Nations nuclear arsenals. All of the latest from moscow. Welcome to whatd you miss . Bloomberg daybreak europe, our flagship show from the city of london. Deutsche bank, 50 less than at the height of the speculation of autumn. 1912. 50 ofe bank settles for the number originally expected. Monte dei paschi will ask for state aid from what we understand. I have gathered together the price to book ratios. The red is that of the whole of europe. How decimated is Banca Monte Paschi . 05 . Barely Deutsche Bank trade that. 4 , the blue line, and it has seen a little bit of recovery. The question the market needs to ask itself today, is there a renewed probability of rising values once a state bailout is in place and Deutsche Bank settles with the regulators . Deutsche bank has put 9 billion 2008. Ince 200 defrauding fannie and freddie and mortgagebacked securities has drawn and 46 billion in fines, but this is a state of play. As a proposition to the market, do you see a resurgence . The yield curves are rising. Is monte paschi and Deutsche Bank on your buy list . Not least the trumped week as well. Have a look. Manic fairly flat at the moment. Discretionary down by 1. 1 . The data was mixed. Household purchases great, but the jobless claims rising to the highest level in six months. Al golden here up a third of 1 . Here upave got gold in 0. 3 . The have contracted for the 30th day in a row. A long drawng removal from gold and oil off by zero point 4 . Oil trims its weaker gains. Stockpiles rising in the United States of america. As eight span by 2. 26 Million Barrels last week so inventories are the highest in three decades and the dollar, a little bit of a pod. Down by 1 8. Afflicting on the jobless numbers from yesterday. Those are your market. Things in focus. Gdp in focus in france as well. Confidence in germany would drive this last trading session before the christmas festival. Let us get the bloomberg first word news. Angie lau is with me this morning. Angie, good morning g. Says Angela Merkel germany will not give to islamist terrorists. She hoped that the attacker would be caught soon. The manhunt continues for the 24 euro tunisian expected to have driven the truck used. Deutsche bank reaches the agreement to resolve a yearlong u. S. Investigation into its dealings and mortgagebacked securities. The bank will pay 3. 1 billion civil penalty. Italy is readying as much as 20 billion billion euros, rather to bailout the countrys banks. The news came after Banca Monte Paschi failed. It could be followed by rescues for other lenders including banco popolare. Toald trump has asked boeing replace the f35s. The joint Strike Fighter is intended to be the main state fighter of the air force, navy, and marine corps. Its development is more than a decade in the works. Saudi officials have presented the most detailed budget in its history over an hours long News Conference. The presentation included scenarios of how public finances could evolve through 2020 after being hurt by two years of lower prices. 30 Energy Minister the saudi Energy Minister said local oil prices will rise. I cannot specify the date, but it will not be late in 2017 that as we do it soon enough. Angie global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 100 20 countries. Of course, you can find more on the bloomberg at top. 120 countries. Of course, you can find more on the bloomberg at top. Manus cocacola buying the bottling businesses in african by lloyds bank, bank of americas credit card business. They are buying delta lloyds. The agreement is delta lloyd have agreed on this as a transaction. You have the dutch insurance and investment company, nn, for a broad church, the description of nn. Deltaave agreed to buy lloyd. A return on equity, by 10 . They would be delighted with the return on investment of 10 for 2018 onwards. Double digits in terms of dps from 2000 and 18 onwards. Another deal, another date. About us get to asian markets. Any christmas cheer for me, juliette . Only if you are Holding Stocks in new zealand. Santa has not found asia just yet. We have had a bleak day. The regional index excluding japan, which is closed. Being hit quite hard today. We are seeing volumes very light ahead of the long weekend, with many markets closed on monday and tuesday after christmas. Australia yesterday hit a 2016 high. Today, we saw that weakness in the Iron Ore Price heat a lot of the minor players. It was a shortened trading day in australia and new zealand. Hong kong extending this slump into correction territory and seeing these property players under pressure and concerned about outflow. Consecutive0th session in hong kong and the hang seng off by 0. 5 . Down more than 10 from that september 9 high. From somecoming down of its gains, off by. 9 . It hit a sixweek high. Elsewhere, we are seeing general weakness coming through in the emerging markets, particularly worth noting the controversial thatnts from president hit the gaming stocks in the philippines and this is a stock that globally has performed the worst in this quarter. This is not a great session for the asian equities. Manus. Thank you very, much. Hoping santa clause will visit us both. Juliette saly with the latest on the markets. One of our biggest stories of the day is Deutsche Bank and it is said to have reached 7. 2 billion dollar agreement to resolve its u. S. Mortgage probe. It ends years of long investigation and removes a legal hurdle of its fuel investor angst. Matt miller joins us now from berlin. Good to see you. We have been waiting and debating about the crisis. 14 billion. Today, 7. 2 billion. How will that be paid . Of thehat is one interesting parts of the settlement agreement, manus. 3. 1 million billion dollars is going to be paid in cash as a civil penalty. 4. 1 billion will be paid in consumer belief, in ways like modified loans, so Deutsche Bank has said it is not clear if that is going to have a real financial effects on the Earnings Report that it is going to put out in february for 2016. The cash payment will take 1. 2 billion out of earnings for the Fourth Quarter, and this is a little bit more than Deutsche Bank had budgeted for. They had budgeted about 2 billion to the cash raymond and were looking at 1 billion more cash payment and we are looking at 1 billion more than that. Manus this bank has been battered since 2008. 8 billion set aside for the provisions. They have been involved in many different disputes. They have talked to find down by down by the fine almost half. We talked about surviving. Is this still too much money for the bank to bear . 7. 2 billion . Matt they have put aside 6. 2 billion right now for all of their legal issues, so this is 1 billion more than they budgeted for, and they have still got things to look forward to on the horizon. They have been able to bring the fine in under some estimates. Banks have a couple of coming out and saying, 9 billion dollars, kbw said 9 billion would be the upper threshold for pain. Deutsche bank is going to need to raise 16 billion in capital, not even counting this fine, so it depends on how you look at it. Than u. S. Banks have had to pay relative to the size of their loan book. Bank of america had a loan book four times the size of Deutsche Bank, but only had to pay 16 billion, so less than twice as much. Manus i love the way we both have become so utterly immune. They only had to pay 16 billion. And u. S. Institutions only had to pay 48 billion since 2008 for contorting, distorting, and moving over 80 of markets. Variety of a markets. Matt miller, joining us. Let us bring in our guest, christian schulz, the European Economic director at city. Thank you summit for coming in this morning. Pieces on the chessboard. Deutsche bank moving on. 7. 2 billion and change. No mean feat. It does move us through the eye of a market storm. Just two months ago, we were talking about Deutsche Bank going bust, and contagion from Deutsche Bank. Your First Impressions when you hear that piece of news flow . Christian from an economic angle more generally, it does not seem that germany has held back on the fragilitys in the fragilitiesor in the Banking Sector. Know, this one particular bank is a very large bank, but given the diversity of the german Banking Sector, it is certainly not the only bank that is available to provide a credit. Questionse got many when i have been talking to investors about the german Banking Sector. This is clearly one of the main banking stories. If this move towards resolution, im confident i will have less questions about the german going, Banking Sector forward and perhaps more questions about the political outlook, about why the german economy, which has a little debt is not growing faster than it is, what constraints there are, because these things manus what is the biggest constraint . I look at the italian story from a market perspective and i say this is moving through the eye of a big storm. What is moving germany back . Everyone is clamoring for fiscal latitude around europe. Do you see that . This is the inflation at dictation, by the way, the fiveyear for the whole of europe. In 2017 atgermany all, driving miss fiveyear fiveyear further and higher this fiveyear fiveyear further and higher . Christian i guess for the first time in a very long time, be listed chance that Angela Merkel will not win the election, but it remains the case. Manus christian, christian there with the polls. Christian any comment on politics, we should not start with current polling. It is going to change. It is a few months away and there is the chance that merkel will not win. The most likely alternative would be some kind of leftwing coalition and that may lead to a little bit of a fiscal easing in germany and perhaps more importantly, lets german strictness on the enforcement of the eurozone fiscal rules, perhaps opening us to European Investment programs, so that could be the fiscal tailwind that people have been looking for, if she is a poors reelected than mr. Schwab remains the finance minister. Manus how worried are the clients that you speak to behind closed doors . Now that we are seeing trump, seeing cameron don, seeing rising up ofg the marine le pen, are they worried merkel could go and the ramifications of that . Christian anything is possible and everybody is much more open to discussing the alternatives than they were previously. I mean, the merkel story came before brexit and trump really became evident. The refugee crisis, her she is above 50 in most popularity ratings, which in the g7 still makes her the most popular leader, but of course, a lot less than she was before the refugee crisis. The story has been around for sometime. People have been assessing what it would mean and there has been ups and downsides to her. She is a most experienced leader in europe. We had major challenges with exit, the refugee crisis, euros on reforms coming up, and you need somebody who can commit the biggest economy to resolving these issues, and a new guy or woman may not be able to do this. The upside could be that some of the restrictions that germany theput around resolving crisis with fiscal stimulus perhaps, with a european deposit Insurance Scheme for the Banking Sector, debt neutralization, support for the ecb, some of these rejections could be lifted if there is Something Else there and things move forward more quickly. Manus absolutely, those could be quite prophetic pieces of changes. Let us get yousef up there for your highlight of the day ahead. It is not one, the christmas shopping. Consumer confidence to asia. Theinutes later, it is french gdp reading and at 9 00 a. M. London time, annual News Conference. Hunger in, get the popcorn. In, get the popcorn. It is a long one. The final meeting of u. K. Gdp and the London Stock Exchange and the u. S. Bond market close early, ahead of the christmas break. Coming up on daybreak, the country government ready to monte paschis plan fails. From the land with the latest. Saudi shakeup. And historic budget prevented as they aim to wean the economy of oil. We going into the details. Brexit votes sixmonth on. Months on. The u. K. Waits in the e. U. Departure lounge. This is bloomberg. 6 21 hereis just gone in london. It is 2 21 in the afternoon. Gorgeous shot of the harbor in hong kong. Not so lovely for the hang seng. Down. 5 . That is get a bit of Bloomberg Business flash, a little bit of cheer with our juliette saly. Juliette the u. S. Justice department sued barclays for fraud. The boj says investors would have seized the risk of securities. Barclays rejected the governments accusations. Volkswagen has agreed to further settlement terms with owners of premium diesel models. The settlement covers gw, porsche, and audi vehicles after 2009. It is part of a larger accord that will add 1 billion to what the company has agreed to pay regulators, consumers, and lawyers in the u. S. And canada. Sixmonth on from the u. S. For number, signs are pointing towards a hard brexit. The temperature of the u. K. Economy this morning with a final meeting of the Third Quarter tp and a first look at the performance of the Services Sector in october. And manus, that is your Bloomberg Business flash. Manus thank you very much. Let us return to one of our top stories. 20 billion euros into the countrys banks after monte dei paschi failed to secure funds from investors. A nationalization of the world oldest bank could also see other lenders seeking lifelines. Joining us to discuss the story financeloomberg managing editor. Christian schulz is with me in the studio. Thank you for joining us. How did we get here, alicia . And how did it take so long . It has been a slow bar. What we have seen over the years of Economic Contraction accompanied by what you would expect, which is an increase in the stock and the banks not of theg rid stock. The model is not been profitable, and under these various squeezes, the banks have found themselves in a position in which they have up and able to find private money, private investors who are willing to take a leap of faith and back their turnaround at this juncture, even if monte paschi would have removed most of the bad debt from its box, or a large chunk of it, investors are not to that would be sufficient to maintain a viable Business Model in the aftermath, and this is what we are seeing. It has been very slow over many years. Manus i suppose the question we have to ask ourselves and the great deal we made of this is the bail in. This is going to be an interesting time in terms of where they are built in. Im going to interrupt both of us here. Credit suisse has reached a settlement, and this is breaking news coming in across the bloomberg terminal. Credit suisse has reached a settlement with the department of justice on retail mortgagebacked securities. Credit suisse will pay consumer relief of 2. 8 the endall are, so this is 2. 8 billion dollars. We had the news flow that Deutsche Bank had reached their settlement of 7. 2 billion. That was split between reparations to consumers and to the department of justice. Chargesuisse was a cap of some 2 billion. This will come in their fourthquarter numbers. That will come out and we will get those in january. This was his absolute objective, to shake up the bank, cut costs, get litigation out of the way. This is the vanguard at Deutsche Bank. Consumer relief, two point 8 billion. That is the latest on the department of justice. That we bring it back to you and the monte dei paschi. If we take this at face value, Credit Suisse resolving, Deutsche Bank resolving. We are moving forward at an exceptional cost. Quite an impressive night for news for european banks as you point out. Paschi, which symbolizes the difficulties that italian banks are going through. I think for the big legal cases, it clearly clears the deck in pledgedms, and the ceo removing litigation uncertainty is one of the key focuses. I think, once we look more closely at the numbers that are involved, the transparency Going Forward will be positively received by the investors. With the italian banks, that is different. They are injuring a very uncertain phase and will be essentially controlled by the government, and what we dont know is the type of restructuring the government has in mind for these institutions that are clearly not deemed to be viable by investors. Will there be more consolidation, will they take an aggressive start on the costs, for example . These are questions we dont have the answer to. For the italian lenders, the pain ahead could be a little bit longer. Manus great work by you on the team. More to come. Our bureaung us from in italy. Breaking news on bloomberg first. Ive spent my life planting a sizesix, nonslip shoe into that door. 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