gift the best sleep of your life to your whole family. only at a sleep number store. right now save $500 on the veteran's day special edition mattress with sleepiq technology. know better sleep with sleep number. >> winter chill. -- dard chartered announces a 3.3 million pound rights issue and an unexpected quarterly loss. new ceo bill winters says recent performance is disappointing. a sweet deal. activision agrees to buy king digital. and revving up. -- the wvw-he vw emissions scandal spreads as

they include the -- audi and porsche. welcome to "countdown." it is a busy morning. let me walk you through where we stand right now. the banking sector is front and center. the -- the news from standard chartered rocking the banking world this morning. bill winters is cracking on with changing this institution. let me show you the share price reaction. standard chartered, from top to bottom, 8% drop in hong kong. we will see how we trade through here in europe. ubs has just been breaking as well. in terms of the headline numbers, we had a net income 07 billion swiss franc. looking through the numbers, i would say that the asset management division has slightly underperformed.

few misses,is -- a a few gains. manus cranny is going to be talking to the ceo later on. really looking forward to hearing what he has to say about his bank and where it goes from here. 6:45interview coming up at london time the a big focus on the banks in london and in europe and in hong kong. let's get the details on how asian trade is taking place. zeb eckert is standing by in hong kong. zeb: good morning. markets today generally higher despite this blockbuster news from standard chartered, really rocking the financial sector. of course, we are getting more details on that. it is factoring into the sentiment right now. let's take a macro picture first and then we will get into standard chartered and hsbc. the msci asia-pacific is up 1.3% today.

that follows the move we saw from the s&p 500 overnight on wall street. the aussie dollar extending gains because the central bank is holding interest rates steady. this is what you have in hong kong. the hang seng of 1.25%. -- up 1.25%. generally gains in the session. we are watching banking and the currencies as well. japan closed today for a market holiday. let's dig into what is happening with those banking shares. if you look, there are big movers across the asia-pacific and here in hong kong on this news of 15,000 job cuts and the rights issues. the hang seng financial index actually advancing. the clear decline or -- the clear decliner is standard chartered.

hsbc, one day after its results announcement, as it moves forward with its china joint venture plans, that is big news today as well. snapshot of you a some other stocks we are tracking across the asia-pacific --ay, in the sole session seeing ition, we're higher. tire denying that it could make an offer for a shipbuilder. we will watch that and the financials. we cannot understate the importance of the news that standard chartered brought us a short time ago. guy: huge changes. a big chunk of the bank is effectively going to be moved off the balance sheet. it will be fascinating to see the impact of that. zeb eckert joining us from hong kong. he says standard chartered is front and center.

i read all the notes in advance of the numbers coming out this morning. there was an expectation that you could wait longer before making the kind of moves that he has made. he clearly feels that he needs to get on with it. he did feel that action was required right now. he's going to be raising 3.3 billion pounds. he has announced a quarterly loss which was really unexpected. 15,000 jobs are going to go by 2018. he talks about the challenging business environment and he says that the bank has "delivered disappointing recent performance." back to hong kong. allhead of the headlines on of this. give us a sense of the magnitude of what we are looking at for standard chartered. >> i think you hit the nail on the head. action is what bill winters has promised and that is what is certain -- that is certainly what he gave us. million on the pretext

bottom line. bottom line. that was a loss, i should say. 3.3 are seeking to raise billion pounds to bolster their capital ratios. the largest shareholder in singapore said that they intend to take up their rights and fully support that issue. hopefully that will provide some support as far as the shareholders are concerned. another statement, a press release coming up wrapping the entire strategy together. some people described it as a bit of a sucker punch. bill winters trying to allay concerns that he is not doing enough fast enough. he has come out with a 15,000-job reduction.

2.9 billion u.s. dollars by 2018. they are looking to restructure about 100 billion in risk-weighted assets. he has really try to hit a home run with these statements. guy: he is on his conference call now and is talking about taking out $2.9 billion worth of expenses. he clearly feels that he needs where therenesses is a huge capital requirement as well. the stock is down pretty hard. that looks like a big overreaction. ?s that a reaction to the miss what is that a reaction to, do you think? statements that were going across the wires, we spoke to a director of trading and he says that you have an unexpected third quarter pretax loss. you have a big rights issue.

discounthing of a 35% on the london price. they also canceled their dividend payout. you put that altogether and, according to mr. clark, quite frankly, a disaster. there are a lot of problems that this bank has to figure out. whener, down as much as 8% the market reopened in hong kong. guy: great stuff. thank you for joining us. .ig day for banks ubs reporting higher than estimated net income in the third quarter. just over 2 billion swiss franc. the swiss bank taking a tax credit. this is where life gets a little bit interesting. if you stop writing back your own credit, is that -- you need to question the quality of the numbers. seeing its investment

bank doing a little bit better. it has postponed next year's profitability target, which is quite interesting. let's talk about that. let's talk about standard chartered the good morning. let's start with standard chartered. some real bombshell being dropped by mr. winters this morning. >> a fairly aggressive approach. assume reacting to all the challenges in these markets. there is an interesting aspect. places like ubs and credit suisse, deutsche bank, basically have shifted towards the perceived lower risk, lower balance sheet -- guy: basically it is being taken

out. >> exactly. standard chartered, they were more of an investment corporate bank, lending heavy. clearly there is a lot of consolidation and cutbacks in areas that are not coming. europeanou look at the banking sector, it is perceived as being a play on europe. and a lot of banks are coming back for more d we are seven years on from the financial crisis. we have asia beginning to rear its ugly head. nevertheless, where do we sit with the banking sector? >> i think, in europe, yes, you are right. there is still more capital raising ongoing. there is still risk-weighted asset inflation.

however, i would argue that we are coming more towards the end of the capital build for the banks rather than still having a hand in it. coming in that are starting to creep in during the ,ast quarter questions like now the banks are effectively fixed in europe. competition is starting to heat up in an environment that is still a low growth economic environment. you start to see margin pressure come in. going forward, the question is in terms of outlook. ,n a slow-growth environment you look at more stable, income-producing stocks. i think that is where banks sit going forward. the along the lines of model that ubs has adopted, pushing back their probability target. they have beaten on the net

income line. i am seeing underperformance in terms of expectations for wealth management. they are talking about a tier 1 north of 14%. that is pretty high. it will be hard to making money -- to be making money. how does that model work? modeles he push that forward? to: cost savings. maybe there is a slight underperformance expectation for wealth management, but i would say it is very slight. clearly, the focus remains for ubs. there is also sort of a market dependence element in wealth management business is, where transaction volumes are concerned. assets under management get impacted by market swings. it is a bit of an impact during

the quarter. sheets have been capital light. double whatlready they were thing of doing. if you were to compare standard chartered and ubs, how would you compare the timeline the banks are on right now westermannotto: -- right now? tto: ubs has done the things that banks need to do in terms of their business profile. they were two or three years ahead, basically beat standard chartered took a little bit more time and is basically lagging. now they are threatening to make these significant changes. guy: thank you for your analysis. a big day for the banks. talk about what we are watching through the rest of the day. 9:30, we get u.k. construction pmi data.

we also hear from ecb president mario draghi. up next, we will talk about what george osborne is going to be saying in berlin. he is talking to european is this leaders. he is saying that the people of britain do not want closer ties. how is that going to go down? we are live in berlin next. ♪

guy: it is 6:17 in london. that means it is 7:17 in frankfurt and zürich. standard chartered is set to raise 3.3 billion pounds. the company says it will remove $15,000 by 2018. the bank announced a surprise $139 million first-quarter loss. analysts had expected a profit of $903 million. so a big swing.

ubs reported higher than estimated net income, more than doubling year on you numbers. the swiss bank took a tax credit to set aside euro provisions for a legal probe. meanwhile, they postponed next year's probability -- profitability target. and the vw scandal is widening. regulators have ended their pro two include more models from regulatorsrsche -- have increased their probe to include more models from audi and porsche. blizzard -- activision-blizzard has agreed to buy king digital entertainment for about $1 billion more than the value of their close yesterday. -- -- ndy crushed" maker "candy crush" maker has fallen

from its highs in july. king is essentially headquartered in dublin and based in london, listed in the state. this is a really big premium. caroline: it is. 16% premium. beingillion is what is bet on by activision-blizzard. betting on mobile gaming, and industry they say could be worth more than $50 billion by 2019. close to some 50%. this is an international firm that they are buying. it was born out of sweden. now headquartered in dublin. what makes dublin such an attractive place for technology companies? the corporate tax rate, the attractive corporate tax rate. coup for european companies, seeing this size deal. there are some risks. the $5.9 billion being spent is

less than king digital's value when it first ipo'ed. it is a bit of a one-trick pony. ga,all know "candy crush sa but the" rest of their franchises have not really taken off. they cannot quite keep the it's coming. king digital has more than 200 games, but we actually only really know one franchise. what is goingof on at the summit, what are we going to hear from this? ireland is home to many tech companies. european tech continues to lag behind what happens in the state. nevertheless, there are some key areas where they are starting to make a big splash. them,ne: gaming is one of hence the deal today. what is so interesting is how much we're seeing u.s. investors, over among the 22,000

delegates that are set to arrive here in ireland. that the u.s. investor base is funding the growth in europe. europe is doing its best. we are seeing some stellar, standout companies doing so well. we would be speaking to block blahblah later this week. pinup for europe in terms of fintech. that is another so-called uniform company that has gone to u.s. investors or its next stage of funding. if you look at the statistics, we are still well behind. we have lots of venture funds in europe. we are raising more than 4 billion euros last year in terms of european vc funding. that pales in comparison to the united states, which has five

times that. what europe now want to see is how much money they can raise so they can exit. king digital themselves exited 2014, giving them money to plow back into the ecosystem. how much money can keep on being reinvested in europe and seeing technology giant grow and continue to be bought by u.s. rivals? stick around the -- stick around. guy: thank you very much. caroline hyde at the web some in dublin. the u.k. chancellor george osborne, is taking his case for european union reform to germany. he will tell business leaders in berlin later what the british people do not want to be part of an ever-closer union. hans nichols is in berlin this morning. what are we going to hear from the chancellor and how is it going to go down in berlin? hans: we are going to hear complaints and an argument that

you have heard before in london, and that is that there is a push for closer integration that is only causing further splits, further acrimony between the u.k. and the eu. we have some prepared remarks from mr. osborne. theill say, quite friendly, british people do not want to be part of an ever-closer union. there is a recognition that seems in order to get any changes to the treaty, you are going to need to have german support. the venue is important. he is speaking to german business leaders. german business leaders do want to see the european union ever so tighter. but they want to make sure the u.k. stays in. this comes ahead of the meeting with the president of the european council and george osborne that will take place in a couple of days. we are expecting more specifics. but the tone will be striking.

it seems as though mr. osborne is going to be driving a hard bargain from a group that he does need to win over. here is another excerpt of what we expect him to say. "it needs to be a europe where we are not part of the ever-closer union you are more comfortable with." taxpayers outside the single currency should never be on the hook or a bailout to happen inside the single currency. that is not actually the case when you look at the different mechanisms for the greek bailout. it is clear that some u.k. money could potentially, eventually, if there were any sort of real default, be on the hook. he will talk about the importance of having the monetary union welcome other countries that are not part of the union. i think the tone is going to be significant and the venue will be significant as well. finally, the reaction will be of importance, too. guy: thank you very much indeed.

hans nichols in berlin, where the chancellor of the u.k. is to be found today. the reserve bank of australia left its benchmark rate unchanged. however, they have opened the door to future cuts. glenn stevens said, "the outlook for inflation may afford scope for further easing of policy." the aussie dollar strengthened against the u.s. dollar on the back of this. is it a safe bet that we are now going to be seeing a cut further down the road? is it a set -- was it a safe bet that the bank would hold this time around? >> it effectively was a safe bet. there was some conjecture that the rba may cut its benchmark interest rate to 1.75%. but they did not do that. they kept their powder dry. there are a couple of factors here which are more

international factors that are having a big play on what is happening with australia at the moment, particularly around the central bank. that is, of course, what the fed will do. the governor is correct when he says they do have scope to cut. a lot of the cutting has been to take the heat out of the australian dollar, which is now at $.72. achievedave certainly their currency aim. it really is a couple of things. we will have to see what the fed does. we also have to see how australia's overall domestic economic conditions go over the next couple of months. remember, this is the busiest quarter in china in terms of production so that could go well for us to -- for australia's prospects at the moment. guy: thank you very much.

up next, moments away from bmw earnings. they are going to be breaking. plus, we will talk about vw as well. see you in a moment. ♪

guy: it is 6:30 in london. it is 7:30 in stuttgart. here are the stories you need to know this morning. standard chartered is set to raise 3.3 billion pounds in a rights issue. they will remove 15,000 jobs by 2018. this comes as the bank announced a surprise third-quarter loss. analysts were anticipating a profit. activision blizzard has agreed to buy king digital entertainment for 5.9 billion dollars. $1 billion more

than their close yesterday. it is in dublin for tax reasons but effectively based in london. in more trouble as regulators have widened their probe to include audi and porsche vehicles. volkswagen is denying the claims. let me bring you the bmw numbers. they are hitting the tape as we speak. even. the operating line is ahead of where we thought it would be. segment margin is 1.9%. there was some risk to that number. the target is a percent-10%. so they are within that. there was some concern that they would start to miss out on that as costs start to rise. let's get more details on what we're learning from bmw and what is happening at vw with hans

nichols. first look at these numbers, what are your reactions? : the profit margin is better than expected. range, but we0% come in at 9.1%. a little bit on the upside. revenues are the same, but profit is beating estimates. billion.ate was 2.12 comes in about 100 million higher than that. they are confirming their outlook for the rest of the year. we will dig into them a little bit to see what currency is doing with it and with china, bmw sales have been flat. china has been a weird divergence story. we see the new models, the new product cycle keeping them flat. the new models that mercedes is putting out, they has seen sales increased in china even when others have been expecting a slowdown. audi has been about flat.

bmw is in the low part of their product cycle. the fact that they are turning out these numbers now is a pretty good sign. we are going to have to dig in a little bit more and see what market reaction is before offering anything totally definitive guy: ubs saying that q3 might be the low point for them. that could be good news. we will watch and see what the market reaction is. talk to me about what is happening at vw. we now have porsche and audi involved. the new boss came from porsche. hans: he was the porsche boss. the epa is saying they found irregularities with the three-liter engine. this goes in their crossover, the sport-utility and into the porsche vehicles as well. here is what the epa said last night. they are claiming there is some sort of problem with software and they are saying that volkswagen has once again failed in its obligations to comply with the law that protects clean

air for all americans. volkswagen is disputing this. they say this is a misunderstanding. they are working to clarify, but there is not a defeat device, according to volkswagen, on the engine.-liter we only have about 10,000 affected cars. taureg, the cayenne, quattros.017 a7 there are porsches on the list. the new head of the volkswagen group came from porsche. thanmakes it significant the 10,000 cars that were affected. again, volkswagen is saying that the defeat devices were not installed in these cars and that these cars received clearance from the epa. what the epa is saying is that the way that they sold and explained their fuel standards

did not quite pass muster. for volkswagen, this is a problem. they are going to face fines from the epa on the first batch of cars, is to 500,000 vehicles. i would suspect that volkswagen wants to work very closely with the epa to mitigate whatever those charges maybe -- may be. and other future charges in the state and other venues. guy: thank you indeed. hans nichols running us through the bmw numbers, which look pretty good. forecast --ming its reaffirming its forecast, maybe towards the upper end of that. the auto sector has been badly affected by china if you look at companies like bmw. it has been really affected by that.

it is a low point in the product cycle. what do the european alsos look like now? >> you are right about china. more detail, any kind of future sales, a great barometer for what is happening. that is what we're looking for, consumption. p/e of 10 and a yield of 3, that is why we are bullish on european equities. looks like a good value. missing,u.s. companies a bit of a currency impact. a good example of why we are positive european equities. guy: can you just buy the sector?

fromnumbers coming through mercedes. bmw looks like relatively good value at this point in time. typically,e invest individual stocks. when we invest in europe, we either buy a sector or european equity fund. we are a big customer on the streets as far as buying european equity fund. you will find bmw in a lot of equity portfolios. great october. the backend fizzled a little bit. the front of november looking fairly solid. what happens between now and christmas? : typically the time where you want to sell volatility and be in equities. after the shakeout a couple of months ago, new the bottoms, it was a really horrible time. the market so quickly turns from

despair to where can i get a return? we are in that phase right now. you are seeing that within the bond markets. and you are seeing that within equities. it is not without its specific risk. a bit of a contrast in financials today. but just look at the numbers. yield of 3 when german bund yields are negative. guy: what is moving the markets right now? she has the details. >> i am focusing on the nasdaq 100 the this is the 100 biggest stocks on the nasdaq, not including financials. we saw this rally yesterday. actually extending a rally for ite than -- actually taking

towards a record high. chart,get close to this i can tell you about the details. you, you to jump in on have a mic problem. you do not have an information problem, you have a mic problem. some of the details she is working through, getting the nasdaq in focus. when we come back, we will be back focusing on the big banks. the massive stories we are focusing on our standard , it has issued a surprise loss in the last quarter and it is saying that it is going to be cutting huge numbers of jobs. the bank is really retrenching in a way that we did not think the new boss would do just yet. he has come out kicking early and he is going to make some big changes. plus, we have mr. ermotti coming up. manus cranny has been talking to

him, numbers out from ubs this morning. the numbers look like a beat. they have maybe made some of the changes that people like bill winters are trying to make at standard chartered. ermotti body -- sergio is going to be coming up very shortly. we will bring you his comments when we return. ♪

guy: it is 6:43 in london, 7:43 in zürich. standard chartered is set to raise 3.3 billion pounds in a rights issue. it will also remove 15,000 jobs by 2018. this comes as the bank announced million loss.9 u.k. chancellor george osborne is taking his case for european union reform to germany. speaking at a conference of business leaders in berlin later

, a day after holding talks with wolfgang schauble, he will say, quite frankly, the british people do not want to be part of an ever-closer union. be an eu that works better for all the citizens of europe. the reserve bank of australia left its key benchmark rate unchanged while opening the door for cuts in the future. glenn stevens said, "the outlook for inflation may afford scope for further easing of policy." let's show you how the aussie dollar moved following that decision. we have seen a little bit of strengthening. of what hasvishness been coming out from the rba and stevens, you can see how this one ultimately traced through. but the aussie is strengthening this morning on the back of that decision. ubs recorded third-quarter net

income that more than doubled. ceo sergio ermotti set down with manus cranny in zürich following the earnings release. they had a white-ranging discussion. talked about the numbers. manus started by asking him about uncertainty in central banks. >> it was a very challenging quarter. think about the seasonality that you have during the summer. you go from an environment in can do exactly the opposite. the changes in emerging markets, china, the geopolitical front. i am very glad that we not only managed to use our bank effectively, but we managed client risks and that is the biggest success for the quarter. manus: "pronounced the leveraging in asia." should we be concerned for 2016?

>> not really. the growth is still intact. it is clearly more volatile, but i feel very confident that we will continue to have a substantial part of our growth coming from asia. of course, it is going to be a more challenging environment going forward, but we are well prepared. manus: let's talk about the investment bank. revamped, restructured the where did the return on equity come from? is it sustainable? >> it is very sustainable. you look at banking for the last 12 quarters, we have always been -- beaten. different market conditions, good and bad. very challenging market conditions. we are very focused with our andurces to serve clients it has become a very effective and successful business model. manus: some other investment

banks might be the envy of you. let's talk about targets. you had 21 and you adjusted forward. today, the market will probably say that you were delaying your return on we target of 15% by 2018. what is the response to that? it is technically a delay. >> the response would be to say .hat we are likely to beat this year's target of 10% will be beaten. to 15% this year. we are not delaying that. we are adjusting our return on equity targets. as you pointed out, 4 out of 21. i think targets are very important. these adjustments are driven by external factors. macro economic consideration, interest rates, the forward curve on u.s., swiss francs, and lowernterest rates is

than the consensus. first adjustment. second one, you saw the new regulation coming in internationally and in switzerland, up to 3% return on our equities. we're going to compensate and work on ways to improve those targets. a are normal adjustments and we are still very confident in our 15% return on equity target. ofus: what is the reality additional capital requirements? .e have just seen swiss demand i understand you are already there at 5%. give me the reality for shareholders of additional capital and additional regulatory requirements. >> first of all, let me point out that i am in full agreement that there was a need for minor adjustments or some adjustments , which wass regime already one of the most demanding. now it is by far the most demanding. justust mentioned, we

spoke about lower return for shareholders. client will have to pay for part of this to offset it. so higher cost of services. will be an impact on jobs, costs. and there is an impact on the taxpayer. at the end of the day, if we make less money, we are going to pay less taxes. guy: sergio ermotti, the boss of ubs, speaking to manus cranny. lots of things to talk about. interesting that he finished up talking about the incredibly , the high finish level of capital required by swiss authorities. higginsggins is -- alan is still here. it is an interesting question

that manus raised. you guys are faced with capital requirements now. they are making money incredibly difficult. ubs is a capital-light institution and it has worked hard to get there. nevertheless, a real struggle to make decent returns. the focus has to be on jobs. allen: the market -- n: the market seems to like that. they are a powerhouse in wealth management. for them, it is a bit less of an issue. but making these banks less risky means they can be on a higher rating. when the market gets confidence, that is one way of looking at it. it is quite incredible, the amount of capital. these ratios, it is a very blunt instrument. it does not make any sense.

most bankers say that, but that is what they want. you are going to get a lot less market-making in the investment bank. we were talking about quarter three earlier. the market makers are not there anymore. else too.thing alan: in terms of wealth , privatet, in asia clients are multi-banked. ubs is nearly always there. it is a fantastic brand in wealth management. it looks like credit suisse is trying to follow that kind of model. chartered,rd asia-focused. he is two or three years behind what ubs has done in terms of trying to take some of the capital-heavy businesses out of

the portfolio. we thought he would wait longer before making the changes but he is already making the big changes. he has a lot of work to do. suisseeanwhile, credit is emphasizing more asset management. cou credit suisseld see do a deal in asset management. guy: standard chartered saying that he could do a deal. industry.t come and join us. guy: if everybody does the same, it is very difficult. alan: they are a market leader in the u.k. once you are a market leader, it can be hard to grow. , ityone is trying to do it is going to be a bit of a struggle. i would chartered, imagine, would focus more on the asian market.

they have an open door with all of their connections. guy: when you look at the macro backdrop, we will hear from mario draghi later on. payrolls coming up on friday. very focused on what the fed is going to be doing. the quick the banking environment with the shallow yield curves in certain places. interesting credit markets, let's put it that way. how does the macro and the bank story fit in with some of the risk that these banks face at the moment? ermotti saying it is very challenging. he is talking about the difficulty in navigating this kind of environment. aspect --challenging when markets fall, the percentage fees start to be heard in the long run. investment banking is challenging in quarter three. morgan stanley got hit really hard. the underlying long-run challenges, their margins.

i was thinking about the nordic banks, which are challenged a negative rates. they seem to have built a good spring forward on investment banking loans despite negative rates. story is goodcro because you are seeing lending come back. you are seeing a reasonably strong economy. therefore, low unemployment rates in the u.k. and lower unemployment rates in europe. so a better macro story, less provisioning. we are long financials. guy: why? economy robustness. we are long basket japanese bonds. in europe, we are in etf's. that has been very mixed. in the u.s., we have a basket of u.s. stocks. guy: volatility goes around the

macro story that fits in with that. alan: looks like we are a little bit early with that. looks very solid. a the market weight in the banks index. it looks like we are early compared to the story in japan and out of the u.s. we are seeing bank lending improve and that is the key. bank lending has been negative for years and that is a real headwind for any bank. postulate theple play on the european recovery. alan: part of it is that. part of it is value. guy: so many banks still trading south of 1. is a value story and a bit of a peripheral story. we like the peripheral story. we never bought into greece, etc. a bit of a mixture in there.

guy: still plenty more to talk about. he likes the banks. interesting to hear his comments on bmw as well. we have the car sector in focus. next, what are we going to focus on? shopping. only is itot interested in sugar, it is also interesting -- interested in shopping. how is it performing? what kind of update will be get on that business as it steps into the wider world? we will find out when it -- when we come back. we are one hour away from the market open in europe. big news from standard chartered. it took a dive in hong kong earlier but recovered a little bit since then. bmw out with numbers. ubs out with numbers. plenty more numbers still to come. we're going to take a break. when we come back, the second will do"countdown"

exactly what we say. we are going to count you down to the market open. when we come back, a look at what the fair value calculations tell us given the corporate news we have had today. see you in a moment. ♪

in focus.cials standard chartered announces 15,000 job cuts by 2018. a 3.3 billion pound rights issue and an unexpected loss. it is a beat for ubs as net income nearly doubles. activision blizzard agrees to buy king digital the price tag, $5.9 billion. and the omissions scandal spreads as u.s. regulators expand their probe two models from audi and porsche. welcome to "countdown."

i am guy johnson. what is happening in the markets right now is to mark a bunch of news already. -- what is happening in the markets right now? a bunch of news already. ab foods just breaking. the fair value calculations pointing to a fairly positive open. london looks like it could outperform here. .2% move across most of the markets. that is where we think european markets are going to be opening this morning. bf have had numbers out from a this morning. let me get the terminal to work to show you where those numbers are. it is an interesting set of numbers mostly because of what is happening with primark. this is a food for shopping business largely on by the western family. eps, theyf four-year are doing something right over

at that business. let's get back to one of our main stories. standard chartered says it will raise 3.3 billion pounds in a rights issue. there was an unexpected quarterly loss. it will cut 15,000 jobs by the end of 2018. chief executive bill winters says the is this environment has led the bank to "disappointing recent performance." with us now, nejra. give us the key points. nejra: the action by the winters is how i would sum this up. looking at a pretax loss of $139 million in the third quarter. analysts had been expecting a profit of $903 million. that was the earnings. we also have the announcement of 15,000 jobs to go and standard chartered is going to raise 3.3 billion pounds or $5.1 billion in a rights issue which, by the way, will boost the bank's

common equity tier one capital ratio to 13.1% from 11.5%. that is as of june 30, according to a statement. what we're seeing here is bill winters trying to reverse those drops in profit, that share slide that we saw. what we were hearing before this release was that there were three challenges faced by standard chartered. capital, commodities, china. that has come out in a statement today. guy: the hong kong reaction was pretty clear. initially, the stock gapped down around 8%. pretty big move. what is the reaction to what we have heard? nejra: that is what we have seen in hong kong. i have the chart for you. ,his is over the past year trading in hong kong, standard chartered shares down 31%. down 26% in london trading.

is half the seen value of the bank in the past two years. investors have really been punishing this stock. this is something that bill winters is trying to reverse. as well as the moves that peter sands made. expansion, emerging markets like india. drop., we have seen that we will see if we can see that continue in london trading. guy: manus cranny has been talking to sergio ermotti about the numbers we have had out from ubs this morning, dublin third-quarter net income to more than 2 billion swiss friends. what did he have to say? what were the highlights of the conversation? i think it is going to be a push and they pull for the market. , no doubtne is a beat

about that. that was driven by tax credit. the investment bank towering ahead. the return on equity is 33%. wealth management came under a little bit of pressure. we caught up. he said it was challenging -- we have to think about the third quarter. he said it was a challenging quarter. >> it was a very challenging quarter. in addition to everything you just mentioned, think about the seasonality that you have during the summer. you go from an environment in which the fed was expecting rates to rise and they do exactly the opposite. what happened in china? what happened in france? i am very glad that not only have we managed the risk of the bank very effectively, but we clients risks. that is the biggest success for the quarter. i think the bloomberg headline are about a beat.

less legal provisions and a tax credit. but the challenge for ermotti and the team is that they have delayed again -- as is the debate. is it a delay in terms of the return on equity that they are going to deliver? guy: walk me through that. why are they delaying some of these targets? what do you think the view of the market will be of that? manus: i think the market is going to be disappointed. whether you say we are delaying our target, and they have held us back a couple of back -- times on this expectation, or is it that ermotti and the team are getting real about the reality of negative rates and no hikes on the forefront from the fed? >> the response would be to say -- iwe are likely to beat

feel often it that this year's target of 10% will be beaten. we will get closer to 15% this year. we are not delaying that. we are adjusting our return on equity target. 4 out of 21.d out, i think targets are very important and these adjustments are driven by external factors. macro economic consideration, interest rates. out of the forward curve on u.s., swiss franc, and euro 50 basisrate, it is points lower than the consensus. second one, you saw the new regulation coming in internationally and in switzerland, up to 3% of our return on equities. we are going to compensate. we are going to work on ways to include those targets. but they are normal adjustments and we are still very committed to our 15% return on equities.

he did not say he was ready to ipo the swiss business as his friend promised the market he would do. a couple of changes at the top. and cfo,ho held coo those will -- roles will be split between curt garner and axel lehman. old coo will be president of ubs america. he will be back in his own country. it will be interesting to see whether the market backlashes over the delay on return on equity or gives them a date gold star says, you have an investment bank that delivers a stellar return. i wonder what barclays would do for return on equity like that from their i.b.? guy: thank you.

manus cranny in zürich for us. we will have more of the interview that he did in the next part of this hour. interesting comments coming through from sergio ermotti this morning. let's talk about the other breaking news we had had out. shell is making some announcements vis-à-vis its acquisition of bg. it is a it is on track -- it is saying it is on track to complete the acquisition in early 2016. it has raised the pretax synergies it is seeing to 3.5 billion. that is a 2018 number but it is upgrading the story regarding synergy so they can tear out of that business. the combined capital investment in 2016 is 35 billion. it is seeing good progress. it is raising the synergy forecast and getting and i you -- an idea of what it is going to be. that is the management story coming out of shell.

for more on that, we will come back to you on that story. in the meantime, i want to take you to hong kong. the markets beginning to ramp up as we head towards the european open. closing a little bit softer. zeb eckert is standing by with the details. zeb: we saw stocks in the region rising for the first time in six days. japan holiday. shanghai just finishing the day slightly lower. .3%, the move. sri lanka looks to be trading lower as well. stocks higher on the back of that gain on wall street and sidess more optimistic with manufacturing data in the u.s. and the eurozone. we are also watching the chinese data we got over the weekend as well. take a look at what we are following. in hong kong, the stock movers included the financials and standard chartered, that dramatic surprise loss that no analysts expected and the job cuts, which are quite staggering

for that bank and all the people who work there. particularly, the number of people in hong kong that may be affected because, as you know, this is a major center for the bank. gaming shares were among those that advanced. galaxy and sans china doing well. property shares are under pressure in the session. let's take a quick look at those financial stocks and tell you how they performed in hong kong. standard chartered, big decliner. the hang seng financials index advanced during the session. standard chartered, you see the drop. 3% move down for those shares. hsbc advancing, cutting costs. that is seen as a positive by investors. this standard chartered news continues to reverberate to the markets. i can only imagine the conversations having right now charteredndard

building, just across the street from where we stand. guy: i think you are right. some interesting people are having some interesting conversations everybody else is figuring it out. it will be an interesting time for that bank, to say the least. a bit of news coming out of china. i am trying to translate this a little bit. yuander to realize we will digest that and figure out what it means in terms of the impact it will have moving forward on making the yuan a global currency. higgins isns -- alan still here. we had turkey yesterday, still dealing with the implications of that. china continues to disappoint on the data front. alan: it is larger in

growth-oriented portfolios. it is not that large a portion of a balanced portfolio. it has been a currency story. even if you look at brazil. the stock market has been flat, whereas the currency has been incredibly weak. russia as aight bond play. we also bought into equities. we like to be the contrary investor. russian bonds have been fantastic for us. russian equities have been undermined by continued weakness in the ruble. that has not been too bad. we have been in china h-shares. they have been painful. it is kind of the opposite. the currency is rocksolid, relatively.

the currency is fine, but equities have really come off. those are our two contrary in nositions -- contraria positions. another,ce has been hasn't it? two best-performing bond markets are greece and the euros. does pay to be contrary and -- contrarian sometimes. we talked about it quite a bit but never quite pull the trigger. guy: we are going to take a break. up next, we're going to be live in dublin, speaking to a special guest from google. see you in a moment. ♪

guy: good morning.

these are the stories that you need to know. ubs has reported higher than estimated net income in the third quarter. it was over 2 billion swiss francs, more than doubling the year on your numbers. year-on-year numbers. meanwhile, they postponed next year's probability targets. standard chartered is set to raise 3.3 billion pounds in a rights issue. the company will remove 15,000 jobs by 2018. the bank announced a surprise $139 million third-quarter loss. analysts had anticipated a profit of $903 million. activision blizzard has agreed to buy king entertainment. $5.9 billion. that is about $1 billion more than their value at the rose of king digital has lost 30% since a high in july of last year.

that story certainly reverberating around dublin this morning, where we also find the world's largest gathering of tech startups. they are descending on the irish capital for the annual web summit, which gets underway today. the event attracts 30,000 people from europe and around the world. it generates an estimated $20 million for the city. we sent caroline hyde. she is joined with a special guest from google. indeed.: i am, i am joined by the president of enterprises at google. we have the cloud computing area, search at work. how important is enterprise for google as a business? >> great to be here. we are excited about our business in general, but enterprise, really moving to the cloud and mobile computing technology. toare providing our platform both enterprises as well as

smaller companies. web summit is a great place to interact with them and show them different products. are wee: how quickly moving to a mobile phones enterprise area? we are way behind consumers, aren't we? what is utopia when it comes to working? startups do all their work on the phone. retrieved documents at instantaneous speed. it is more secure in the cloud than it is in the old legacy world. i think larger companies are finding it a little bit more challenging. longer tohem slightly do the i.t. integration work. i can tell you from personal experience that most of them have decided this is the future architecture for us.

we will be retrieving out with mobile devices. caroline: how much of the market are you looking to have? workloads are% of in the cloud. it is a market that is bigger than advertising. do you compare when it comes to amazon web services, microsoft, companies that are really doing well in these early seasons, companies that are betting on the cloud. how do you distinguish yourself? >> we built our cloud from developers initially. they were all built on that infrastructure. we started unlocking that cloud for external developers a few years ago. we feel like since only 1% of the workload has moved to the cloud, the bulk of that change

has yet to come. built, over the years, tremendous experience in how to run these services. our products are different. we feel like, over time, that will play itself out. caroline: what about price competition. will we see the price continue to go down? >> absolutely. technology should follow moore's law, where it gets better and cheaper at the same time. we have been advocates of taking andever value we created putting that back in our consumer products and our enterprise products. google's cloud products are, on average, 30% lower than the market-leading products out there. caroline: security is front and for most of any written -- of every consumer's mind. how are you convincing the bigger businesses that you are

safe and that the cloud is safer? >> we feel and we are convincing businesses that cloud is actually safer. we have built all the technology ourselves. we have over 500 people that professionally managed our cloud both for ourselves and business data. most companies do not have access to that kind of data. integrating the products together and trying to managing -- to manage them themselves, they will be less secure than what the cloud is. caroline: a lot of startups are making enterprises so much easier. you have started using slack, all these new companies that are making videoconferencing so much easier. is that where the competition threat is from or is it from my cressotti? ?- microsoft >> this is such an exciting space that there is competition from everywhere.

likeer it is products weree docs, which we talking about earlier, you can magically edit a document, have students working on a project together, or be able to call your kids on the phone, like i computingight, cloud is the core. all of these companies are doing a great job bringing that technology to work. caroline: the you buy them? >> we always look for acquisitions. over the years, we have found the right early-stage companies and found a way to scale them into google. caroline: thank you for joining us this morning. president of google for work here at the dublin web summit. guy: interesting chat. thank you very much indeed. abf has beaten estimates as a

growth of primark helped to offset a decline in sugar earnings. an interesting group. senior bloomberg analyst charles allen joins us in berlin. he has been pouring over the numbers. primark continuing to deliver, isn't it? charles: absolutely. now on is 62% of profits 42% of sales. really the profit driver. guy: what happens next? they are pushing this internationally. italy is going to be at a challenge. how does that work? will it work? charles: it has been the big question in every country that have gone into. so far, it has worked in all of them. germany, france, spain, belgium. the two big questions are, will it work in the u.s.?

they have open one store and they are about to open another five. and also in italy. i think the president is quite good in italy. do well and zara h&m do well in italy. guy: they start to get exposed to the currency story now. charles: like many of the european groups, it is a bit of a double whammy for primark. there is a lot of sourcing in dollar-related currencies, which squeezes the margin a little bit. we did see the margin fall a little bit. because they are reporting in pounds, the decline in the euro is also slightly crimping the reported growth. guy: always a pleasure. thank you for joining us from berlin. we will be talking banks next. averaging management ceo saying he is supportive of the standard chartered strategy.

we are also going to be hearing from sergio ermotti, the ceo of ubs. the bank out with a little bit of a mixed story this morning. nversationar manus' co with him when we come back. ♪

7:30 in london, eight: 30 in frankfurt. here are the stories you need to know this morning. standard chartered is set to raise the .3 billion pounds in a rights issue. the company says it will remove 15,000 jobs by 2018. that comes as the bank announced a surprise $139 million loss. analysts were expecting a profit of $903 million. the reserve bank of australia has left its key benchmark rates unchanged at a record low of 2% while opening the door for cuts in the future. glenn stevens said, "the outlook for inflation may have afforded scope for further strengthening

of policy." the aussie dollar has been strengthening versus the greenback this morning. and u.s. regulators expanded their probe to include models from audi and porsche. volkswagen is denying the claims. let's take a look at where we stand on the market less than half an hour away from the european open this morning. 29 minutes, to be exact. european equities expected to .pen up around .1% london looks like it could be a key outperform of this morning, up by about .5%. thanks -- banks are front and center this morning. one of those is ubs. it reported first-quarter net income that more than doubled. sergio ermotti sat down with manus cranny in zürich following the release. manus started by asking him how

he feels about global uncertainty like china and banks . >> it was a very challenging quarter. in addition to everything you just mentioned, think about the seasonality that you have during the summer. you go from an environment in which the fed was expecting to hike and turned out to do exactly the opposite. big changes in the sentiment in emerging markets. what happened in china and on the geopolitical fronts? i am glad that not only have we managed the risk of the bank effectively, but we managed client risk and that is the biggest success of the quarter. manus: pronounced deleveraging in asia and low client activity. should we be concerned? >> not really. it is the journey in asia of growth. it is more volatile. i feel very confident that we will continue to have a substantial part of our growth coming from asia. of course, it is going to be

more challenging going forward, but we are well-prepared. manus: let's talk about the investment bank. revamped, restructured, everything you set out to do. where does the return on equity come from and is it sustainable? >> it is very sustainable. you look at banking for the last 12 quarters, we have always beaten our goal of 15%. we were always about 20%. in different market conditions, very challenging market conditions, we are very focused with our resources to serve aients and we have become very successful and effective business model. manus: let's talk about targets. you set out some new targets. today, the market will probably say that you were delaying your by 2018. equity target

what is the response to that? it is technically a delay. >> the response will be to say that we are basically likely to beat. we will get closer to 15% this year. i think we are not delaying it, we are adjusting our return on equity target. as you pointed out, 4 out of 21. these adjustments are driven by external factors. macro economic considerations. the forward curve on u.s., swiss rates,and euro interest is 100 basis points lower than consensus. newnd one, you saw the regulation coming in internationally and in switzerland. up to 3% of our return on equities. we are going to compensate.

we are going to work on ways to improve those targets. but they are normal adjustments and we are still committed to our 15% return on capital -- tangible equity targets. the reality of additional capital requirements? we have just seen the swiss demand more from the leverage ratio. give me the reality for shareholders on additional capital and regulatory harm. >> i am in full agreement that there was a need for some ,djustments to the swiss regime which was already one of the most demanding. now it is by far the most demanding. the consequences are clear. we just spoke about lower return for shareholders. we will have to pay for part of this to offset it. so higher cost of services.

there will be an impact on jobs, costs, and there is an impact. if we make less money, we definitely are going to pay less taxes. manus joins us from zürich. what do you think will be the focus? will it be the pushing back of targets or the surprise beat? i think it will be a really hard call. when you listen to what he says about the reality of negative rates, the reality of the forward pricing of the market, this is just checking and balancing, saying, we are not going to get there. it is going to be another year. the world did not happen according to plan. that investment bank did pretty darn well with a stellar return

on equity. that was a beat. i think it is going to be a push and pull. when you look at this bank relative to everything else that is going on, if you look at what ryan has got to do at deutsche bank, when you look at what is happening at barclays, we just saw those discussions this .orning at standard chartered many other people are starting a sayan that ermotti would and to some extent, the market would happily accept, has already done. this is priced at a book value of about 1.6. i think they are going to look at return on equity. but that is me. close call, as you say. what does he think the capital story is going to look like going forward from here? he has created a bank that is relatively capital like --

light. they have some really stringent requirements being imposed on them. what is his expectation of where that story goes? i still think any of them that you talk to, either on camera like this for the informal opportunities that we have to speak, we are nowhere near peak regulation or peak capital. too big to fail is a theme that is here to stay. they will meet their reserve ratio requirements this year at 5%. but everybody is going to have to do more because, simply, that is the environment that we are in. if you look at the details of the note, i have not got it exactly at hand, but in -- they issued a bit of debt instruments in the third quarter. you are going to see more of

this from a lot of institutions, all hurrying to be the best in breed. ,f you stick around after 8:00 come back and hear what he had to say about china. i think he was quite resolute. china is still going to be a key part of the growth story for them to he also went on to say that, as far as he is concerned, the outlook was tough in the third quarter, but he is certainly going to take a more upbeat outlook going forward. we have some management changes going forward as well. he held both offices. coo and cfo. that role is now split. curt garner is going to be cfo. to the left and coo to the right. this is about taking the bank

forward. the retail and corporate banking, best results since 2010. net new clients at a record. the swiss business did ok as well. it beat on the estimate. they are promising -- i do not think you will see promising a split of the swiss bank. ceo doing a few checks and balances on the board, changing a few things around, telling it like it is in terms of return on equity. legal provisions have dropped. that is the other take away. tax credits and legal provisions dropping. this quarter, it dropped to just under 600 million. back to you. nice work. i am genuinely looking forward to what he had to say about china. interested to see how credit suisse and ubs fare over the

next few quarters. manus cranny in zürich. good work over there. let's turn our attention to what is happening in dublin. activision blizzard has agreed to by the dublin-headquartered, london-based kit digital for 5 $5.9ng digital for billion. they have fallen more than 30% since its high last july. let's get some details. in dublin at the website, we find caroline hyde this morning. it is a decent premium they are paying, but the stock has fallen. caroline: you are right. premium is a 16% compared to where kit digital was trading yesterday. put that in context. they are betting on mobile. mobile gaming is expected to be worth more than $50 billion by 2019. growth of about 50%. activision blizzard is the maker

of "world of warcraft" and "call of duty." $5.9 billion is a big premium, but less than the value that they first sold shares at back in 2013. we all know "candy crush saga ," but this is a company that makes 200 games. can you name the rest of them? i cannot think of many of the other killer games. many are worrying that, like zynga, perhaps king digital was a bit of a one trick point. when can they bring in another franchise that is in the users? monthly users have been slowing. profit has been falling to his is why the share price is below where they initially sold shares in 2014. this is a bet on mobile gaming by activision. interestingly, u.s. cash

splashing here in europe, european-founding companies. king digital was founded in sweden and headquartered in dublin. rather attractive corporate tax rate. guy: that has been a bit of a theme, hasn't it? tech companies coming over here and looking to spend a bit of money. is that what they are talking about at the website -- the web summit? caroline: i think they are. shining a light on different tech stocks. king digital but also the likes of berlin, london, and lisbon. this year is the last that the web some will be based in dublin after five years and growing from just 500 delegates to more than 30,000, bringing in hundreds of millions from the likes of the economy here in dublin. it is moving to lisbon, a new, growing tech startup capital. it is shining a light on new

startups here in europe. but it still is the case that european venture capitalists are raising more money. digital and just eat have brought more money into the european ecosystem, but not enough to bring up the new uniforms. think of a french company that is now internationally growing and having to go to the united states to raise more funds. aank -- thanks -- same for fintech company. still, the u.s. has the cash to splash. the king digital deal shows that. guy: interesting. great stuff. thank you very much indeed. caroline hyde in dublin. we have had news from bmw this morning, beating in the third quarter. the product lineup is important in china. that vehicle doing very well.

really motoring for bmw. we will break down the numbers next. ♪

guy: 7:48 in london, 8:48 in paris. standard chartered is set to raise 3.3 billion pounds in a rights issue. the company says it will remove 15,000 jobs by 2018. it comes as the bank announced a surprise $139 million third-quarter loss. analysts had expected a profit of $903 million. activision blizzard has agreed to buy dublin-headquartered, london-based king digital entertainment. it is about $1 billion more than the company value at the close of yesterday. king digital has on more than 30% since its high in july of

last year. u.s. regulators have expanded their program to include models from audi and worse, saying -- were work equipped emissionso fool detectors. let's find out which stocks are going to be in play. there are plenty of them. nejra: indeed, plenty of them. let me start with the banks. i will be watching ubs. third-quarter net income more than doubled in the third quarter. and happen ast they booked a tax gain and set aside u.s. provisions legal costs. its investment bank swung to a profit. this is being called lower by some analysts because ubs did push back its profitability target, next year's profitability target. g stricter capital rules at

home and changes in the economic outlook and conditions. that is ubs. moving onto standard chartered, it is also being called lower, no surprise given that it posted an unexpected loss for the third quarter. it will cut 15,000 jobs. billionalso raise $5.1 in a rights issue. finally, looking to show -- shell, this is being called slightly higher by some analysts. it has announced organizational changes, meaning it will run its natural gas business at a standalone valuation. they also raise their estimate of savings from their acquisition of bg group. process.till in it raised those by $1 billion. overall, shell targeting $11 billion of total savings. that to you. guy: plenty of stocks on the

move this morning. one stock will certainly be in focus, bmw posting a surprise rise in third-quarter profit. why? let's find out. hans nichols is in berlin. hans: the x5, a popular vehicle. guy, i know it is a little out of your price range. earnings increased by 4.3%. that is about 200 million higher than the estimates. revenues came in right in line with expectations. about 22.3 billion euros. the estimates, but it is a solid quarter all around. we did see profit margin decreased down to 9.1%. it was 9.4% earlier. in some ways, that is a good sign. 8%-10% and they have these new models that they are really revamping. we were expecting profitability

to come in a little bit lower. when you compare bmw, their profitability of 9.1%, right in the middle. audi is right in the middle and cities is at 10.5%. one thing on the race to become number one in terms of the leading luxury auto brand. for cities has posted their third straight month having sales that have vested bmw and audi. if you are searching for cache, do you really want to be number one? don't you want to have fewer of the cars that everyone else wants? guy: i am not sure that shareholders would take deposition, but i see your point. who are you ultimately trying to please? we showed you the chart a moment ago. it is now beginning to move up again. china will -- is probably a factor in that drop. how do they expect the market --

that market to develop? hans: the numbers are basically flat or september. there is a story of the virgins. when you see the likes of porsche and mercedes. for cities, on the year, did about 25%. overall, for the month of september, they had a 30% increase. bmw was flat. audi is doing even worse. they are basically at 0% year on year. in some ways, china story has not been as damaging to the luxury brand than we might have expected two months ago, when we saw trillions shaved off of equity markets. we thought there would be more pass through to the sector. it has been pretty resilient. global sales are reliant on china. china, the largest market. about $15 billion of their revenue last year came from china. china is a key sector for them. they are going to need to keep

growing there. in some ways, the story has been about product cycles in china. --ie's, with -- or sadie's mercedes has had a good quarter in channel despite the downturn. guy: good stuff. obstacles in berlin. the french president is in china. -- he is saying that the eu needs to rule on diesel emissions. is ahead of the summit later on in paris. we are five minutes away from the european market open. looks like it will be a fairly flat open. there is 20 going on. plenty for jon ferro to think about when he joins us for "on the move." rba manning on hold. a big move in the fx market as well. a much stronger aussie dollar to take a look that -- a look at. let's just call it what it is. financial upheaval. standard chartered posting a

surprise loss. plans to raise three point 3 billion pounds and cut their headcount by 15,000. these are huge numbers. it will transform the banking industry when you put together the moves by standard chartered, deutsche bank, credit squeeze, and potentially more to come from barclays. i find the vw story fascinating this morning. the scandal spread, the accusations towards porch. -- porsche. that means their new ceo has a lot of talking to do. guy: and the macro theme with comment saying we need a big change in how we view diesel. we have done our job. the equity markets look like they are going to open flat. ♪

guy: good morning and welcome to "on the move." but get straight to your morning brief. financial upheaval. the plan to raise 3.3 billion pounds. that income at ubs more than doubles. the u.s. regulator says it is looking into more vw diesel models and this time volkswagen fights back. agrees to buy king digital. that is what we're walking --

watching this morning. it's pretty dead flat looking at futures this morning. there is plenty to discuss. stocks extendpean their gains yesterday after they had their biggest monthly rally in six years. let's look at the equity market across europe. we see the ftse 100 coming pretty flat. this is pretty much in line with what the futures are indicating. the big focus has been on corporate. i will take you to some of the big movers we have been watching today. it has been a big day for earnings, starting with ubs. net incomes have more than doubled in the third quarter. looked attacks gain and set a f