shadow chancellor.

join the conversation. our twitter question of the day is a very simple one. which is britain's most business friendly party? let us know. hashtag u.k. politics at flacqua or guyjohnson tv. think about the recent use we have had surrounding britain's relationship with the rest of the world when you think about that. give us your thoughts. we'll take a break and see you in a couple of minutes. ♪

guy: welcome back. you're watching "the pulse" live on tv, radio, streaming on bloomberg.com. check it out. we're on your mobile as well. the chancellor's warning which was issued in the g-20 in i stan bull of significant repercussions for the u.k. if if crisis not s not resolved. britain's future in the e. aumbings critical issue in may's elections. the british chamber of commerce holding its annual conference here in london. the prime minister david cameron speaks noon. anna edwards is there. what are the business communities saying about this? >> thanks, guy.

from the b.c.c. here in the center of london in the shadow of westminster very much gearing up for that election in may as you say. we heard yesterday that the prime minister david cameron was meeting with people from the treasury and the bangor england to get a handle on what kind of risks there were to the u.k. economy. no one is pretending that the trade links between the u.k. and greece are extensive. it is a small trading partner. it is never about greece and the size of greece. it is about the fallout surrounding any story, any escalation in that greek story. the question running up to the election, the people, the delegates here at this conference today. ed balls is going to be here. the shadow chancellor. he is going to be flexing his

party's pro european credentials talking about how the relationship between the u.k. and e.u. needs reform but if the u.k. were to leave europe, that would be a zeast for the u.k. -- disaster for the u.k. me. -- economy. the biggest risk facing the u.k., facing the u.k. is that referendum. with the conservatives . they will be here. david cameron will be here at noon. he will be talking to the delegates here and he will be asking them to give the country a pay raise. that is the focus of his thinking today. of course the labor party has been critical of the government saying they have failed to deliver real wage increasing during this most recent apartment. he wants to do this head on -- recent parliament. guy? guy: let's talk about the relationship between politicians and the business community. it has generated a few -- over

the last few days. how frustrate second-degree the business community about what it may perceive as a lack of traction in getting its voice heard? >> yes. interesting one, isn't it, guy? has very much been the subject of many columns. much broadcast time has been devoted to this. many of the usual suspects, big business figures who have connections to the conservative party have been out talking. mentioning the dangers of a labor party victory in may. stuart rose describing miliband as a throwback to the 1970's. you have some other voices. maybe not as vocal on a pro labor agenda as they might have been in the past. charles, one of the figures from the sainz brie family have

previously spoken out. we'll talk to ed balls about what that party is trying to give itself a more pro business outlook, if you like, or if it thinks that actually that is not the key fact or here. interestingly, we looked at some polling and it was interesting. in that poll, they said yes, the conservatives have the best pro business policies but then that poll went on to say that they actually wanted the u.k. government to stand up to business more. so it is interesting to see how politics and business stack up against each other as we head to that election. we spoke to the bbc. they said they asked people in the general public in the u.k. whether they wanted to hear the vuferse business on what is going to be a democratic election and the polling they received is people do want to hear the view s of business. we'll try to bring you some of those views. guy: i think we may have had a

technical problem. anna edwards will be back from the bbc conference a little bit later on. in the meantime, she was talking about the labor party and the conservative party. we'll get both of those views throughout the morning. the prime minister will be delivering a speech. we'll be hearing from ed balls. now, though, we have the chance to talk to chucka -- chuka ummuno. the labor party and the business community are not seeing eye to eye. >> i don't agree with you. we do see eye to ai eye -- eye on a huge number of issues. helping us review our policies. whether it is a big well respected figure in british

business. he has advised us on how we can take the policy -- seeing dither and delay or somebody like mike wright. i'm going to be speaking in my speech about the -- i'm speaking at the british chamber conference at 12:45 u.k. time. i'm going to be speaking about the view carried out by graeme kole into exports and how we can deal with our trade deficit. we have been working business. i should say some of the names, stuart vose a conservative party politician a member of the housor commons. you may not have heard him when he was head of m&s, convincing everybody to go buy good at fraser. let's not forget there are almost 5 million businesses in

the u.k. who all, it is very importantly get as many of them involved in the elections going into the seventh of may as possible. you will have a few figures who'll attract media attention. we have companies in many different sectors all over the u.k.. it is very important that their voices -- >> all right. kole. you named three names. are they supporting you? >> the same way that rose and everybody else is -- these are labor party supporters. >> they have carried out reviews for us. i can nameos. davis, who used to be the head of standard chartered. a very prominent neighbor supporter. charles atland. as i said, we can go name all of these people who have written about it but let's not forget

the overwhelming majority of businesses in our country who don't necessarily get the glamour of coming to studios like this, it is very, very important to the british economy. i'll tell you what. the big issue that united stateses all of these people and i know you touched on it in the package coming live there, is what is going to be the future of our relationship with the european union. i'm not sure bloomberg's european headquarters will be here in london if we were not -- members of the european union. you can't comment on that. guy: the bcc, -- john saying that he does support the referendum. they see head of a big business. he is saying yes he does. >> i wanted to talk about john's comments. john is somebody have i a lot of respect for. he has been very helpful to me

throughout my time in opposition. let's not forget that -- it is a multimember organization. it consistsor different chambers throughout the country. there are a mixture of views by the way on the -- whether or not to have a referendum if you speak, for example, to colleagues in the london chambers. i'm a london member of parliament. they actually have a very strong view that it is crucial that the u.k. remains a member of the european union. what i'm saying is those are the views over the chamber. you speak to other groups and they are very clear they think referendum would create a huge amount of uncertainty. one of the things that has brought this is that the ref -- referendum we had on scotland. take the uncertainty that was engendered by having that referendum and multiply it 10-fold. frappingly it is not a priority

for the british people or british businesses. they want to ensure that we put through the structural reforms that enable us to put our economy on a long time footing so we see more sustainable growth. all of this debate about whether a party is anti- or pro business is bedecide point. the real issue is how do you create wealth in our country. the only way you do that in a big sense backing our businesses. they are the ones that create wealth in our country which enables us to build a fairer society. >> you and ed balls are well known to the business community and trying to create a strong relationship between your party and the business community. the frustration that we're not seeing, maybe in the newspapers and on broadcasts. the prime minister is up. >> i guess if your leader ed

mill bant wanted the opportunity to talk to the business community and correct some of your perceptions that you were talking about. >> i haven't done the numbers but i think that ed has spoken. ed mill bant has spoken at more british chambers and your conferences this parliament. he speaks a whole range. guy: thaw that relationship needs work. >> it is not about what happens in london. it is about what happens around the country. it is about companies -- as a leader of a party you have to be out everywhere campaigning putting across your party's methods. guy: would you have liked to have seen him there? >> i would like to see ed everywhere. all the time. he is a human being. ultimately he can't be every

where all at once at the same time. i understand that. i have similar issues where people want me to speak at three or four different things. sometimes that is physically not possible guy: the relationship with business is something that is going to drag into the general election. the budget is coming up. it is going to become more and more of a prezing issue. there are those that are concerned. it kind of god -- it came out of the scottish referendum story that business is afraid of speaking because of the political reaction that is generated. talking about the polling that comes from -- talking about the enact the general public want to hear what businesses have to say. you say these groups generate wealth. should business be taking part and making its voice heard? >> absolutely. i don't think business welcomes the kind of party political tit for tat.

that chris uncertainty. it gets in the way of making long-term investment decisions. i think where business can really add to this campaign is by getting involved in the policy debate. that is where business has a lot of really important things on say around infrastructure around the skills we have in our country. we don't have enough learning technology and engineering and math. it is really important that businesses get involved in that debate. you're talking about ultimately people's jobs. i think it is really important for people to hear what the impact is going to be for you and your family. a business which is you know, trading in internationally sold goods. we need to you know increase our reach into new emerging economies.

the e. sumbings our biggest single market. it is the key to unthrockmorton door for the emerging markets we want to get into. >> the conservative party is pushing for the idea of a referendum on the e.u. you would be talking about the idea that we are in a situation where business generally doesn't that to happen. struggling with this idea on the economy. if they are -- on the economy, what are you guys doing wrong when they are generating an e.u. referendum story as well? there seems to be a mismatch. >> we have polled ahead of them. another word of caution for me is i get massively upset with polls. polls go up and down. what ultimately matters is how people vote at the ballot box. if you look at our local elections here in the u.k., the

u.k. labor party winning that support, particularly in the important swing areas, floating vote areas where we need to get people's support from a majority in may. ultimately that is what matters. we were in power at the time global financial crash hit. overbly we have to win back -- obviously we have to win back support. that is in spite of the fact that there was a broad consensus. all of the parties behind the framework at that time. we're clear. actually we should have regulated the banks better. the universe in london that i represent is ultimately what really matters is do you learn from these things? we have learned and we want to make sure we put through the reforms. we're a great country.

we might only be 64 million or 65 million depending on where you set your figures against the likes of china with 1.4 billion people. the challenge for us is policy makers. unlock the responsible we continue punching our way into the future. that's what we can do. >> you bring up china. let's talk about hong kong and shanghai. bank. you didn't maybe regulate the banks as strongly as you could have done. did the labor party drop the ball? it is pretty clear that there is a -- a number of nodes in which their responsibility lies in the hsbc story and the allegations that came out. how much responsibility did you guys -- >> this was first brought to the attention over the u.k. government in may 2010.

her majesty's revenue and customs -- the documents under the current government and it seems no action was taken. there are some really serious dwose answer. i take no delight in seeing these kinds of stories evolve and come up in the national news agenda ingredient. our financial services sector is an incredibly important part of the u.k. economy. we have a competitive edge. the world's preimminent trading -- part of the reason people want to trade here is we have maintained certain standards over the the years on integrity and honesty and the rest. it is not just bad for hsbc but it is bad for u.k. business. >> guy: is it bad for the labor party? >> i think it is bad for all of us.

during our time in office, this is not to do so much with to do with regulation. people frankly breaking the law. that is what tax evasion is. policy makers have got to put in the rules. this seems like flagrant breaching, breaking of the rules which could attract criminal liability. frankly, if somebody commits a crime. you don't blame the policeman for that crime. you enshower that -- ensure that you catch the people. guy: final question. given what happened with hsbc, the spotlight on tax videance and evasion, the fine line the exists within that space. do you think this is going to further fuel your party's enthusiasm for a significant crackdown on places like currency, jersey? >> we know the -- is at least around 35 billion pounds. given the issues that we have in

reducing our deficit and our debt, which we must do, of course that, to many people is an -- swigs that we have to deal with. we need people to make a fair contribution so we can fund it without talking about the skills gap that there is so that we can fund things like infrastructure and ensure more of our people have the technical skills that businesses are asking. there are things you can do like for example tightening the general anti-avoidance rules that are here. which at the moment, if you're called, requires to pay back what you owe. there is no fine. we have toughened that. it is not really an -- we just have to deal with this thing. if we don't have revenue coming in, if we don't have people paying their fair share, we can't invest in the things a business wants us to invest in. guy: always a pleasure to see

you. the shadow business secretary. the labor party. we have also been speaking to the chancellor of the -- the u.k. election, a big theme. we were talking to him overnight. we spoke to george osborne at the g-20 in stabile. -- in istanbur talking about the referendum. >> we made it clear the european union needs to change. it is constant where jobs are created. we also need to make sure that the relationship between members of the e.u. like the united kingdom, is a fair one. those are our prortes going forward. wsh priorities going forward. if we can con delude

negotiations soon ergs we would be delighted. >> many investors have voiced concern that an early referendum could potentially speed up or cause an exit. what would you say to them? >> first of all there has been a lot of talk from the media that somehow our european -- might deter investment. the truth is since we set out on our policy, we have continued to receive a huge amount of investment into the united kingdom. more than the rest of europe put together. now we're a go-to destination for international investors because we have a competitive tax system. we sa v a strong workforce. a place where business can grow and jobs can be created. as i say, what we want to achieve is a reformed european union, a european union that is an economic success story.

>> george osborne speaking about the e.u. we're talking about what has been happening. he also spoke about greece and the risks that greece poses. what is dominating the agenda down there at the g-20? >> well greece is certainly foremost in people's minds. it is not actually appearing in the communique. on the sidelines the talk is all about greece. about a potential exit of greece from the euro-zone and of course we have european leaders meeting later this the week in brussels. this issue is going to dominate the agenda for days to come. >> any surprises in the statement that we're going to get? what are we expecting out of it? we always get a draft on these things. anything stand out? >> yes, absolutely. first of all, there has been a

big surprise. it is the first time that g-20 finance ministers have mentioned growing in equality in the world which he. which is certainly unprecedented for finance ministers at this level. meetings ongoing. another thing that stood out is the possibility of currency wars which was a concern before this meeting. but so far the finance ministers are not that concerned about that. >> thank you very much indeed. now let's go from istanbul to the ukraine. talking tough on russia. we'll take a break first. we'll come back. we'll do it. it is a big subject. two big things dominating the week this week. one is greece and the ear is what's happening in the ukraine. we'll talk about the latter when we come back. ♪

guy: welcome back. you're watching "the pulse". president obama is talking rough on wasia after bheeth angela merkel yesterday. he is weighing all options in aiding ukraine. those options include providing

defensive weaponry storm's -- tomorrow's peace talks in minsk fail. america sl pretty much against the idea that we provide those weapons. is she making any headway with the president? what is the current state of play? >> in the president she clearly has someone who has not made up his mind. he is still publicly ruminating on whether he wants to arm the ukrainian side with defensive armory. merkel clearly has her position staked out. one thing both sides made a point of saying is they are going to work through their differences. listen to how merkel put it yesterday. >> as to the export of arms i have given you my opinion. you may rest assure no matter

what we decide, the alliance between the united states and europe will continue to stand and will continue to be solid even though on certain issues we may not always agree. >> guy the term coming out of the white house is they have tactical disagreements but the germans and americans are unified on the idea of increasing the costs for the russians if aggressions continue as the ukrainians are alleging. the minceing agreement -- minsk agreement is in name only. not just a humanitarian not just a military crisis but there is a economic crisis inside the ukraine. they have a $17 billion loan. they are going to need an additional $15 billion. in the coming days, they face a cash crunch as well.

guy? guy: merkel thinks we're engaging in some shuttle diplomacy here. she is on her way back to europe. how does it work in terms of logistics here? >> a meeting in minsk would be on wednesday and another in brussels on thursday. we still don't have firm confirmation from merkel's government on whether or not she does indeed plan to travel to minsk. last week, she went to kiev and on to moscow, that didn't yield a lot. one thing to note if, these negotiations fail, it may be a predicated -- it may increase merkel's strength or negotiating position in brussels to increase sanctions. we'll see whether or not she goes to minsk or comes back with an agreement and ultimately what is going to happen on thursday in brussels.

guy? guy: busy week. thank you. hans nichols joining us from berlin. let me give you a heads up on something else that is coming up. we were speaking with the shadow business secretary. later on we'll speak with ed balls. he will be speaking to the british chamber of commerce as well. he'll be joining the program from there. we'll stay on air a little bit longer to take that. we're also going to be taking the prime minister's speech and the q & a that follows it. all of that coming up. we'll take a break and see you in a moment. ♪

guy: good morning, everybody. 48 minutes past the hour. we're on the radio. streaming on your tablet. on the all new bloomberg.com. check that one out. now man bags, let's not call them man bags. whether they be duffels handbags. probably handbag not the appropriate word there. this according to estimates. it is no wond they are a luxury travel accessory maker don riley has a market that is taylored for him. he is also tayloring his bags to one of the greatest athletes. one is dom riley. the other is michael johnson. you founded this business. you came out of fomplela one. you decided that -- formula one.

you decided that banks are the way to go. you brought along some star talent as well. let's talk about the relationship between you two. how you decided this man needs a greater bag. let's start from the beginning. why are you two sitting next to each other? >> good question. we first met in qatar. we were doing a sports conference and got to talk over lunch and got to know each other pretty well. michael ended up being a partner with the williams f-1 team. we got to know each other pretty well. when i started this business, said i'm going to be making bags. he said i need a bag that does everything i need it to do. go to the gym. go to business meetings. carry my laptop. this is the net result. guy: does it fulfill all of your ambitions? >> absolutely. i have pretty high ambitions. but for what i asked dom to do,

it sure does. it needs everything to do that i need it to do for me and the business lifestyle that i have. with all the things i do now with business, television broadcast, still having to work out and maintain some sort of -- guy: you're still h 4, weren't you? >> no, i was 44 three years ago. guy: i'm 44. i saw you work on the set this morning. i was like wow, work to do here. in terms of this is a business venture, when you see an opportunity to sponsor a brand, when you look at an opportunity to get involved in something are there boxes you to tick? >> absolutely. some of the same boxes i had to tick when i was an athlete. a brands that understands who i am and what my lifestyle is. i had to have brands that understood what i was trying to achieve as an athlete. that was really important for know have that sort of support

and not just a sponsorship and cash for my time but how are you going to help me to achieve my objectives? that is what with ve here with dom riley. i have a partnership with him. he understands what i'm trying to do. that was really important for dom when we sat down to make this bag. what is your lifestyle like? what does the bag do for you and how does it function for you stp >> you need to bring someone like michael on to kind of -- the halo effect is pretty clear. what meaningful difference does it make? >> there is no question. he is very competitive. we're up against the big guys in this industry. to stand there, you to have a point of difference. the story that we can tell about the bag and itself is interesting. having someone like michael be an ambassador is fantastic. guy: how competitive is it? everybody seems to want to see men's accessories as the big

growth market. they see it in a way they don't see it in the female market. >> absolutely. the big guys you mentioned alfred dun hill. for me almost everybody has one of those bags. we wanted to do something different. but to compete against them is very, very difficult. they have huge budgets, which we don't but we do our thing. guy: i'm curious to know how you're going to play the social media game. social media has changed everything beyond recognition for all of us. and it didn't exist in the same way when you were winning your gold medals and -- when you look to promote businesses, when you look to promote brands, how important is the social media element in that? >> it has become extremely important. when i was competing, it wasn't even a part of what we were conscious of. it had nothing to do with the

endorsement relationship whereas now endorsing a brand, part of that responsibility is for the athlete or the endorser is to actually participate in social media and promote that brand via social media. the important thing is to have a strategy and understand what the end game is. lots of people are participating in social media really with no objective or strategy. you would not do that from a marketing standpoint. you would not advertise without a strategy. the same thing applies here. guy: we have a picture i think what usain bolt tweeted out this morning. you probably wouldn't want to sit on one of these. michael, put yourself in his shoes. here is a guy that is delivering on track. he has got 3.6 million followers on twitter. every move he makes. every step he takes, not just on

the track, but off the track becomes the story. we're all here. we don't have anything like the social media following he has. he needs a different bag by the way. how difficult is it for a guy like that now? >> it is extremely difficult, but at the same time there is a huge advantage. there is tremendous value to usain bolt and that 3.6 million followers. we would love to get him one of these dom riley bags. he is obviously a very unique individual in sport. he transsendses the sport. he is a worldwide superstar. he deserves it. the brands that are associated with him are lucky to be so. guy: where do you take this next? >> depending on how well this one goes we'll start doing some other collections. things you need to travel. they will be coming out later in

the year. come out later in the year. guy: the premises getting bigger or are you going to be taking market share from somebody else? how does it work? >> i think there is enough space for everybody. it is a huge market. we're quite happy doing our little niche products. guy: congratulations. thank you very much. you have a big event tonight. we'll look forward to hearing how that goes. dom riley and of course michael johnson. we are going to take a break. coming up here, more on bloomberg. if you're listening "the first word" is up next. if you're watching, we have another great hour coming up. we have an exclusive interview. last time around, in the last election, he did the work for the labor party. this time around he is not doing the work for the labor party.

what does kevin roberts have to say about the political story in the u.k. and the advertising market we find ourselfs in currently. he is coming up in the next hour. plenty more on bloomberg television. ♪

guy: i see a bad outcome. ek chancellor george osborne tells bloomberg about his fears over greece. ubs tumbles after cautioning that a strong swiss franc could hit businesses. we talked to shadow chancellor ed balls. good morning to our viewers in europe, good evening those in asia and a very warm welcome to those just waking up in the u.s. i'm guy johnson.

this is "the pulse." we are live from bloomberg's european headquarters in london. europe is waiting. holding its breath for meetings on 2 political stories that had driven the 2015 new cycle. the european union has delayed sanctions on russia had of tomorrow's talks in minsk. as angela merkel and president obama present a united front in washington. the greek finance yanis varoufakis minister -- the greek finance minister yanis varoufakis will address parliament. greece topping the agenda istanbul, where the g-20 finance ministers are concluding a two day meeting. yesterday they named greece as their top concern. u.k. chancellor of the exchequer

george osborne told bloomberg he sees a growing danger of a bad outcome. he spoke to bloomberg. chancellor osborne: the risks of this standoff between the eurozone and greece is growing each day. the risks of a miscalculation or misstep leading to a bad outcome is growing. here at the g-20 we are urging all parties in this dispute to try and find common solutions. we are stepping up preparations for whatever the outcome may be. we have to make sure the british people are protected from whatever develops in this crisis. the greek exit from the euro would be difficult for the world

economy and potentially damaging for the european economy. we have to be prepared and make sure we choose a path of competence and stability over potentially chaotic and disorderly exit. >>. percussions for the u.k. economy could be harmful? chancellor osborne: the u.k. would be affected by a crisis in the eurozone. we need to protect ourselves at home. we step up our contingency planning. it is vital that we go on working through our economic plan so we are taking steps to secure and strengthen our economy. the idea that britain or the rest of the world is insulated is not true. guy: chancellor george osborne warning of damaging repercussions if the greek crisis is not resolved.

britain's future in the eu will be an issue in the may election. the business about is heated as the chamber of commerce holds a conference in london. david cameron speaks at noon. anna edwards is there. george osborne highlighting the greek risk for the u.k.. is that something the business community is talking about? anna: the subject of europe is very much at the center. i've been listening into the main auditorium at the bcc conference. europe is at the center. picking up specifically on greece. it is worrying enough for the prime minister that he's been talking to the treasury and the bank of england to work out what needs to be done to protect the u.k. from greek father appeared nobody is pretending greece is the u.k.'s biggest trading partner. it is about the broader euro

zone economy and any fallout. it is worrying the establishment enough that they are having those conversations. putting in place contingency plans. more broadly on the european subject there's conversation in the room next to me about what it would mean if we see a referendum on europe for u.k. businesses. we will hear from ed balls, the labour shadow chance lindley on. flexing the company's pro-eu muscles. one politician making the point that on the face of things you could say that the labour party has some very strong pro-business policies, perhaps on europe and immigration there might be things that members of the business community want to step up and speak out in favor of. we have not heard very much in that yet. we will see whether that motivates people to speak out. also going to be in the

crosshairs is the conversation on pay. david cameron is going to be talking about pay. echoing things from mark carney that the u.k. needs a pay rise. guy: let's talk about politics. let's talk about business. a little difficult over the last few days and weeks are people trying to figure out how the various parties relate to the business community. the issue of the eu referendum is one of those. the labour party has been struggling. how big a focus is this? anna: it is going to be a big focus. speaking to ed balls and trying to test how strong a bias towards or away from business the labour party has or wants to be seen to have at this point. we've heard from the business

community in recent weeks. the conversation has been around how anti business is the labour party and that labour is going to try to play its europe card. ed balls is going to attempt to persuade the business community at the bcc conference that there is a pro-business message coming from the labour party. it's interesting to work out how pro-business any party wants to be. you look at the latest ugov polling, it suggests that the u.k. population sees the conservative party as better for business. at the same time they want government to stand up to big business. it is a complicated mixture of politics and business in the u.k. one that we are going to be talking about mark. -- more. the conversation is around finance for small and medium-size is business. that is going to be a conversation. the middle gap.

a phrase that refers to some structural impediments to getting funding too small and medium-size businesses. 70 years later, still something that businesses are talking about. infrastructure is a topic. behind me there are stands operated by heathrow airport the high-speed rail, both of this projects are here and seen by some as key to the u.k. economic story. we will be probing some of the infrastructure investment story. how much does that get impacted by the relationship with europe is another question. we will speak to the ceo of heathrow airport. later in the hour we will speak to the labour party shadow chancellor ed balls. back to you. guy: looking for to it. anna edwards at the bcc conference or she will be joined by ed balls later around 11:00.

at 12 clock we will be delivering -- taking, not delivering, the speech by the prime minister. it is probably around a 15 minute speech followed by 15 minutes of q&a from the bcc members. looking forward to that. both conversations are going to be fascinating with ed balls and the prime minister. our twitter question of the day, which is britain's most business friendly political party? let us know what you think. #ukpolitics. @guyjohnsontv, @flacqua. ♪ ♪coming up ubs ceo has been speaking to manus cranny. he has interesting things to say about the bank's number and the impact of the snb decision to get rid of the peg of the

franc. the financial markets, feels like we are in a bit of a hiatus. we take it on greece and the meeting in minsk. financial markets, wait and see what is delivered from those political events. we take a break and we will be back in a couple minutes. ♪

guy: you are watching "the pulse." here in london. let's go to zurich. ubs' fourth-quarter profits eat estimates due to stronger estimates at investment banks. a doubling of its dividends. manus cranny joins us from zurich. he's been speaking to the ceo sergio ermotti. manus, the numbers. manus: the banner headline one billion swiss francs of net profit in the last quarter. the dividend up 100%. delivery on the promises. this is the bank sergio ermotti has turned around. he says i will pay 50% of earnings when my profits are good. the investment bank bolstered the numbers in the fourth quarter. return on equity of over 20%. why is the stock down?

because they margins they are making on the business are not up to tick. not only that they are not having done as a benchmark anymore. they are not trying to target making 105 basis points and they are not going to target making over 1% under clients' money. it is a key performance indicator. also the fact that there is a slowdown in the intake of money. just over 3 billion swiss francs . when it comes to the issue again, the start of 2015. what i wanted from sergio ermotti was a size, how big is this affects business. that the doj is distressing to investigate a little bit more. mr. ermotti: it is not a

multibillion-dollar business. at least for ubs. we are looking into those matters as part of the ongoing discussions with authorities. to produce timing on when we are going to get a resolution of these matters. manus: trying to put a perimeter around the fx investigation. was it the size of libor or manipulating the fx market. it is not a multibillion-dollar business ermotti's words. guy: let's talk about mr. jordan and the snb and the decision to remove the peg on the swissie. how did it work on the day and

what is his view on the bigger picture? manus: on aggregate, they did not lose money. he did tell me that the clients rushed tobuy euros for their holidays. that is one end of the spectrum the client' side. i got very specific and i asked him did you make money at ubs on that date? mr. jordan: we do not comment. this is an exceptional situation which we feel is important to give some indication. i think on a day like january 15, to make money is quite difficult. what we are focusing on is to give the best execution. a day like that it was important not to lose money. there were some positive effects

in hedging tell risks. on the fact that one day or the other the swiss national bank could abandon the peg was in our scenarios when we were looking at the euro crisis. therefore we have been benefiting from that. day to day trading activity i would not call it -- we did not really make money. that was not a priority during those days. it was important to serve clients. manus: when you look at the swiss national bank's action, we hear they might be ready to go a negative rates. what is the impact of the snb's action in foreign exchange and interest rate market. what does it mean to ubs? mr. ermotti: it is a good point.

everybody is focused on the currency movement. the most impactful consequences is clearly a negative interest rate. what we can do at this time, we are passing the cost of negative interest rates to large corporate clients. if it goes further, we cannot rule out that more clients will be affected. clearly that has severe and in some cases devastating consequences for part of the economy. manus: clients what is the reaction so far. are they switching into dollars? what has the movement been? mr. ermotti: we saw during the first days a huge round of swiss clients buying euros. being on their account or drawing cash and buying euros for shopping for the holidays. a massive increase in demand for euros. i would call a temporary demand

not structural. manus: interesting that they had hedges in the right place, as you suggest. it really is, i said it earlier a butchers scale. on the one side you have client money which you have to turn over. that is just not happening up to scratch at the moment. the other side was we do speak to the fse regularly. it seems they do not seem to be too bruised at the moment. i like what sergio ermotti said in terms of the longer game. it is the negative interest rate and where we go with that story, the ramifications that has on the businesses. back to you. guy: thank you very much indeed. manus cranny from sunny zurich. with sergio ermotti. coming up, examining all the options after meeting with angela merkel.

the president says he is considering sending weapons to ukraine. did merkel agree with that? where does she stand? the view from berlin when we come back. ♪

guy: good morning. you are watching "the pulse." live on bloomberg tv, streaming on bloomberg.com. talking tough on russia.

obama said he is weighing all options in aiding ukraine as violence in the eastern part of the country continues to escalate. those options include providing defensive weapons of tomorrow's peace talks in minsk failed to deliver. hans nichols has been following the story.. any change to merkel's position against arming ukraine? hans: no. merkel is convinced there is no military solution. president obama has not made up his mind. there's a tactical difference. merkel was clear that both sides are going to work through their differences. have a listen. chancellor merkel: as to the export of arms, i have given you my opinion. rest assured that no matter what we decide, the alliance between

the u.s. and europe will continue to stand will continue to be solid. even though on certain issues we might not always agree. hans: both sides do say they want to increase the costs for russia if they are supporting the rebels. the minsk peace agreement from september has all but collapsed. ukraine is alleging that 1500 russian army regulars have crossed into ukraine. another chance i had of a brussels and eu leaders meeting. you can have new sanctions on the table. first there is a prospect potentially of a minsk summit with president poroshenko, putin , mr. hollande and chancellor merkel. guy: this is where i become a little unclear about all this. we have a meeting on thursday.

are the leaders definitely going to the minsk meeting? shuttle diplomacy is she going to be going to minsk? hans: we do not know whether the summit is on. this is what merkel's government has said, they went tangible progress that you could have something concrete come out of a minsk summit. until we have all the leaders firmly pledge they are going to go, minsk seems more aspirational than firm. guy: in terms of the issue of timing the ukrainians, how divisive could that be? hans: in terms of the european view there does not seem to be a lot of division on arming ukrainians. maybe the poles are leaning that way. ukrainians want it.

in western europe there does not seem to be a great deal of appetite if any, for providing arms to the ukrainian government. guy: hans, thank you very much. hans nichols from berlin. some of the top stories at barclays said to be planning to raise the pay for its junior investment bankers in order to hold onto talent according to people with knowledge of the matter. some employees could receive a bump of 20% to 40% in salary and bonuses. about the shrinking conversation gap. a fine in china after antitrust regulators found all the company violated anti-monopoly laws. qualcomm will not challenge the ruling, which imposes conditions on phones sold in china. it ends in investigation that lasted over a year.

coming up, we speak to the ceo of heathrow airport. coming to us live from the british chamber of commerce conference in london. coming up very shortly write your own "the pulse." ♪

guy: half past the hour. you are watching "the pulse," here in london. these are the top headlines. risk from greece is growing. that is the view of the british chancellor george osborne. speaking to bloomberg at the meeting of the g 20 in istanbul, george osborne warns the longer it takes to find a solution to the greek debt crisis, the greater the danger to the world economy. chancellor osborne: the risks to

the world economy and the british economy of the standoff between the eurozone and greece is growing each day. the risks of a miscalculation or a misstep leading to a bad outcome is growing as well. guy: ubs is doubling its dividends after quarterly profits beat estimates. speaking to bloomberg, the ceo, sergio ermotti said the swiss national bank's decision to abandon the peg for the euro would not change ubs's strategy and his clients' demand for euros increased after the move. mr. ermotti: a huge run of swiss clients buying euros. being on their account or drawing cash and buying euros for shopping for holidays. a massive increase of demand for euros. i would call a temporary demand and not structural. guy: china's consumer prices

rose at the slowest pace in more than five years in january. factory deflation steep and along -- steepened along with a slump in commodity prices. this gives policymakers the option of monetary stimulus. china's central bank cut interest rates in november and reduced reserve requirements last week. let's turn our attention to our coverage of the british chamber of commerce's annual commerce. anna edwards is at the event. anna: thank you. we've been talking about the relationship between u.k. business and europe. about the infrastructure investment in the u.k.. all those things come together for our next conversation. the ceo of heathrow airport joins us, john holland-kaye.

thank you for coming to talk to us. let's talk about the politics. less than 12 weeks away from the u.k. election. the labour party keen to present itself as a pro-european party. we will hear that from ed balls later. you must be very pro labour , you do not want europe to leave the eu? mr. holland-kaye: we are pro-business. we should not ignore the benefits that come to us in the aviation sector in being part of europe. the development of local carriers has been something we have been able to benefit from. let's have a debate and get on with it quickly. business needs certainty. the biggest issue on my agenda is around the expansion of heathrow. from that point of view i think there is a very good consensus between the major parties that this is argent, it is important

to do something about it after the election because it is holding back britain from achieving potential. politicians from all the major parties want to get on with it. anna: do you have contingency plans if the eu kate word-- if the u.k. would leav europe this would impact your business? mr. holland-kaye: it might cause uncertainty for our passengers many of whom are business travelers. we need certainty so people know where they stand and can get on with it and make decisions. anna: would you not have to renegotiate landing rights airlines might have to. you do not worry that that would take business away? you have mentioned the competition from middle eastern

carriers at airports across europe, it is a competitive environment. mr. holland-kaye: it is. heathrow is full. 30 airlines want to fly from heathrow, including u.k. and european airlines. we are in a different position. we need certainty and to get on as quickly as we can. anna: talking about the new runway, is there a shade of politics you would prefer in terms of getting approval for a new runway at heathrow? are there any partnerships are coalitions you could look to and say that will work to us? mr. holland-kaye: with the major parties there is consensus that it is urgent. the heathrow office of expansion, when hundred -- the heathrow expansion, 100 80,000 new jobs, keeping us with the global economy. we can only tackle our balance payment deficit if we are exporting more only expanding heathrow will do that.

all politicians want to rebalance the economy and make sure it is not just london and the southeast that benefit. only heathrow can do that we can create four times as many jobs in other parts of u.k. as the out. we can help deliver. anna: some have suggested with a coalition or minority government that any investment decisions or infrastructure projects are going to get pushed into the long term once again. what message would you give politicians if that looks as if it turns out to be the case? mr. holland-kaye: this is argent. britain is falling behind. dubai is ever taking heathrow. paris is ever taking. britain should be the best connected country in the world. heathrow is the best located hub airport in the world. 95% of the world's gdp is within range of a direct flight.

if we want to export all of the world we need to get on with it quickly. anna: do you think the davis commission should have been asked to report back before the election? mr. holland-kaye: i think they planned it well. the last couple years has allowed us to understand what it is that heathrow can bring and what can other opportunities bring. heathrow can bring 180,000 new jobs. growth of exports. something for all the uk's rather than just london and the southeast. that is what any government will want to achieve. anna: local airlines have been absent from heathrow. is there a window for local airlines if we see more slot available? easyjet speaking out in favor of expansion at heathrow as opposed to get-- to gatwick.

mr. holland-kaye: we would be delighted to have low-cost carriers operate at heathrow. that shows how much potential there is. there is demand from 30 airlines around the world to come to heathrow. that shows what a strong business case there is. there is so much demand. that does not exist with the other options on the table. that shows what a strong business opportunity this is. follow the money and it tells you he throw is the answer. anna: are you having conversations with easyjet? mr. holland-kaye: we spoke with them and i think from having seen the submission they see there is a massive market opportunity. heathrow has been full for 10 years. we have been traveling more. we are holding back the british economy, exporters and business people by not expanding heathrow. 32 chambers of commerce up and down the country are saying we back heathrow expansion. anna: have you talked to michael

o'leary and will we see ryanair? mr. holland-kaye: anything can happen in the next 10 years. what is clear is only he felt -- only heathrow can deliver what britain needs. connections to global markets more exports for the whole of the u.k. anna: have you been talking to o'leary? mr. holland-kaye: he has been a customer of ours in the past. we had a good relationship and we will see how the market develops. i am delighted about customers wanting to expand heathrow. anna: john holland-kaye, the ceo of heathrow airport. guy: thank you very much indeed. anna edwards, live from the british chamber's annual conference in westminster. more on "the pulse." talking to the ceo of saatchi & saatchi -- not the ceo, the boss.

an interesting conversation. hearing from the british prime minister later on. and hearing from ed balls, shadow chancellor. all of that coming up on "the pulse." see you in a moment. ♪

guy: welcome back. you are watching "the pulse." saatchi & saatchi will not be backing the labour party in may.

a change of heart for the advertising firm which led the general election campaign for labour in 2010. let's look at the world of political advertising and more. saatchi's relationship with it has been interesting. we welcome kevin roberts, saatchi & saatchi's chairman. the relationship with the labour party has been interesting for you guys. you have done interesting work and decide around you decided that is not the way you want to go. was that an easy decision? mr. roberts: not really. at saatchi we had a global business in 280 countries. the u.k. is our heart and soul. it's where we had been. we are linked forever in the minds of mom and grandma with the conservative campaign that elected mrs. thatcher. we came and following not just

gordon, it was neither was it? we have a policy which says wherever you are in the local market we are in ideas company. figure out what you think is the best idea being run by the political parties and see who is leading that agency in that country whether you want to get involved. it is not a corporate down, it is from the bottom up. if you are part of the u.k. foodie think has the best ideas -- who do you think has the best ideas to drive growth? we are interested and growth. the guys in the u.k. take a point of view that says where is the leadership. guy: you are telling me that there are no interesting ideas. mr. roberts: if you look around in the europe and the u.s., i am looking at a world where ideas are not a premium. there seems to be a lot of coalescence into the murky middle where we are interested in the polls and what audiences

say rather than trying to drive transformational change and trying to solve problems. it feels to me, look around the leadership. look at france, look at germany seems to be running out of steam. look at the republican party in the u.s. there are 12 candidates are zero. god for bid we bring back hillary, which is not really an idea driven choice. guy: are there any politicians out there who have ideas that you like? we've had the greeks coming through. i'm interested what you think about yanis varoufakis. mr. roberts: you might want to be wary of where greece are going to go. i've spent a lot of time in new zealand. john key is a terrific prime minister. he is a guy full of ideas.

running new zealand is not -- guy: challenging -- mr. roberts: w you just have to win the rugby world cup. guy: let's not talk about that. i watched the last game. why do you think we had the idea deficit? is the idea deficit being driven by the fact that we live in a world that is almost instant? .it is digitally driven is a cause and effect? is one influencing the other? is the digital world bad for ideas? mr. roberts: it is just weakness in leadership and the right people not taking the right time. the u.s. military strategist, if that is not an oxymoron, they say we live in a world that is volatile, uncertain complex and ambiguous. thought-out uncertain, complex and ambiguous. this has come as a revelation to the u.s.

if you live in argentina or greece spain or scotland, it is a way of life. in yorkshire, perhaps not. in the civilized world it is a way of life. i'm from mentorship. guy: i i have a bias towards lancaster. mr. roberts: i am teaching there. you did the right thing. in advertising, no surprise. what we have to do as leaders is reframe vuca to super vuca. super vuca. the world is full of opportunities. obama thought about that eight years ago. it is unreal. it used to be to change stuff

you had to have power resources, connections muscle, armies bombs. now you need one thing -- an idea. ideas change the world. guy: social media has made -- that change. mr. roberts: the other part of super vuca you have to be vibrant. it has to be full of crazies. crazies are the only people who keep ideas alive. the abominable no man kills them. thanks to youtube and twitter, if you have an idea you can share it within three hours and the world will adopt it in action will result. in that environment there is no excuse for political leaders not to stand out take a point of view and try to go for transformational change. most of them look at the polls

and go that is far too risky. we are going to incrementally move away ever so slowly. the people who are leaving now are not political leaders that are entrepreneurs. guy: it is a bit of a truism that business must stability. is that just political stability? if we want political stability, born politicians sound my gay great idea. -- may be a great idea. mr. roberts: i think it is no longer true. we want change, action and movement. if you are driven by the thought that ideas creativity is

the gamebreaker we have got to have transfer patient change 00 transformational -- transformational change. i took an uber car in london transformational change. the guy was with me in five minutes, a mercedes 11 quid. a black car would have cost a lot, etc. making our lives better. guy: i'll wrap up talking about volatility and how that relates to the general public. look at something like ukip and fringe parties around the world. there is a huge swath of the population terrified of globalization and the impact it has. the very volatility that keeps them up at night. how do we had the change and the

positives that comes out of that and keep everybody on board? mr. roberts: it is a phrase being bandied about in some great universities, to win, you got to be social local mobile community -- solo moco. we are saying let's be connected and collaborative. let's do this with local. a supermarket chain in the northwest of england they do this beautifully. they are very local, people buy local produce.

mobile is where the action is going. you have to feel like a community. politicians should tap into that, not the middle. they leave themselves vulnerable to all the edgy stuff. they will lose out in the end. guy: interesting point. come back again. interesting ideas, kevin roberts, saatchi & saatchi's chairman. we will take a break. coming up, yanis varoufakis faces the euro group. crucial talks in brussels tomorrow. ♪

guy: good morning. you are watching "the pulse." live on bloomberg tv, streaming on your tablet and bloomberg.com. check it out. what do we need to watch? let's find out from hans nichols. today, the greek finance minister yanis varoufakis is going to be talking to his parliament before going to brussels. hans: we are going to get a little more details on what he's going to be asking from the finance ministers. the headline number is 10 billion euros in short-term bridge financing. 8 billion date want issued new treasury bills. to do new t bills, they need

approval from the eu. he wants 1.9 billion euros ecb interest may have made on sergio ermotti -- they have made on greek debt since 2010. he needs a yes from brussels and or frankfurt, potentially both. guy: we are talking about minsk. two critical meetings. set that up. hans: we do not know if minsk is going to take place. if there is tangible diplomatic process leading up to minsk, we could have a 4-way summit -- angela merkel, francois hollande, mr. putin and mr. poroshenko for some kind of cease-fire that is lasting. guy: hans nichols, thank you. covering all that tomorrow. we are going to take a break on "the pulse."

for our european audience we will be back after the break. talking to the shadow chancellor of the executive -- chancellor of the checker, ed balls. look for that conversation on bloomberg tv. ♪

>> angela merkel gets quality time at the white house. she says greece must come up with some quality recommendations. greece needs to appease germany.

the fed will act -- well, at some point. pandora, they are in court. digital radio is different than regular old radio. good morning, everyone. this is "bloomberg surveillance." it is tuesday, february 10. we need some top headlines. >> president obama said the u.s. may send deadly weapons to ukraine despite operation -- opposition from german chancellor angela merkel. merkel was there at the white house to press a diplomatic solution. four way talks will be held in minsk tomorrow. >> we are in absolute agreement that the 21st century cannot stand idle