banco espirito santo is getting a rescue. the nation has taken control of the bank, what happens next? we have a professor from the university of lisbon. good morning. was this handled in the best way possible? i think it is a good solution in the framework for the banking regulations. it is a new experience. how the market will absorb the idea and react. so far, so good. the bank is just opening the doors. about anyave any news negative reaction at this moment. >> will customers stick with the institution? >> there are hopes for everybody. the central from the to the other banks, industry will absorb the customers. if they do this they will move value to the bank. all that the industry gets reduction. there will be a transference from value from the new banks in the industry. the winners and losers. to increase capital. you have to give this to the customers and allow them to be stable and quiet as they used to be. >> how much value is there in this new bank? the portuguese are calling it a new bank whereas the europeans are

that is what has bailed out banco espirito santo.uckily, portugal still has $6 billion remaining from its bailout in 2011. the bad bank, problematic to use the word assets, held by the shareholders and the junior bondholders. they will include the loans in other parts of the espirito group. taxpayersews is that are not on the hook. >> well, they are in the short term. >> exactly. the senior bondholders are not on the hook. as in cyprus, the depositors are not on the hook as well. this is similar to what happened with the bank in england. arejunior bondholders taking some of the hip as well as the shareholders. the berlin sharing process was put in place by the european union the last 12 months. >> 2016, seniors could be brought in as well. >> exactly. some are already saying that if the bad bank needs funding, it is possible that the senior bondholders would be wiped out, which could bring in some of the junior bondholders. which could bring in the senior shareholders. that is what some are speculating. next?t happens you have laid o

portugal spending $6.6 billion to bail out banco espirito santo .ll be divided into the bureau and bondholders will be stuck with the bad bank with a worse assets. i want to turn to a specific focus, technology. my guest host just step down from the board of yahoo!, which has a significant stake in alibaba, estimated at $20 million after taxes. once alibaba goes public next month, the true picture of where yahoo! is headed will be seen. welcome our guest host, activate cofounder michael .olff great to have you here. what is your take on this company, alibaba, post-ipo? >> there is a huge amount of growth in the chinese market. alibaba is dominating the market , but it's not clear what they will be, going forward. whatsapp is 400 million users. i think we will see a alibaba grow the chinese market. what is even more interesting is alibaba is not making significant investment in this country. >> you have seen some acquisitions from alibaba. think we should be watching more closely is that alibaba has started a site that competes directly with amazon a

the bank of portugal has announced details of a $4.9 billion rescue of banco espirito santo.ailout money three years ago. it will split a good bank with healthy assets and a bad bank with risky assets. it's the first time european rules are tested to make sure taxpayers most directly deal with the fall out when the bank fails. just start with viewers around the world a little about this bank. it's a private bank run by a family. >> yeah, it was founded by the family about 100 years ago. the family only controlled 25% of the stock. that's now down to 20%. they have to sell shares to cope with their own financial problems. the bank itself ended up lending money to other group companies. the the fact several group companies are now in protection from their creditors in lucksingburg means the bank was liable for billions of bad loans. that led to this rescue. >> is this an isolated case or wider sign of troubles with portuguese banks? >> it does seem to be a specific case. as i say, it's a family controlled group. it seems the family was very keen to try to hold onto control of t

joe santo -- banco espirito santo group which got them involved. >> this morning i think there seem to be a little bit of relief. >> the authorities have drawn a line in the sand. yesterday's move removes key thertainty around the bank. lenders are stronger and safer than before. i spoke with a professor at .obert kennedy college he said there are still some unknowns. >> i don't think he drew a line in the sand. that is a positive to see it. that is on the other side a bit symptomatic. the evolution of the banking sector is not over yet. we don't know. it was a bit of surprise. that is the concerning side. that is why investors will stay away from banks. we have to be careful. >> you do the math. it's something you brought up. or to bill had 6.4 billion euros remaining from its bailout in 2011. the bailout cost 1.43 9 billion. who pays the next bailout? >> that is the big question. i am going to post that to you. who pays for the next one? >> i don't expect the next one soon. let's be clear. the senior bond holders have been spared any losses. if the government is not willing .o pay >>

. >> portugal's central bank has taken over struggling lender banco espirito santo. tapped nontaxpayer funds funds, using money already set aside, and it is already getting a new name, it is novo banco. >> daimler says it is cutting prices for spare parts by 15 pers%. this comes as beijing investigating auto makers for possible price manipulation. other frands like audi have so cut prices amid the crackdown. stoking u.s. economy giving auto makers a boost. sales in july indicate deliveries may be heading for their best year. craig, who are the big winners ere? >> well, it was easy to look at detroit auto makers and see 10% growth for those companies. but really an interesting performance for the month was out of toyota. the company for the first time in quite sometime actually outsold ford for the month. which we've only seen sparingly in the last few years. see lexus outsold mercedes-benz and b.m.w., which is another victory that we see fairly so that the companies really rebounding in the u.s. market has been sort of a slow recovery from the tsunami of a few years a

they will bailouts banco espirito santo oh. it will be split into a good bank and a bad bank.ctric says it will invest $2 billion more in africa by 2018. -- the ceo calls africa one of the world's most promising markets. shares have grown from almost nothing to a big game. and it is safe to drink the water in toledo, ohio. toldeds of thousands were not to drink the tap water, contaminated with toxic algae. the toxins have returned to acceptable levels. argentina announced it has defaulted. it's restructured debt constitutes a credit event. yet, the bonds continue to trade at $.80, perhaps confidence that a deal with argentina's holdout creditors can be worked out. our correspondent has been following the stories since the beginning. welcome back. now? things stand >> things stand at a bit of a standstill. right now we will see if talks will continue between argentina and their holdout creditors, including elliott management. the judge at the hearing on friday was very disappointed that things have come as far as they have and he wants talks to continue. both sides and said the

to banco espirito santo, the question will be put, is a concern about the speed in which one of the biggestiled? russia, how do you deal with the russian issue? >> we talked to carl weinberg earlier about that, it is o verlay. here we come with the headlines are the ecb. and much by rote. >> unchanged. we expected unchanged, it is about what happens next and the pressure building on him to do more. that question will be put to him. you have an asset purchase plan, when is it coming? inflation in the euro zone has dropped to 0.4%. that is a concern. >> how powerful is the bundesba nk in fronankfort? how much sway do they have? >> they have atrophic amount of power. the difference is the weaker data is starting to filter through into their own industries. that is something they have got to deal with. one of the reasons you have seen the bundesbank almost capitulate over the need for more qe. in the bond market, i know what , yieldsg in bunds at record lows. spain went to market, issue 10 year debt at record low yields. lowerrket is pricing in inflation, some might say it is pricing in deflati

in global news, portugal is rescuing banco espirito santo. it's a 6.6 billion bailout.bled financial giant will be split into a good bank and a bad bank. the major european averages in early trading on the back of the news have been mixed. they were sharply higher when the news was first unveiled late last night. the ftse,

of course, you've got the banco espirito santos issues as well. the s&p, dow, nasdaq all down terribly. and this is your worst week since, pick your date, april, january, or april. back to you. >> thank you very much. we are heading towards the close with ten minutes left in the trading session. the dow well off the close. we were down 125 points at the low, now down 54. we have more on the markets as we wind down what has been a rocky week, coming up here. >>> another story we're following, v anvaeant respondin a lawsuit. ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. over 1.2 billion eyeballs are on us during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't wa

reporting a slump in second quarter profit heard by the crisis facing banco espirito san santo.a stake a writedown on that. seeing shares of that stock up in the green today. german automakers also some of today's biggest movers. bmw reporting second quarter operating prost that rose 26%, came in above forecast and boosted by strong china sales, bmw closing up by just a fraction of 1%. when those markets closed just moments ago. >>> start-up dap across america, a national event spearheaded by two former small business owners turned congressmen. aentrepreneurship around the country, they join us first on cnbc. on the phone, colorado democratic congressman jared polis and joined by california republican darrell issa chair of the house oversight and government reform committee. gentlemen, good to have you today. >> well, thank you. >> thanks for having us both on. >> and covering this month-long tribute, if you will, to start-ups. >> we're excited to see what you have in store. i'll start with congressman polis, who joins us on the phone. you started a company, sold it to liberty m

>> maybe portugal's done, but i think the bank in portugal, banco espirito santo to be emblematic because we are coming up to a big event in europe where they will reveal what are the quality assets in the european banks, and we think there are a lot of problematic assets in european banks. it's why we believed among leaders within europe in the financial community that there are other banco espiritos out there and we're going to find out what they are, where they are as we go through this process, as they're forced to unload these assets. because remember, we're going through a big shift in europe where it used to be country by country that controlled the banks, and now it's going to be the ecb that's going to control the banks that's supposed to eliminate a lot of politics, kill a lot of banks that have been allowed to survive because of their connection to politicians. but that's in theory not going to happen anymore. so, there's going to be days of reckoning coming soon. >> yeah, and this one's so interesting, michelle. it's fortunate that portugal had this leftover bailout money sitt

in global news, portugal is rescuing banco espirito santo. it's a 6.6 billion bailout. the troubled financial giant will be split into a good bank and a bad bank. the major european averages in early trading on the back of the news have been mixed. they were sharply higher when the news was first unveiled late last night. the ftse, the major averages in france and italy are positive. the dax in germany lower by a fraction of 1%. in asia, major markets are mixed at this hour among the headlines out of the region. growth in chinese services sector slipping to a six-month low in july. the non-manufacturing pmi showed new orders rose at the weakest rate in at least a year. brian, the nikkei is down slightly but the rest of the major averages across asia are slightly higher. >>> kayla, thank you very much. folks do think it's a slow summer week. you better think again because another big round of earnings are coming your way. among the companies set to post numbers this week, aig, disney, time warner, aol, fox, cbs, wendy's and hundreds more. the wall street journal reportin

espirito santo collapse. the "wall street journal" reports they helped put together billions in securities issued by offshore investment vehicles of bancospirito. they were then sold to the portuguese bank's retail customers. also, u.s. banks are reportedly thinking about moving some operations to ireland. did you see this story? if the uk exits the eu. the "ft" says bank of america, citigroup and morgan stanley all are preparing preliminary plans. ireland said to be an attractive location for some european businesses because the banks can move out of the uk because the tax issues, also some other things. so, there you have it. by the way, did you see, this is actually the story i wanted to talk about. did you see this? "fed blow to global banks over living wills"? i remember about a week and a half ago, all the banks found out that their living wills were not good enough, and one of the reasons was because all of them expected to be able to get to what's called the discount window, which we know so well in the last financial crisis was so important. now the fed is saying no discount window, you can't touch it, and a lot of people sugge