Today we bring you our weekly show, brexit whats next, bringing all the news and conversations around the u. K. s vote to leave the eu. Today we speak to [indiscernible] we are live also at the first eu summit in four decades without the u. K. Francine, im here in bratislava. The meeting is commencing behind me. Tokel said they are critical show unity. We have tsipras saying we must stop sleepwalking in the wrong direction. We will bring you all the signs of whether they are singing on the same sheet. Is it more integration or less integration in a postbrexit world . Francine thank you so much. We will have prompting more from caroline throughout the program. Deutsche bank, this is the share price at the moment, down significantly. Opened 7 lower. First lets get to the bloomberg first word news with nejra cehic. Nejra donald trump has dropped a major taxcut for business organizers from his tax overhaul proposals. The change will make the nominees plan much less favorable for private equity partners, hedge fund managers, and others who receive income from partnerships and limited liability companies. Such entities pass their earnings through to their owners, who are taxed at individual rights. Japans biggest bank has urged the boj to consider the side effects of Interest Rate. Japanese banks have struggled to make money from lending. The boj will reveal the results of its latest review wednesday. The leader of the u. K. Opposition labor party says norway offers britain lessons as it prepares to leave the European Union. Said hes sending his Foreign Affairs spokeswoman to oslo to examine how officials there managed relations with the eu. Always in the European Economic area, giving it access to the Single Market, but it is not in the eu itself. Maybe we can learn a great deal from norway. It does have a successful expanding economy, albeit based largely on oil, and it is a smaller society, but they have a Strong Social democratic tradition. They have a huge and effective welfare state and health service. The model of their economy is not that different from what we in the labor party talk about. Nejra global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. Lets head to the bloomberg with mark barton for a look at the banks. Earlier we fell as much as 8. 2 . We know what happened. That equates to 1. 2 4 billion claimafter a 14 billion from the u. S. Department of justice to settle this investigation. The figures as the german lender wont pay. Lets put that in perspective. That is equivalent to a majority of its market cap. Its market cap is 16. 85 billion euros. These are the banks today. The stoxx 600 bank index is down. It has fallen four out of five days this week. The gauge is down for a second week. The worst stretch since july 8. This is the index over the last 12 months. There ongreen circle july 6, interestingly, weve seen the gauge rebound. It has rebounded 20 since reaching that fiveyear low in july. Lets not forget how banks have been slaughtered this year. This is the bank index this year. This is the worstperforming gauge on the stoxx 600 this year, down 23 . Look at deutsche. It lost half of its value. You will see most of the other leading decliners on this stage are italian banks. 282lower, that equates to billion euros of value. Francine thank you so much, mark barton. We will have plenty more on the rest of the markets. Deutsche bank takes the spotlight after it says it wont pay the 14 billion the u. S. Department of justice is seeking to settle the investigation into its mortgage business. We have news that european regulators have threatened a revolt against the Basel Committee on banking supervision over suggested changes the industry says could change capital requirements. Joining us for more, michael moore. Also with us for the hour, john wraith. Thank you so much. Michael, Deutsche Bank is down 7 today. This is because i guess the markets fear they will have to raise capital. Michael if the settlement ends up anywhere close to the 14 billion, that is not great for Deutsche Bank. Jpmorgan had a note that anything over 4 billion would need additional litigation reserves, additional capital, so this is a big delta between what people thought might be dojonable, versus the coming out at 14 billion. Francine the doj also settled with other banks, american banks, and the amount was much lower. Michael tank of america was higher, but they had a larger amount at issue here. But you are right. With morgan stanley, goldman sachs, which were comparably sized in the mortgage is this, they were much lower. You have to keep in mind that this is open negotiating. This is their opening settlement amount. They tend to start far away and work their way toward the middle. I do think this is higher than the market was expecting. Francine michael, you used to cover wall street for many years. Does the amount go down from here . Taking a hardche stance on, we will not pay anything close to 14 billion the other banks have not had to do this in public. They have had these negotiations but they havent had to put out public statements. It will be interesting to see how that changes the dynamics. I think you will definitely see it lower, but anything above 4 billion being an issue, that is a big gap. Francine john, we have another story that german and italian officials told regulators theyve had enough. From where you are sitting, how urgent is it that we fix the banking problem . John it is very urgent that we get some sort of resolution to all these issues. Im sure the rationale is seen in different ways from different sides of the fence, but only when you have stability in the Banking System and in the markets, so the markets know what they are dealing with, can they become a strong supporter of the recovery. Any of the stories just add concerns. Francine michael, this is on the back of Bloomberg News reporting very heated arguments or meetings in basel. Is there a chance that regulators will scale down or back down . Or cool off a little bit . This is about tweaking the capital rules once again. For a long time, banks have said, we need set rules at this level so we can move forward. I think in the last year or so, theyve convinced some of the politicians on their side of things. Now some of the politicians are coming to bat for the banks, saying, weve done eight years of bank regulation. We need to be done with it. We need to let the banks start lending again. I think you are seeing that tied turn a little bit. That may impact how basel tweaks the rules. Francine can eu officials say, we just wont comply by the rules . Or they can say, this is killing my bank. Michael basel sets the rules. The individual countries enforce it. They could break off from the pack. That would be an extreme move, given that so many of the countries have agreed to follow these standards and Work Together on them. Youve seen minor differences in the way theyve been implemented. The u. S. Has done it differently than europe. Francine this is the anniversary of the Lehman Brothers collapse. How amazing is it that we havent it seems that we may have overregulated at this point and the European Banks are so far behind the u. S. Ones. Francine there was john there was always a risk of that. The instinct is to overreact. Perhaps we are getting to that point now. Understandably, the regulators are determined to make sure nothing like that happens again. On the sideerring of safety, that is understandable. We just need to get to the point where we are done and we can start moving forward. It seems we are not there yet. Francine john wraith, thank you so much, and michael moore. We will continue the conversation on europes banks. Christopher wheeler. We have plenty coming up. We will talk about brexit. Deutsche bank is one of the main stocks we are watching. It says it wont pay a 14 billion claim from the u. S. Government. Plus, with policy decisions from the fed and the boj next wednesday, we look ahead to a big week for the Central Banks. We also speak to the founder of the u. K. Based brewer who exports to eu countries. He is Karan Bilimoria. He will join us for our special brexit show. This is bloomberg. Francine lets get straight to the Bloomberg Business flash with nejra cehic. Nejra u. S. Regulators have a recall of around one million samsung note 7 smartphones after more than 90 reports of batteries overheating. The move gives the government the option to formally ban the phones on Airline Flights and makes it illegal to continue to sell them. Black rock is joining a growing list of investors. The largest money manager said withction is in connection failure to disclose to users. Said it always complied with Capital Market rules. The move comes a year after the german carmaker admitted to dupi ng emissions tests. Spg capital says an unsolicited offer of 650 pence a share undervalued the company and its assets. The investor says it has otherches from credible parties which may lead to a competing offer. It has urged shareholders to take no action. Francine . Francine thank you so much. Lets return to todays top corporate stories. Deutsche bank is plunging after it said it wont pay the 14 billion the u. S. Department of justice is seeking to settle the investigation into its mortgage business. For more, we are joined by christopher weaver. Hes a banking analyst. Always great to speak to you on the phone. Unfortunately every time we have you on, it is either italian banks going badly or Deutsche Bank going badly. When is deutsche going to have more stable news . Christopher it is difficult to know. Ive said before that what john cryan now needs are some Small Victories to show hes making progress. Unfortunately the market seems to be conspiring against him. This is a major distraction. While the number seems very large indeed, it is going to have to have a lot of management to get to an it sensible number. Francine why did they slap on 14 billion . Is this the u. S. Out to get a European Bank . Do they really want 14 billion . Does Deutsche Bank have the money . Christopher i think it is really confusing. Theres been a lot of people linking it to the apple tax case. I cant comment on whether that is true or not. It is odd that this is played out in public, whereas most settlements were counted out behind closed doors. If it is 14 billion, then absolutely their Capital Position is going to be tested. Again, ive said many times on the show that the one thing we can be sure of is that berlin is watching this very closely and is standing behind Deutsche Bank to make sure it provides all the support it can. Francine meaning what, chris . Can they put pressure on the u. S. . Does it mean that whatever happens, that theres no question the bank wont go down . Christopher first of all, they will clearly be having words with the u. S. , with the doj. They will be wanting to calm the credit markets to make sure people realize that berlin will be there to support deutsche. In terms of raising capital, i think it is too early. This is a first stab the doj has thrown in. Deutsche will be looking at what other options it has. Maybe selling some assets or trying to work out how it can find further investors to support it if the need does occur. Francine im looking at a chart , cocoa bonds for Deutsche Bank. Are they going to be back at the forefront . Christopher i think by nature they are the sort of thing that people like to apply as an alternative to equities. They do convert into equity under certain circumstances. Looking atwe may be some tactics being played by various investors as to how to play this disturbing piece of news. Francine as we speak, monte dei paschi has been halted after it fell from 7. 3 . , which looksew ceo a lot like the old cfo. Is this going to be dealt with in an appropriate way . Christopher im absolutely sure. I dont think it is in anybodys interest to see anything other than some kind of stabilization of monday to pesky. I know we keep saying this, but i think it is fair to say that rome, just as berlin is standing Deutsche Bank, rome is going to make sure that anything at monte dei paschi is going to avoid any instability in the banking market. Francine chris wheeler, thank you for coming on the program. Analyst at atlantic equities. Up next, policy decisions from the fed and the bank of japan next wednesday. This is bloomberg. Markets lower this morning. Lets head to the bloomberg with mark barton. Mark down for the fourth day in five. This is the worst week since june. I made this chart showing you how asset markets have fared in thursdays ecb decision. Look at the jpmorgan volatility index. Up 4. 8 . That is the bloomberg developed sovereign bond index. In return, it is down by 1. 5 . Bottom of the table is the msci world index. Look at that performance, down 2. 6 . Look at Deutsche Bank shares. Were as low as 8. 2 . No only 6 lower. 14 billion claim from the u. S. Doj to settle this investigation into Mortgage Backed securities. The market cap of the company is 16. 85 billion euros. This is going to be the story of next week. The dollar spot index, the gauge of the dollar against 10 major peers, it is creeping down. Why is it creeping lower . Very clearly, the white line. This is the odds of a fed rate hike in 2016. We have fallen below 50 . We are below 50 probability of a rate hike this year. Well below 20 now in september. The fed, the boj, what a big week. Francine we have certainly a big week for Central Banks with the fed and the boj making announcements on wednesday. But just when markets are craving clarity, currency markets show that they are harder to predict. Take a look at my chart of the hour. The options on premium contracts to buy the yen disappeared for the first time before reversing course this week. Lets get the thoughts of john wraith. He is with us for the hour. When you look at boj, have we lost faith in what the boj can do or are we just not understanding the communication from the governor . John may be a combination. The communication has been quite plentiful. It seems theres going to be significant changes. I suppose the nature of those changes is what is uncertain. People are taking a very neutral stance going into the meeting. It does seem as if the bank of japan understand they need to change their approach. The one theyve been pursuing isnt bearing fruit. Francine changes for the better or is this kind of an Inflection Point where they can take decisions that will hurt them more longerterm . John the aim is to get inflation back up again. We do think they will cut rates into even more negative territory and try to weaken the currency to help areas like residential investment, which has been responding positively to negative Interest Rates. The problem is that they are increasingly squeezing the financial institutions. It seems as if they are going to try to stephen the yield curve as well which will help the banks and offset the impacts of negative rates. Their aim is to get inflation up. This might help. Francine are you nervous wednesday . You have the boj and the fan. The boj could miscalculate what the fed is doing. John absolutely. Who knows how much they talk behind the scenes . Clearly theres a lot of moving parts on wednesday. Dollaryen is likely to be the key battleground. Francine john wraith, thank you. Up next, we bring you our weekly show, brexit whats next, with all the news, analysis, and conversations around the u. K. s vote to leave the eu. We are live from bratislava. We also have an entrepreneur benefiting from weaker pound. This is bloomberg. Francine welcome to our weekly brexit show from london. Im Francine Lacqua. Every friday, we round up the news, analysis, and conversations that will make you smarter about what is next for britain and europe. Lets get you some of the brexit news with nejra cehic. Nejra the bank of england kept its key Interest Rate at a record low of 0. 25 . Policymakers indicated theres still a chance of another rate cut this year as they assess the potential longerterm fallout from britains decision to leave the union. The u. K. Unemployment rate stayed at an 11year low as the economy added jobs. That is according to figures in the office for national statistics. Unemployment fell to 1. 6 3 million, leaving the jobless rate at 4. 9 . The leader of the u. K. Opposition labor party says norway offers britain lessons as it prepares to leave the union. Jeremy corbyn said hes sending his Foreign Affairs spokeswoman to oslo to examine how officials there manage relations with the eu. Norway is in the area, giving it access to the Single Market, but is not in the eu itself. It does have a successful expanding economy, although largely based on oil, and it is a much smaller society, but they have a very Strong Social democratic tradition. They have a huge and very effective welfare state and health service. The model of their socially based economy is not different from what we talk about. Nejra global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. Europes leaders are gathering for a meeting in bratislava, the first in more than four decades without the u. K. Caroline hyde is there for us. Can eu leaders achieve a lot this weekend . Are they going to talk about brexit . Caroline that is the key question. Might not be any treaty overalls. Theres unlikely to be any concrete determined policies, but there will be a foraging for unity. Weve heard Angela Merkel as she arrived at this meeting saying, we need to show determination to fight this crisis. Saying we canece no longer sleepwalk in the wrong direction. A moment