but under basul 3, perhaps the bank is not even there yet.o the lack of information on that solvency ratio is part of the wider stock is nearly flat and there's actually a sharp contrast if you compare with another bank that was reporting here this morning, louislouisa. it's nine-month net profit was above expectationes and most importantly, this net interest income that i was mentioning, down 4.6% and down 14% for sabadell. over to you. >> stephane, good to see you again. thank you very much for that. of course, we are going to be speaking to the cfo of bankinter coming up at 17:15 fwlor ya ortiz. simon joins us in the studio now from olive tree. we were just hearing from carolin and stephane about some of the weak spots in the various banking stories at the moment. what's your take, first of all, on credit suisse and on santander? >> well, you know, it is quite a sharp contrast between what's going on generally. we've had decent results with rising revenues and falling costs in the nordic zone. but no one cares about that because it's all a

basul is packed with unintended consequences.n ten years time, it will all go horribly wrong and we'll have basul 4. >> you're telling people to buy everything? >> i'm telling people to be careful about what they're buying. buy risk, but do it smartly. and the bond market defensively. we're recommending a bar bell between long dated municipal bonds which v unduly beaten up and incredibly cheap. they have price risk, though, so you want to balance that out with floating rate securities like levered loans. get twice the yield of the market. >> you're worried about puerto rico causing widespread infections? >> perhaps. it has widened all mini bonds out. >> so 75% of municipal bond funds owned from puerto rico because of a triple exemption? >> they do. it's been a baby with the bath water syndrome on things like aaa texas. >> aaa texas is a great state. it has a lot of revenue, a lot of diverse -- >> the field there is what? >> >> wow. >> yeah. it's a great deal. price sensitivity. i caution you. balance it. >> hold to maturity and g

when i spoke to the ceo of the bank, he said to me that their target for their capital bases based on basul, that is not going to change as a result of the higher capital demand set out. the only thing that is going to change is their return on equity target by 2015. they're not now going to be able to reap that by 2015 but by at least one year later than that. let's listen in to what sergio had to say about the performance in the third quarter. he says that the banking model, that they chose to go with is worki working. well, actually, the third quarter was a challenging one, seasonally usual, difficult operating environment. we are very pleased with the way our last nine months have been developing. i think, yes, the performance is good across the board in all segments, but particularly the investment bank has been able to operate at a level in which the return on allocated equities was 17%. so it was a good quarter. >> how can you be so sure of your business model? if inflows were half of what you saw in the second quarter, the wealth management margin declined even further. does that no

he told me that the bank is still sticking to its target for a 13% core two one equity ratio over basul 3 next year and that means they're going to be sticking with their 50% payout ratio target after that. so that should be somewhat reassuring for inest havers, but i think this additional uncertainty and the surprise factor in because no one saw this additional capital surcharge coming. not even ubs. that really is hitting sentiment in the stock this morning. keep in mind, the stock haas a really good run, up 32% year-to-date. but yes, litigation is a big problem, not just for ubs, but for the rest of the industry. ubs says it's been quite transparent about it. >> we are being quite up front about our litigation issues, both in our litigation report and will in our language in the past. we will continue to look at litigation charges for the industry and for us. >> how about we talk about the actual numbers. they don't get much attention this morning. they were actually okay, broadly in line with expectations. net profit at 577 million swiss francs and that was slightly better than fore

come out and said we're going to want banks to hold 8% of common equities tier one capital using the basul 3 definition. they've been laying out the broad framework. we've had two sets of stress tests condifficulted by the financial crisis and getting stressed in a number of bank who went bust, as well. so a lot of pressure on the ecb to get this right. show you where we stand with tech sectors. barnlgsz rts weaker sector here in europe. as a result, travel and leisure up and chemicals are up. number of stock necessary focus this morning, as well, just quickly run through these. heineken, down 5% today. this is just the latest company to dmran about the strength of the euro. today, we hit a two-year high on euro/dollar. we just got numged up to 1.58 for the heineken, as well. talking about a week. cation demand, that stock up 7%. they're talking about maybe we need to unwind or losing our gm alliance, as well. and one final note, for all the royal watchers today, the duke and duchess of york are chri christening their son, george. we had a viewer who wrote in, joe, this is for you, listen

i'm interested in the basul level of -- >> the next two will be a mess. the expectation is in the third quarter when you started seeing more concerns of the tax increases that came in and the sequester numbers. >> the report brit was already weak. >> right. >> so was it slowing down? this is like -- when you put in the shutdown, it's like reporting earnings with one-time items. >> the one-time items coming in and then the next one going out. >> more interested in reference to what janet yellen and the new fed next year is going to be dependent on what the underlying economy is doing. not what the shutdown did, too. >> steve, is it fair to assume, especially prosecute what we have we heard from charlie evans, is it fair to say that there's no way they're tapering this year? they're going to have to get more numbers. >> no, i don't think that's fair. it's fair to assume charlie evans has numbers. i think charlie is a little bit kind of left of center. you put the doves there. i don't think -- look, what he said makes sense, that if you're looking for a real