Of sweden. Sweden is not a member of nato. Neither is russia. Good morning, everyone. From a meeting of the World Economic forum, i am tom keene. Francine lacqua will join me in a moment. It is called today. It is adapting to the new world order. We will catch you up on the news in london, with sebastian salek. Europes biggest bank, hsbc, says Trading Operations that generate about 20 of revenue for the Investment Bank in london may move to paris. Speaking exclusively to bloomberg, Stuart Gulliver and was confident about londons future as a financial capital. Stuart this is a decision british people made, so we need to execute it. But london will return london will remain a global mental center. Ofelieve the revenue impact brexit on Financial Services will be made good in two or three years time. I do not see the Foreign Exchange market moving, the equity market moving, the highyield bond market moving. Specific we will happen is those activities covered specific by european legislation need to move. Looking at our own numbers, that is about 20 of the revenue. Seb meanwhile, the president of ubss Investment Bank said his organization will also move out of london. Brexit, we will have to. The question is, how many . It will very much depend on the agreement that the u. K. Will but yes, wehe e. U. , will have to move bankers. An option ine have frankfurt. We have property set up in spain. We have, still, flexibility to decide where to go. And we will definitely have to go. Saudi arabia has promised it will reduce the overall tax rate paid by National Oil Companies to make the ipo potentially one of the largest in history. The aramco ceo spoke exclusively to bloomberg at davos. The company, with what is remaining, is able to, for example, in 2016, execute one of our biggest capital programs. And we paid a dividend in 2016. So going to the market, definitely, it will change. A lower tax rate in some ways. Exactly. Seb a special prosecutor in south korea is making his case for arresting the same son heir apparent for paying for political failure political figures political favors. Samsung has denied any isngdoing and said the court expected to rule within 24 hours. If you have ever thought how is is to buy a house in london or new york, expensive cities are all in asia. Mumbai and shanghai take years for a household with a normal income to buy an apartment. London came in fifth place. Powered by journalists and analysts in more than 120 countries, this is bloomberg. Tom thank you so much. It is too cold in davos to do a day to check, so we will go back to london. Mark barton . Mark it is not frigid here. This is my chart of the day, sterlingdollar intraday percentage moves, going back to 1992. Look what happened yesterday. A 3 move out, versus dollar. The biggest daily game since 1993. This chart shows every single one of them, going back to 1993, after Prime Minister mays brexit speech. Bank of America Merrill lynch says the worst for sterling is most likely over for now. What may go when she triggers article 50 . Hard brexit concerns may have peaked in the near term, leaving sterling undervalued. Deutsche bank disagrees. It sees sterling falling below 1. 10. Hsbc forecasts further depreciation, given political and certain key. A 3 rally yesterday. We are falling a little bit today. It is not every day a Company Loses a quarter of its market value. This is pearson. Shares climbing 25 . The Worlds LargestEducation Company withdrawing its profit goal for 2018, amid challenges in the u. S. Courseware market. And also, it says it plans to sell its stake in publisher bank when random house. It has lost a quarter of its value. Mark barton, thank you so much so much. This is arguably the most important interview for donald trump in doubles. This is the current minister of sweden. He is a trade unionist, and he did not overlook beginning on third base like the president elect of the United States. He took welding courses at a young age. Rosa through swedish politics. And joins us now from our studio. Esther Prime Minister, wonderful to have you here. Populism seems to be a substitute for a new kind of conservatism. ,ow do liberals respond including liberals in sweden and the United States . These are worrying times, and we have seen it over the years, that people are getting more and more concerned about the globals about globalization. We have winners, of course, in globalization. We have very clear signals we want to reduce poverty, increase education for boys and girls. Those are good signs. But also we can see people are losing. And they are feeling threatened by globalization. That means that we have to show that globalization and our societies are developing in such a way that you are on board on this future project. It means jobs. It means decent jobs. It means equality, social youlity, welfare that gives some trust for the future. So we need to change these worrying times, uncertain times, into more certain times, and a positive attitude to the future. Tom to yourself, within the turmoil of european politics, we have the netherlands, the french, and others with elections, germans with elections. What should be the e. U. Response in the early days of a Trump Administration . To stay united, of course. Tom to have one voice . It is very important for europe and america. I would say it is very important to keep developing the transatlantic link, because that is beneficial for both parties. We need to stay on that track and develop that. For the European Union, given the happy brexit negotiations coming up soon, we need to focus on those, of course. We also need to focus on the larger scale, on the larger pic sure. Larger picture. One of those is cooperation with the United States. Tom americans and i am the ugly american we look at scandinavia, norlin norway, sweden, denmark, we learn for two weeks in school and we move on. I know that is a naive view. Explain to me swedens distance from the toe when you see the heritage of finland with russia and the threats from russia. Can sweden stand aside, as it has for years . P. M. Lofven both sweden and finland are outside nato. We are nonaligned countries. For us, it is a way of keeping the stability in our region is in our region. Changing that would mean more instability. But we are taking responsibility for ourselves and our region. So we are increasing our own military capacity. We are increasing cooperation with the nordic, baltic countries, with nato, with the United States, with the u. K. , and so on. Sensitivities that the present administration, the administration of mr. Obama did they err in their expansion of rhetoric of nato to the east . P. M. Lofven i am sorry, did they . Tom president and secretary kerry, did they err in expanding nato to the east or the talk of moving eastward . Was that a mistake . P. M. Lofven no, that is something that they have to decide during the decisions they were about to take. But we also stated to president obama and Vice President biden and secretary kerry that we will stay nonaligned, and they respect that. So in this environment, we all need to make our decisions. Defend thehing can action from the russian side now. Ukraine, the annexation of crimea nothing can tom there is conversation of the elimination of sanctions that mr. Trump would support the elimination of sanctions. Are those sanctions constructive against mr. Putin and russia . P. M. Lofven we need to adhere to international laws. For small countries, this is very important. You cannot just change borders. That, we will have disorder around the world, because if one can do that, another country can do the same. We need to stick to international law. As long as countries do not adhere to international law, we also need to be prepared to use sanctions. Tom mr. Prime minister, thank you so much. Is thelogan lofven Prime Minister of sweden. The ubs chief executive officer will join us in this hour. All of that with Francine Lacqua. From davos, this is bloomberg. Good morning. Francine a special surveillance here in davos. We just finished a panel on populism. It was great. If you look at the three point plan to combat populism and the antiglobalization wave, panelists including christine letsLarry Summers get back to globalization, but talk a little bit about banking. Lets talk about what it means for some of the revenue growth. For joining much us, as always. When you look at your bank, where do you see the most growth, and terms of where it is coming from, in 2017 . Obviously, u. S. Momentum. We see good growth in asia, although it is slowing down compared to the last few years. What i would say u. S. And europe, clearly, things are pointing at developments. Francine more cost cuts to come for ubs . Sergio it is about executing the current plans on cost optimization. Were always talking about net cost. We also make a lot of investments. We do need to change our levels as an industry, and also as a bank, freeing up resources to invest in new technology, and also to respond to regulatory requirements for new setups. Talking about regulatory requirements and going back to what you were saying about the u. S. , are you expecting donald trump to deregulate a lot of companies, which means you will attract more business from companies that are willing to take advantage . Sergio it could well be, outside of the financial sectors and banking. But i think a lot of deregulation coming through the right thing to do there are, at the margins, some intended or unintended consequences of the regulation that has been implement it over the last few years that needs to be rethought. But in general, i do not think there is going to be deregulation. Probably, it is going to be a slowdown and a more pragmatic approach to it. Francine what worries you the most . You are looking into 2017, with brexit, possibly moving some jobs. You look at what is happening in the u. S. And volatile markets. What we focus on . Sergio our focus is really on executing our plans, to be honest. ,e see, in the last few years 2016 was a year of a lot of changes. To try to focus too much on the macro and the outside environments. We stay focused on executing our plans. The u. S. Are promising a market for us. Business is starting to deliver solid results. Francine do you worry about being able to retain balance . Is that part of your thinking when you come to bonus and compensation . Sergio not really. I think compensation is part of the equation. I think it is not the only motivation for people to work in an organization. So we have a clear strategy. We are strong with our capital position. We are an attractive employer. We try to be attractive to newcomers. Most importantly, to our existing employees. Francine talk to me a little bit about your asset management. How much are you expecting to manage by the end of the year . , still,asset management we see growth. If you look at our client business, we expect to grow around 50 billion of assets. That is in line with what we did in the last few years. And if you take into consideration that in those numbers, there is a lot of clients changing theirrisk profile, booking centers, and so on and so forth, i think it is a solid result. Francine is it also new money coming in, and where is it coming from . Do you break it down by region, or in terms of types of people that want to come in . Sergio it is a good mix. Clearly, we are skewed toward High Net Worth individuals. Asia is a big engine of growth. In general, we saw good flows coming in from all segments. And the very important item for us is that, a, we have not seen a lot of leverage. Money is also a function of how much leverage clients want to take. Our plans were riskaverse. Is that we arec also very selective in the way we onboard new money in terms of profitability. I think we could get billions and billions of new money, but structurally, it would be a loss leader, because low rates or negative rates and capital consumption is also factoring into on boarding. Francine steve factor in possible do you factor in possible trade wars in emerging markets . Sergio not really. I do not think those things are going to play out in 2017. It is time for the world to adapt to the new market. Francine if i am a High Network Individual human asian market, i am a High Net Worth individual in an asian market, why would i choose you instead of a competitor . Crowded, but well defined in terms of the offering and what people are looking for. I think we are very well equipped to serve not only altra clients, but also High Net Worth individuals in high affluence segments. We have a lot to offer. We have a longstanding presence in the wealth management. It takes hundreds of years to build up such a franchise. So the so that is a major advantage. Francine when you look back at 2016, did we a lot of markets most markets actually missed the global populism and a lot of market signals. Have you learned anything as a ceo on how to do things differently because of the last 12 months . Sergio it is a process. It is nothing new, populism. It is something we feel more and more, because probably people see the latest developments in the u. S. As a big step towards that. But in europe, we have been used to populism for a while now. So im not very surprised about those developments. But, you know, we need to do something that conserves it, but also need to be pragmatic in realizing that populism is not going to be addressed by coming with slogans and shortterm solutions. We need to address the fundamental issues that is inequality is driven by two factors. First of all, a need to retrain people to stay competitive as an employee, as a workforce. And number two, low rates. A low rate environment is putting pressure on the savings of people who have been counting on their savings for quality of life. And they seem more wealthy people getting wealthier because they are invested in Financial Markets. But we all know that Financial Markets is not the only way to measure the true net wealth. To therefore, we need address these issues, but not to panic and not to be populist it populistic as companies, and tom a political standpoint, address unease. Mays speech,esa getting out of the single market, a surprise . Sergio considering the last several weeks concerning the pressure on her and the government to come out with clear signals, i was not surprised at all. The situationider now clear. Having said that, the position position in a negotiation, and the clock is m2 ing to start to take countdown. Ck and to but it is too early for us to take a decision about brexit issues. Francine you have said that in the past. 1500ould move up to people. A clearer view of how negotiations are headed . Sergio i have no view at all, and it is unlikely to be clear months. Ext six to nine we are preparing for a couple of options. We have existing businesses in the continent of europe. And we will decide how to best leverage those capabilities in depending on how things play out. But i do expect things to be clearer maybe in the last few months. The very good outcome of yesterdays speech by theresa may was that she is also looking for a pragmatic phaseout. Francine a transition. Sergio i think that is the most important issue. No matter what they decide i hope they do not go down the route of creating more instability across the continent and in the u. K. , and potentially globally. Francine do you think you are a step ahead of your rivals or peers because of the banks record . Sergio not necessarily. It takes at least a year or 15 presence,build up a and entity. We have the advantage of already technicalnd some capabilities to execute transactions. So it is an advantage. But many others have it, so not really. Francine at a negotiation stage, it is difficult to predict how it will go. Are you expecting by the start of summer to have a better idea of how people you need to move, and how quickly . Sergio summer is too early, only five months to go. I would say probably towards the end of the year. You think about article 50 being called maybe march, april. It takes for us, it is going to be important to know at this time next year, the direction of travel. Francine do you think that swiss banks have in actual advantage, compared to u. K. Banks, because of this . Sergio it is more a mental advantage, because we are used to have a passport, and therefore it is nothing new for us. We are used to running a complex coming complex, multijurisdiction environment. Francine two banks in europe need to be simple fight . In europe need to be simplified . Sergio we could talk about making ubs less complex. Cases, the complexity is coming from the people who want that complexity. Francine bullish or bearish on russian clients . Sergio we have always been bullish on russian clients. We are staying out of these political debates. Russian clients are very important for us. It is just a country. We stay out of this kind of political issues. Francine what about the middle east . I imagine clients have changed their allocation strategy because of what is happening with the price of oil. Does that impact your thinking . Sergio always a factor with oil prices. You could see, not only in the middle east, in general, oil countries, looking at their reserves and how they manage their reserves in a different way. I would say right now, with a more stable environment, things have been stabilizing. In general, people are reviewing wealthiews on generation, and trying to look at a combination of data and asset mix. But that is nothing new. Francine sergio, thank you so much for joining us. The ubs group ceo. We are also keeping an ion boris johnson, the u. K. Foreign secretary. He is speaking in india, saying the u. K. Will be out of the you the e. U. , but will be supportive of the e. U. That is on the back of the foreign secretary, having heard from theresa may. We speak first to the japan post ceo. That conversation, next. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi