in banking, monte paschi chief executive speaks to bloomberg about their $6 billion rescue.e will tell us how he plans to make the bank profitable by the year 2021. have a look at where european equities are trading now, 30 minutes away from the finish of the wednesday session. stocks are rising, shrugging off geopolitical tensions. awaiting the release of the minutes from the fed meeting which we will speak about with our next guest. currencies are falling against the dollar and yields are rising in europe with commodities moving in brent crude down 3.5%. we had pmi data out of the eurozone for manufacturing and services. expansion of .7% to the second quarter this by a slight slowdown. fromauge dropping 56.3 56.8. for the first time in more than three years, output increased and all nations, covered in the survey. that is significant as the ecb policymakers prepare to meet in the coming weeks. talking about portugal, portugal equities could climb 35% by late next year as violation benefits from the countries improving macroeconomic fundamentals. it says the head of equity

global tour of the week's top business stories in italy, where the e.u., the government, and monte dei paschireed on a new rescue plan for the troubled lender. >> banca monte dei paschi has laid out the five-year restructuring plan, including cutting jobs. the announcement came after the e.u. said the lender could receive 5.4 billion euros in state aid but only after shareholders and junior creditors have contributed to the rescue. are we now at the end of the troubles? >> i think they will be clearly getting rid of a large pile of the bad loans that have weighed on the capital. they are addressing the inefficiencies that have burdened the bank as well, but going forward the key will be to maintain those efficiencies, particularly with lending. the theme that has weighed on them generally is lending practices that should not have been getting them into the situation in the first place. >> prime minister shinzo abe's ruling party was well beaten in a local election in tokyo. we just heard comments from the prime minister, saying he will try to move forward on this as ldp is projected to win th

i can talk for monte paschi and only on what we experienced in the last six months. rules we were bound to comply with, the precautionary cap scheme, we did play by the role. us is what the negotiation took so long. we played by the rule. this is why the negotiation took so long. there will be a monitoring aspect to check and engage to what extent the bank is complying with commitments agreed upon with the european commission. we did apply all existing rules and regulations. >> some say the eu is being more lenient come a little more flexible with a total loss. thing that the european regulator is being a bit more flexible? terms, rules need to be crafted and then implemented. we must have a checkpoint to see actually rules do function properly and where the rules need adjustments going forward. this will be a good case to see to what extent the overall scheme of the camp works. as far as the bank is concerned, for us, for me, for my management team, for all the employees of monte paschi, this is clearly a turning point. the dust has settled and there's no clarity an

this is monte dei paschi. joining us from rome with an exclusive look is giovanni sabatini.of the european banking federation. thank you for joining us. it is been a week or so since the unwind of those two banks. what is your assessment of the deal? giovanni: good afternoon, mark. deal of all, i think the that the italian government was able to reach with the european institution after the -- is marking the a turning point for the entire italian banking sector. coupledrly liquidation with the green light on the paschiion of the monte will remove the dark clouds hanging over the horizon of the italian banking sector, as it has been a clearly -- as it has been grilli demonstrated by bullish reaction of americans in the recent days. italian banking index is up more than 2.5%. i think this is an important agreement, which is within the new rules. also, i think it is important to european that the military framework is able to deal with complex, and difference situations -- complex and difficult situations. as it has been pointed out by they needhi, different policy measures to

and monte paschi plans a return to the stock market as soon as possible.ll event on the bloomberg at tv . this is bloomberg. ♪ mark: live from london, i am mark barton and this is the european close on bloomberg markets. back with final thoughts from john roe. we basically answered all the questions he and his team talk about. what message do we get from low nominal and real interest rates? we did not discuss, how sustainable is the pickup and world trade growth? john: it is sustainable and we think that because china will probably remain a decent pace of growth for the rest of the year. we have the congress in the -- thequarter, they will biggest risk is donald trump and his protectionist rhetoric, he is deliberately holding off on announcing the steel outcome until after the g-20 summit which could be a bad sign because you get the same thing with the paris field where he waited for after the summit and said i am out and almost avoided the need to talk to people he may have been treating badly by simply refusing to accept where he was until afterward

bank monte paschi. they want formal approval from the european grocers. 4.5 billion euro from the italian government. it says the improvement is an important result for the banking system. we intend to put the bank back on track. with the market valuation, not only do it not fear that we intk back on track. we believe it will be positive. it will maximize its value to benefit the stakeholders. this is a goal that will be rapidly pursued. guy: speaking to bloomberg, the active ceo reached an agreement with the european and italian bank'sties on the capitalization. it was not a straightforward process. >> cumbersome process. we did entertain talks with bank's capitalization. regulators for quite a long period of time. i think the outcome is what the bank needs to move forward. guy: joining us now is bloomberg news bureau chief for italy dan liefgreen. any surprise we have heard? dan: not really. details on the restructuring plan, what the bank is planning. more than 5000 job cuts. closing branches. morelli, will be speaking again at a press conference after

the ceo of monte dei paschi will talk about restructuring his bank. why he thinks this plan will work. , this is new york bloomberg. ♪ jonathan: monte dei paschi laid out a five-year restructuring plan that includes cutting thousands of jobs and selling assets as part of an agreement with the european union that lets the bank received $6.1 billion in state aid. following the say result of many late nights is marco morelli. great to have you on the program. investors have seen this movie a couple of times before. the bank tapping investors for 8 billion euros requesting it twice in the park as well. why is this restructuring land so different? long-awaited day. long-awaited plan. we have been negotiating with a number of european regulators since the beginning of january. i think it is the first time the precautionary recap model is actually applied to european i do believe a lot of attention has been paid to structure the plan. to have something which would votinghe bank to start again in a sort of stable and normal commercial framework. i think we did

from your standpoint, from the ceo of monte paschi, is it good that the european regulator is being more, the rules need to be crafted, and then implemented, and then we must have a sort of checkpoint to see whether rules do actually function properly and do rules -- whether rules need adjustment going forward. i think it is going to be good, to see to what extent it works. as far as the bank is concerned, i think for us, for me, for my management team, for all of the employees of monte paschi, this is clearly a turning point. the dust has now settled and there is clarity and transparency on what the capital structure of the bank is and will be going forward, what is the impact of the final disposal of 26.1 billion gross npl. to draw the line and opine on whether the rules will work. i think we need more time to see how it will be unfolded. david: let's revisit a a few more of the week's most interesting interviews. starting with john mcfarlane, chair of the british lobbying group the city u.k. he is confident london will remain the center of euro clearing business after brexit. >> the t

the european union has given former all approval -- given formal approval to bail out monte dei paschithey gave the green light for nearly 5.5 billion euros in state funds. monte dei paschi is committed to a five-year restructuring plan. there has been concern in recent months. qatar plans to increase its production of liquefied natural gas by 30%. the small gulf state is the world's foremost producer of lng. raise to 100 million . sellingen will start cars in iran for the first time in 17 years. they signed a contract with local importers to sell two models at dealerships in the tehran area. iran is seen as a major opportunity for manufacturers struggling with stalling growth in europe and china. most international sanctions were lifted last year. uber is facing another legal roadblock. an advisor to europe's top court has said that eu member states can bring charges against uber executives for running an illegal taxi service. allowedion of the app unlicensed and nonprofessional drivers to connect with passengers. it was ultimately suspended after huge protest kate:s -- protests. the

. >> monte dei paschi says it has asn headcount cuts as much 5000.he details unless than a day after the embattled lender won eu approval to receive 5 billion euros from its government. entertain talks with regulators for quite a long time. i think the outcome is what the bank needs to move forward. the u.s. government is hardly getting involved in apple's text is good with the eu -- tax dispute with the eu. a report withd the eu. volkswagen plans to sell cars and iran for the first time in 15 years, taking advantage of easing sanctions as growth source in asia. they could offer compact suvs and the tehran area. rebuildruggling to operations in the u.s. after the diesel cheating scandal. francine: it is exactly one decade since the uk's central bank last raised interest rates. been 10en there have cuts. a new interview with the guardian member says the bank probably doesn't need the current level of stimulus and has warned hustles to prepare for tighter policy at some point. i have never seen so much talk about whether mark carney said the right thin

from your standpoint, from the , what monte dei paschi do you think? implemented,hat but then we must have a checkpoint to see whether rules do actually function properly. whether rules need adjustments going forward. i think it is going to be a good case to sort of see to what extent the overall scheme actually works. as far as the bank is concerned, i think that for us, for me, for my management team, for all the employees of monte dei paschi, this is clearly a turning point. that is not settled. there is -- now settled. ande is clarity transparency on what the bank is and will be going forward, what is the impact of the final disposal of 26.1 billion gross npl. draw the line and opine on the overall european schemes have worked. i think we need more time to see . ♪ david: let's revisit a few of the weeks most interesting reviews, starting with the exclusive conversation with the chair of the british lobbying group the city u.k.. he is confident they will remain in the center of euro business after brexit. guest: the thing you have to remember is tha

playing a role in the news flow. >>> the eu approved italy's $6 bui billion bailout of banca monte dei paschiter monte dei paschi agreed to a major overhaul. >>> an ambitious announcement from volvo the company is planning on phasing out gas powered cars this will make it the first traditional automaker to stop making vehicles powered solely by an internal combustion engine >>> disney channel's ratings have fallen about 4 million s subscrib subscribers. the channontent lacks popularit according to the article they say they are trying to improve programming and a shift to online platforms. >>> spacex may be ready for its third attempt at launching the falcon 9 rocket tonight. the air force approving a 7:35 p.m. eastern liftoff we don't know what caused the firm to cancel the attempt on monday but remember this is such a -- it's fun to watch. only because it could mark that next evolution in our space exploration program. >> and to see who get there's first, bezos, musk, blue origin. >>> nokia and xiaomi enter into a deal which includes a cross license to each other's cellular standard patents

. >>> let's talk about the italian banking sector, because banca monte dei paschi is aiming to sell 18 billion euros in bad debts by 2021, this part of the overhaul after the european commission gave the green light to the bailout of the italian lender the italian finance minister said he is confident in the bank's management team and hopeful about the bailout plan's potential. >> translator: i want to remind this plan gives certainties and a credible future to a bank whose capital level is important. prior to this plan, bmps's bad debt would be eliminated by the first half of 2018 for a gross value of 28 billion euros. the plan will be based on prudent economic estimates >> let's get out to claudia in milan. is this the all clear for the italian banking sector >> it does appear that way the positive comments coming out from the economy minister stating that he's confident, using words like the certainty, the credibility of the plan, that this is a positive turnaround for monte dei paschi, but it could signify the turnaround for the italian banking sector this plan will be coming throu

the reason all of this is necessary is monte dei paschi has bad loans of close to $30bn.vernment. last week's bailouts cost close to $6bn. here's andrew walker explaining why the poor state of the italian economy is to blame. it makes it very difficult for the bank's debtors to generate revenue to repay their loans. but what we have got is an uncomfortable hybrid between bail in and bail out. the idea was thatjunior creditors further down should take some of the hit and indeed many of them are taking some of the hit. but the retail investors are going to be eligible for compensation, which is one of the reasons why it will cost the italian government rather more than the european authorities originally envisaged when they created this system of sorting out problem banks that was supposed to put more of the burden on creditors. a really important aspect of sorting out this bank is dealing with bad loa ns. out this bank is dealing with bad loans. it will have new bad loans that go back over time, or existing loa ns that go back over time, or existing loans that go bad over

story ofhis developing monte paschi.ng italy's plan to rescue pavingld's oldest bank, the way for a $6 billion r jens -- injection. joining us now is our italy chief. why did this take so long? >> a couple of reasons. first of all, the european central bank had to formally establish that monte dei paschi is a solvent bank pay that is a requirement to get aid such as this. and they also wanted to make sure that they could find a way to remove this massive amount of bad loans. about 26 billion euros. ,hat they can get rid of that potentially, to private investors. they have a preliminary deal to do that through a vehicle set up about a year ago to help banks get rid of their bad loans. mark: monte paschi bowing to carry out this restructuring. what exactly does that entail? dan: we should get more details on that later on. we will have a press conference in rome with the italian finance minister, padoan, as well as the bank itself will probably put out a statement either later today or tomorrow, detailing the cost cuts. we

in banking, monte paschi chief executive speaks to bloomberg about their $6 billion rescue. make the bank profitable by the year 202

bank is concerned, i think for us, for me, for my management team, for all of the employees of monte paschiy a turning point. the dust has settled and there onclarity and transparency what the capital structure of the bank is and will be going forward, what is the impact of disposal of 21.6 billion gross npl. whether the rules will work. i think we need more time to see how it will be unfolded. a a few more of the weeks interesting interviews. ,tarting with john mcfarlane chair of the city u.k. he is confident london will remain the center of euro clearing business after brexit. >> london is the eu's financial center. it has been built not over decades, but centuries. it is not easily replicated in one place or even in a number of separate places, and if it was to be replicated in any tangible way, it would take an awful long time. you need an awful lot of buildings to replicate that. for example, if force came to tose and we weren't allowed do your-related activities in london, you would have to move the bank the size of barclays out, so it is pretty material. likely, think that is and the

the european had your given formal approval to the bailoutnt to blend -- monte dei paschi in exchange for a five-year restructuring plan. the bank's chief executive says that will involve closing roughly 600 of its branches and cutting jobs. it will also include getting nearly 29 billion euro's of ad loans off its books and onto a backup land. are no merger plans and no plan b. we are seeing major indexes in muted inlatively wednesday trading after being closed for the fourth of july. data for the pmi euro zone. all three major indexes showing modest gains at midday. very welcome tourists spending to destinations across the continent. not everyone is happy about the tight -- boom in their hometown. are beingsay the squeezed from their homes to make way for tourist. more than six in every 10 people living in the center of our son floatingnow called residents. short-term renters for tourist. sharon gaffney has more. manuel valls this part of barcelona home. the 76-year-old pensioner was forced to leave the city's popular gothic quarter last year when his rental accommodation was sold to

equity and bond masters come in and his twin pillar of resolving the banks and monte paschi, hopefully. whether it is the end of this chapter is too optimistic in my view. francine: there has been more and more criticism from germany. what does this mean for banking? dan: lots of questions have been raised about was it the letter of the law regarding situations like this followed? italy, and the case of these two banks says there was no other solution. in fact, if we want to reduce the risk of the italian banking system, there is no other solution. so far, it seems to have worked. francine: so far. we will have to continue to keep an eye on this. dan, thanks so much for the updates. coming up, conversation with the former u.s. ambassador to south korea. discuss the north korean missile crisis, how mr. trump, president trump can get their president involved? this is bloomberg. ♪ ♪ tom: so much going on today. francine in london, i'm tom keene in new york with matthew miller in hanover, germany -- hamburg, germany with the g-20 conference. >> in hamburg, germany, another day of clashes b

the head of the italian banking association said the liquidation recapitalizingnd monte paschi was aurning point. they also discussed consolidation. >> will probably end up less groups0 banks or banking active in italy. and the consolidation of the sector is already in place. we cannot assume additional consolidation. consolidation at the european level could be welcome. that is your bloomberg business flash. guy: the french president emmanuel macron is working to place his country in the age of enlightenment. rebuilding the spirit of ambition across europe. a two france to take initiative and i want to do it. in the month to come thanks to the close relationship i have established in particular with the german chancellor, before the end of the year, everywhere in europe we will launch to credit attendant -- conventions conventions toc unite people. new age of enlightenment. he is raising the bar. caroline, the highlights, he is talking about a new age of -- and heent thought is raising expectations. it is about the vision of france. he talked about the new humanist project revolutio

the only liquidation of to lenders and progress to recapitalize monte paschi was a turning point forry's financial sector. also discussing consolidation. >> by the end of this year my we probably end up with less than 140 banks or banking groups active in italy. and the consolidation of the sector is already in place. exclude additional consolidation. consolidation at the european level could he welcome. -- he welcome. juliette: that is your bloomberg business flash. our guest is still with the daybreak team, cracking story on the bloomberg. this is what they are saying and volatility and goldman say they have looked at the data. takes, they last for about two years. we are not that far into low-volume. what does it take in your mind to change the perspective on volatility question mark they say it takes a war or a recession. wayne: we have looked at a number of different conditions. to 1941 and looked at various different markets around the world. what is interesting is fuel in a bull market and you have a shock, you get a natural immediate reaction. marketed eight days, the lost 4.

banca the monte paschi, also resolved. in there limited test line of the banks in europe.jectory is to the upside. german manufacturing a little volatile. major andwe had steve he said there was a complacency in the market. this was the biggest one-day move since 2015. that outlier day we had. , in steven's mind, undid some complacency in the market, direction of travel in the bund market would be up towards .9%. what happens next in the gilt market? 10-year is on. ratesst time they raised was friday in the japan and u.k.. yields, we will simply bubble on at these levels. on .27%. no aggressive change from the bank of england. too many unknowns. the propensity for brexit to impact the real economy. i am off to digital radio with caroline. guy: manus, thank you very much. let's talk about how the individual stocks are moving. let's move to the outside. guy: manus, thank you very much. associated british foods, the western family company and we are seeing the prime are story little -- interesting to see how to respond.going up by nearly 3%. to the downside, a revenue miss in

that's what i -- i didn't sleep well the eu approved italy's $6 billion state bailout of banca monte dei paschi this comes after bmps -- that's what i will call it from now on, agreed to a major overall including transferring bad loans and capping pay for senior managers. >>> volvo says that every model from 2019 onward also have an electric motor this will make it the first traditional automaker to stop making vehicles powered solely by an internal combustion engine i was kidding, they have a couple cars that are not that ugly i was like -- they talk about the old volvos they used to look when they were saf safe >> those boxy scare vol yy squa- >> i still don't like them >> but the safety. >> there's a lot of safeguards, i don't know if on the tests whether they outperform. there's been strides made. >> a lot of car companies, yes >> a lot of car companies are safe you don't need to drive a boxy swedish whatever it is >> it's another competitor for tesla on top of jaguar, mercedes and audi which all have cars -- >> why can't bmw -- bmw and mercedes figure it out that is what scares me about th