francine: standard chartered cuts 15,000 jobs. ubs's profit troubles. u.s. regulators look into more vw diesel models. buy candyagrees to crush maker in a $6 billion deal. welcome to "the pulse" live here in london. i'm francine lacqua. now, let's get straight to our

top stories. cutdard charters will 15,000 jobs and raise 3.3 billion pounds after posting as a price loss. ubs net income beat estimates. manus cranny is in zero or he spoke to the ceo of ubs. he told us how difficult the quarter was. >> was very, very challenging quarter. in addition to the everything you mentioned, think about the seasonality you also have in the summer. you go from an environment in which the fed was expected to doe and turned out to exactly the opposite. big changes in the sentiment in emerging markets, what happened in china. so i am very glad that not only we managed the risk of the bank very effectively but also we managed in the good times -- that's the biggest success for the quarter. francine: joining me on site, guy johnson, the chief assetment of brooke

management. we are joined by manus cranny. let's kick it off with you. what is behind this beat? manus: yes. one, you have got a lot less legal costs running through. this time last year the bank had 1.3 billion. that has dropped. two, you have got a tax credit. three, the investment bank -- and this is what he said, which was revamped the investment bank. and they made money and goodies. -- on equities. wealth management which is the core of the business missed a headline numbers. there are a number of factors that helped us through this seasonal period. if you think back to what we talked about throughout the quarter, glencore, he still believes, though, that there would be wealth creation in china. legal costs coming down, and the investment bank or

the reshaped investment bank which is what every other bank is trying to achieve actually delivered in this turbulent period. francine: manus, we heard from the ceo and it is all about reofitability that seems mo difficult to achieve -- not probability but what they are expecting profitability to be. let's get to guy in standard charter. it is great to have you in this seat. it is pretty tough, right, overall. he's having a really tough time. and we have a surprise loss. he'ssome would say kitchen sinking the numbers. promised when he came in in june that he would deliver repositioning. in many ways he is trying to do what sergio emotti has done. take some of the capital requirements out. so, he's cutting jobs. he is going to make significant changes in the restructuring of the business.

he is going to undo some of the damage. and he is going to have a right issue, which it seems most people sign up to. francine: when we speak to credit suisse it seems like ubs upfronted everything that their rivals want to copy. ubs also telling you that are going to disperse the role of their targets. manus: yeah, this is the big challenging issue, which is the world of negative interest rates. you have got nearly 2 trillion euros worth of european bond markets and negative territory. you have a fad that did not to lift off. not to liftt did off. living in the reality of the world, of the challenges of lower interest rates, of looking for income and the ability for that to be delivered on a timely basis. this is the second time we've seen this delay. this was the slight move we have as to whether it was a delay in

a return on equity target, or is it them adjusting to a new world? rmotti was very clear. for him, it is about adjusting to the reality of markets right now. >> the response will be to say that we are basically beating, we are likely to beat, i feel confident this year targets of 10% will be beaten. we will get closer to 15% this year. so i think we are not delaying them. we are adjusting our, our return on equity target. as you pointed out, for august 21. i think targets are important. these adjustments are driven by external factors. macro economical situation. interest-rate outlook. the forward curve on u.s., swiss franc, and euro interest rates is under 20 basis points lower than consensus. so, first adjustments. second one, you saw the new revolution coming in internationally and in

switzerland as a waiting up to 3% on our return on equities. so 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 very committed to our 15% return equity targets. still hanging his head on those targets. when we talked about the leverage ratio, the additional leverage ratio the swiss regulators are going to ask these institutions to hold, he did not say it was going to hit hard on the dividend. for the last of the banking -- is this your opportunity with deutsche bank in credit squeeze reorganizing? he says it is not about being complacence. you can be pretty sure that this institution has got the pick of the good cd's going around town not just in zürich but across the globe. because everybody else is in

transition through 2018. this is a bank that has chuckled the senior board members this morning. the joint coo and cfo, the roles are now split. no time for complacency. they did not some like he was doing hoopla la over the investment bank. 33% is not bad. francine: thanks so much. guy johnson stays with us and we have kevin, the chief investment officer. when you look at standard charters, do you see this as a buying opportunity or do you think the job could be so a lot of theseee banks having to go through these strategic overhauls that you want to wait a couple of months? kevin: good question. for us, you have to be specific about which banks you want to buy. face aontinue to challenging environment. we do not see that changing anytime soon. some banks are more exposed to in emerging markets

and other the u.s. banks are further down the restructuring ve, but they all face challenges. i think you have to be very specific about the banking sector at this point. haveart of the problem we is that we like companies where you have visibility on earnings, revenues, margins, and with thanks, you do not get that visibility. it is a very volatile business. neither have management got control over many of those aspects of their business at the moment. got exposurehat's to asia. china is having a tough time right now. --s going to read your take to re-orientate the institution andfocus standard charters a different place. this is an asian facing base. why do i wanted in my portfolio? kevin: it is all about price. especially as we think china, china may stabilize for now but long-term we know it is

all set at a lower growth rate. people question whether the current growth rate is closer to 3% or 4% or the 7% official figures. china is still slowing. the commodity cycle, commodities are likely to have a bear market. bad loan provisions. how effective and how accurate are the? they are probably going to get worse. there is far too much uncertainty, and we are still worried about the global growth scenario which would prevent us from looking at asian banks. there are other press a financial services space which are much more attractive. francine: do have any u.k. banks? kevin: we have a bit of exposure. but even there again, you have to be careful because some of those u.k. banks have significant exposures to energy and commodity related businesses, to asia and emerging markets as well. volkswagenope, with

and the motor industry, which is been a huge engine of growth for europe and the global economy, there are potential problems down the road there as well. francine: thank you so much. we will talk about the cars next. guy johnson there on standard chartered. now, more bank earnings still to come in your. -- in europe. on thursday we get results from society general. -- societe generale. activision has agreed to buy kingmakegr entertainmen. that is $1 billion more than the company's value. king digital has fallen 30% since the high in july of last year. the reserve bank of us try at left its key benchmark rate unchanged at 2% while opening the door to cuts in the future. the rba governor says the outlook for inflation made for

further easing a policy. the us strong and against the u.s. dollar. writing.andal is regulators have expanded their probe to include models from audi and porsche. volkswagen denies the claim. now staying with cars, vw beat but trailed the competition in china. we will look at the global car race next. later in the show, draghi is halfway through his tenure. a look at why he is far from his goal. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on bloomberg.com, your tablet and your phone. the vw scandal has widened. the vehicles have equipment to alter their emission system when they are not being tested. volkswagen denied the claims. hans nichols joins us from berlin. first of all, what exactly are the charges? hans: the charges are that volkswagen when they were applying to get permits to have their car sold in the states, they were not entirely honest. it is a different charge that what we have against that initial claim of 483,000 the theylls the dp device and

actively try to defeat regulators and tried to figure out how much carbon dioxide they were emitting. what is interesting here is the the eminence volkswagen is issuing their denial. they are saying they need to clarify this, but they are not at fault. they are insisting they have not done wrongdoing. the challenge for volkswagen includes porsche. there are only 10,000 vehicles affected. it includes porsche and audi. these are the v6, the 3 leaders. up to this point, it has been the smaller engines. it is going to be on another headache for the new ceo of volkswagen because he came from porsche. we have seen a stock trade down on this news. yesterday when it came out the epa was doing it, depositary receipts fell in the states. francine: how concerned are we -- volkswagen put porsche and had volkswagen. now we have the spotlight on

porsche. is that something of concern? the: when you look at optics of this, it is not a great morning for volkswagen. they thought they battled through a lot of this. they set aside 6.7 billion euros for provisions for legal costs. there is one big unknown. we still do not know what fines are going to be and we do not know where all fines are going to be. the factor is another round, even though this is only 10,000 vehicles, the epa is crying foul could give you an indication the negotiations, conversations, the dialogue between volkswagen any epa is not going that smoothly. bmw earnings out today. they were great and they surprised to the upside however, they lagged in china. ins: well, they lag china. when you look at the race between bmw, mercedes at audi,

mercedes when the last three months. we expect bmw to retain the top spot at the end of the year. here is the issue -- and china where a lot of the new models of mercedes are rolling off are had 31% inr, they the last months. 25% on the year. and bmw is basically up 2% in china. and china is the biggest single market, about 15 million euros in revenue came from china in 2014. so it is a challenge for bmw. it is a part of their product cycle challenge. you look at next year -- or cities will have their new e-class out, that competes with the five series -- mercedes will have their new e-class out. you soe: hans, thank much. hans nichols in berlin. let's get more from kevin. when you look at the cars and we are talking more about -- you have exposure to the cars. how tainted has the diesel market been because of volkswagen? kevin: yeah, i think from our

perspective it is almost too early to tell with any certainty what happens next four vw and if -- for vw and if the problem is contained. then it's probably manageable. however, we have to recognize ar industry has been a huge part of global growth not just in europe but in the u.s. and globally as well. if the problems in vw are systemic of what is happening in the industry and it becomes a much bigger event, not just for car manufacturers but for all the service providers, the banks that lend to the industry, for the european economy and for the macro economy, at a time wehre it's already vulnerable and growth is disappointing. vw,too early to be sure on but nonetheless it is worrying if it starts to spread from a macro perspective. francine: what does it mean for investment?

are you staying away from car companies as a result? or do you see good valuations? kevin: it is all about valuation and stuck pacific. -- stock specific. bmw results this morning were quite encouraging, basically. also, perversely i think in terms of europe, if it turns out that germany has to come to the rescue of its car industry which is a major part of us economy, then this would be a form of fiscal stimulus within germany and europe at a time perhaps where the european economy could really do with those fiscal stimulus from germany. upsides ia potential if germany asked in the same with u.s. did with their industry in 2009. francine: do you have a preference between european carmakers, asian carmakers and u.s. carmakers? kevin: i do not think it is so

much about geographic. it is about the quality of the management, the quality of the company, where they sell and the product. for that sense, both in the u.s. and europe, and in asia, i think you have global car producers who are quality companies. it is not so much about geographic. it is about quality of management, quality of the business and in particular where their sales are coming from. francine: think is a much for now. stay with us. coming up, gaming a deal. why activision is paying a 16 cent premium for king digital. coming up next. ♪

i ended up in investing in a ir bnb. there is a wonderful new company called ring, which i invested at the bar, exploding in america. and saving lots of people from being broken and entered into. francine: that was richard branson talking tech. let's keep the conversation in the sector. activision has agreed to buy king digital for $5.9 billion. that is $1 billion more than the companies i'm at the close yesterday. let's get more with caroline hyde in dublin. let's talk about the deal. the premium is pretty decent. caroline: you're right. 16% premium if you are comparing it to the share price that was yesterday. 1 billion more than its market valuation, but, well, it is not actually worth more than its ipo

price when it sold shares last year, march, 2014. the reason? is activision perhaps a betting on a one trick pony. that is what everyone is considering. we've got the likes of yes, betting on mobile, an industry that is set to grow by 50% by four years. in excess of $50 billion. that is mobile gaming. but, well, what of the other games that we know in terms of king digital? we know candy crushed. everyone plays it on their commute. can you name any other 200 games they have made? you might know the franchise, pets rescue, but i cannot name money. this is the problem. it happened to zynga and farmville. one particular franchise. at the moment, activision paying $5.9 billion, as i say 16%

premium on king digital share price yesterday but still onto the market valuation when it sold shares last year. what is also fascinating -- considering i'm here at the we b king digital is headquartered in dublin. it is making the most of an appetizing corporate tax rate in ireland. it was born out of sweden. it does highlight the tech talent that is going on in europe but also the deep pockets that keep on coming from the united states. u.s. piling into european technology. back to you. francine: thank you so much. caroline hyde in dublin. kevin, when we talk about this deal, is it a gaming deal and is it an industry that you like or is it actually just m&a because borrowing costs will get higher? we are getting a little bit of these 5, 6, 7 billion-dollar mergers together. good: i think it is

timing. nasdaq 100 has made a 15 year high. technology is one of our preferred sectors at the moment. and that is probably because it is a growth industry and in a low growth work companies that can maintain margins are in demand. it is also a sector which does generate a lot of cash flow. it'll struggle for business if they cannot invest that cash flow back into the business, they are going to continue on m&a route. we see this very much of a -- as part of a trend. but technology is important because in a low growth world were demographic trends are as they are, where there is too much debt, then productivity is one of the few ways we can all enhance growth. francine: thank you so much. kevin boscher there. up next, we talk software and central banks. ♪

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welcome back to "the pulse" live in london. i'm francine lacqua. here are bloomberg's top headlines. ubs reported higher than estimated net income in the third quarter. now the company set aside fewer provisions for legal problems,. the ceo spoke to bloomberg and told us how ubs is facing up to challenging conditions. >> so the journey of asia, of growth and wealth creation 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 more challenging environment going forward. but we are well prepared. francine: standard charter's

will cut 15,000 jobs by 2018 after reporting a quarterly loss million. the bank says it will raise 3.3 billion pounds in a right issue. bill winters struggles to reverse the stoxx lies that has caused the value of -- the sotok slide. demand for cars including the x5 utility vehicle roast the carmaker is locked in a battle with mercedes and volkswagen's audi to maintain its leading global luxury car sales. growth has slowed and margins have shrunk. the world's largest gathering of tech startups is descending on dublin for the annual web summit. the event attracts 30,000 people from across europe and $120 million for the city. caroline hyde is there.

caroline: thanks very much. we are live outside the main stage. the last time it is going to be held in dublin. i am now speaking to a man who is building up his business here in dublin. group. of sage stephen kelly. thank you for joining us this morning. of are you putting your hub europe in ireland when perhaps the biggest tech event is moving to lisbon? steve: i think ireland and dublin is a fantastic center. three weeks ago we announced 300 jobs in ireland. i think the essence of why we selected, we looked at 12 places across your. dublin came out head and shoulders above them in terms of digital infrastructure and skills. this is a multilingual center. caroline: so, london, berlin did not even come close? steve: we have a strong

footprint and all the countries we serve, just to give you -- 54% o businesses in the u.k. pay their employeesf. in spain, 56% of the business out there return their taxes. we are part of the fabric of european countries where we operate. we have a multilingual center. you were looking at digital infrastructure because your business is, to be blunt, having a fair bit of ketchup. perhaps you are a bit behind the curve when it comes to cloud computing. wanting to be able to run your enterprise business via remote access an online. how quickly are you managing to play catch-up. the great thing is we are not just catch up. it is taking the game to a new level. fromd control of our lives

the palm of our hand. it will be the same for businesses. are live which we profiling. we are talking about rapid capability in the back of a taxi about less than three quarters were customers and revenue, how is that escalating? >> we have shifted the prescription. our customers are excited about that. we've been very competitive. it's a good time.

caroline: this is the biggest startup convention. they are making quick ways of dealing with enterprise. >> we have been very successful. inot of our growth has been acquisitions. that the continuing part of our strategy. we will look at acquisitions as well as the real strength of the organic growth of the business area --. weoline: add you think compete? activision by a european company. is it all about u.s. the pockets coming over? i think it's an unprecedented time for innovation. a time never been such

in the last couple of years where there is so much innovation happening in europe. funded 400they million dollars in startups. ins is an unparalleled time this. there is fantastic start up business. they will build in rich applications. i think it's already been to your work technology. we just saw a vodafone have to admit to hacking. our business is realizing the

concerns when it comes to their insider security? i think it's one of the most important issues. caroline: it's wonderful to have you here discussing all things european tech knowledge he. -- technology. back to you in the studio. francine: thank you so much. we will have plenty more from carolina throughout the day. went to scope out the new host city that is positioning itself as europe's

san francisco. caroline: young entrepreneurs are living the tech dream. >> it's common every week to go surfing. in lisbon, you can get a surf our in the morning before work. portuguese capital looks a lot like san francisco. it's starting to act like it as well. the view lisbon as beginning of san francisco. similarities from the energy of the people in both cities. caroline: tech startups are expanding. >> we are seeing all the

structure rise. we are accommodating that growth. whenine: it still tiny compared to its american idol. >> lisbon is viewed as lisbon's west coast. that lisbon believe can be one of the channels of bridging europe to the united states. caroline: international tech and will send on the city. already, foreign investment is growing. this is a company founded on engineers. even comparing to the u.k., it's very rare. lisbon is where europe ends in the world begins. caroline: the wave of excitement is rare. young entrepreneurs are writing

it. francine: we take a look at how successful the ecb has been helped by tenure at the central bank.

>> within our mandate, the ecb is ready to do whatever it takes to preserve the euro. it will be enough. francine: that was the president of the ecb saying it would do whatever it takes to save the euro. he is far from achieving his desperate --. in that inflation target is out of his control. it is somewhat of an unfair comparison. he is only halfway through his mandate. to go through tough times in the first four years of a job. he is had to deal with the threat of greece exiting twice.

he came in in the middle of a double-dip session. the ecbly halfway to mandate of 2%. he hopes he will be able to focus with unconventional measures and push through getting inflation just below 2% as the ecb is supposed to do. francine: you cover this day in and day out. the biggest challenge is how do you keep the euro from rising. bank got theal ability to do that western mark -- western mark >> is not had it bad so far. the recovery had been struggling so far. now it is going on along nicely.

this is one thing he can count on, getting hands-on it euro. a weaker euro helps. on the other hand, the ecb is clear in saying that the euro is not a policy target. they do not try to manipulate it. francine: what are economists saying about more qe? be handingeems to out the possibility of expanding qe. has, it seems like it's an open question. he seems to backtrack a bit on this sort of announcement. we will see. it depends on the income information. the things seem to be doing nicely. we might get more information. he is speaking three times in the next three days. we will have to hear what he has to say. francine: i know you said it

are targetingey currencies. qe,e are expecting more there is a question as to how it works. it has cap eurozone together. -- cap the eurozone together. has it really filtered through the real economy? >> the recent study published says this. qe and other unconventional measures are going through in getting to the real economy. it cut costs for banks. banks are able to push lower prices to customers. it's easier for households and companies to borrow from banks. this is supported the recovery. this is one of the key measures we are looking at. they are looking at this see if

it is working. francine: then we get into the regulation to the area --. sent the dollar higher. that is one of the first big numbers. mark: there was some talk that we might see a cut. inflationdisciplining data. the rba did not surprise most people. they can't -- cap rates at a record low percent. record, 12 out of 29 economists forecast a cut today. forecast no change. prospect forp the improvement in economic conditions.

what that has done has caused a reset in interest-rate expectations. traders are pushing back expectations for when they think the next couple take place. they think it will be the first quarter of next year. dollar, this is not the greatest color to show. all of these 16 currencies are falling against the australian dollar today. hold your horses. australian dollar has dropped 12 steps. what a big day for the banking and his three. what a big week for the banking industry. shares have plummeted today, down by as much as 8%. the company offered a rights offering. it is cutting 15,000 jobs.

sands was calling for fresh capital. to new ceo has gone ahead have the bank of england stress test next month. it's very important. they are going to test banks on their exposure to risks abroad. we know a lot of the revenue of standard chartered comes from asia. mr. sands is pushing into emergent markets like china and india as well. the capital call comes out of the pig stress test result next month. as $10y have as much billion. have a look at the chart. chart down byy 8%. shares are down by 31%. this is the second worst warming

european bank. that is after national bank of greece. we want to talk about ubs. it's at that of a binary story. target now is for 2017 to reach its return. that did overshadow its first-quarter earnings which were boosted by 1.3 billion. shares are down by 4.8% the investment bank did swing back to a forecast profit. it is mixed news from rbs. pulse,e: next on the going back to george osborne. wanteople written do not close ties with the continent. how will that are down? we're live in berlin next.

francine: welcome back to the pulse. here are some more headlines. activision has bought king digital entertainment. $1 billion more than the value yesterday. since julyllen 30% last year. the reserve bank of australia

left rates unchanged. they open the door to cuts in the future. is outlook for inflation stronger. the us trillion dollar strengthened against the u.s. dollar. washington would be less likely to buy taxpayer-funded ls for banks in a future financial crisis. unsecured debtse ratings have been put on creditwatch. george osborne is taking his case for -- to germany. the british people do not want to be part of an ever closer union. hans nichols joins us from berlin. what are we expecting? hans: here are some demands. we will hear some flattery from the earnest chancellor. he's going to be making this

case. there will be a need for closer integration. the u.k. does not want that. they want to go in the opposite direction. he is going to present a female case on what the u.k. wants. this will not be specifics. expect that next week from the actual prime minister. there is an excerpt from the speech we have. he will say the british people do not want to be part of an ever closer union. that is pretty clear. ,hey want to remain in the u but they want to be reformed. he will go on to say that it needs to be a europe where we are not part of that ever closer union that you are more comfortable with it he will talk about how there are two engines for growth in europe are the u.k. in germany. he doesn't want u.k. taxpayers on the hook for bailouts inside countries that use euro.

we have through a variety of mechanisms they have been through to rescue greece. clearly, there is money from the u.k. that has gone toward greece. they have not had to write those loans down yet. they are on the hook for that through a variety of different activism. we will see how this argument goes over. it's a long speech. he will meet with his --.terpart during a lot of this is them making the case for what mr. cameron will be specific about a couple of days. francine: thank you so much. the story is getting a little bit of traction. that will play into the referendum we have in the u.k. in the next 18 months. viewers, surveillance is up next. we will talk to jimmy wales. ♪

francine: strategic reviews. ubs's profit has doubled. the omission scandal spreads. they will look into more vw diesel models. the spotlight hits worship. druggie celebrates four years in charge. we will talk monetary policy. good morning. this is bloomberg surveillance. tom keene is in new york. tom: