Banks Fight Back, Trump Cuts Korea Drills, France Tax Cyberattack

0:00 Bloomberg Audio Studios, podcasts, radio news.

0:09 This is the Bloomberg Daybreak EUROP podcast. Good morning, It's Monday, the seventeenth of August. I'm Stephen Caroly.

0:15 In London and I'm Lizzie Verdon coming up today. JP Morgan's CEO, Jamie Diamond, said to have called the UK's chancellor to warn against higher bank taxes as European lenders push for lighter regulation like their US peers.

0:28 President Trump scales back military exercises with South Korea after Soul refuses to support the US war with Iran.

0:35 Plus a taxing breach, the French government calls a crisis meeting after Hack has accessed close to seven hundred thousand personal and business tax accounts.

0:44 Let's start with a roundup of our top stories.

0:47 JP Morgan's CEO, Jamie Diamond, is reported to have personally called Britain's new Chancellor, John Healey to warn him against raising bank taxes. The Financial Time says the boss of America's biggest bank made the intervention last week in Burghs James Wilcock has more.

1:02 Diamond has long been a critic of specific bank taxes in Britain. Now he's taking that argument directly to the UK Chancellor.

1:09 The ft says.

1:10 He warned Heally in a call that higher taxes often drive jobs away, pointing to a decline in finance jobs in New York that he partly blamed on the city's tax burden. Diamond's call comes after Andy Burnham's government declined to rule out increasing levies on lenders as bumper profits, prompt speculation the new administration will target the city of London.

1:32 Speaking at Bluemberg's London office last month, Heally stressed his commitment to UKPLC.

1:38 I'm just as concerned about the cost of business as I am about the cost of living, tax, energy, supply, chain costs, labor. I know that businesses large and small have felt really squeezed.

1:53 But Heally also needs to fund the government's spending pledges, leaving and balancing demands from labor, the bond markets. And now I'm the boss of the world's biggest bank in London. James Wilcock, Bloomberg Radio.

2:05 Well, Donald Trump's The Wall Street deregulation drivers changing the debate over banking rules in Europe, but as lenders pushed for a similar relief of the EU Bloomberg reporting reveals the watchdogs are increasingly uneasy about the direction of the US has taking. Bloomberg' Freddie Filston reports.

2:21 As financial reforms in America keep coming, European banks are pressing Brussels to ensure they're not left behind, and the European Commission is responding delaying tougher trading rules and reconsidering limits on how far banks can use their own calculations to reduce capital buffers. But Bloomberg has spoken to senior European central bankers and watchdogs who say the aggressive US approach is now making international regulatory meetings increasingly fraught. Several expressed concern about what they see as American complacency around risks in banking AI, and one veteran policymaker told us that in almost two decades at the global regulatory table, he's never seen a bigger divide with the US over

3:09 threats to financial stability In London. Freddie Fulston Bloomberg Radio.

3:15 President Trump has told the Pentagon to substantially reduce joint military exercises with longtime ally South Korea. In a social media post, he hinted that the shift was driven by frustration that the country hadn't given more support to his war with Iran, saying South Korea had recently declined to join him in the denuclearization of the country. On New Desk Managing editor Jill Deesis as the details.

3:38 He cited his relationship with Kiinjong own of North Korea. He cited that costly measures, these military drills that scheduled to take place today, they're actually still going forward. But you know, this is kind of a very abrupt message from Trump here. Another thing that he kind of suggests the net post a little bit, is this idea that maybe it's unrelated, maybe it's related, this concept of the Korea maybe not being necessarily as participatory in Trump's war of the run as he would like.

4:06 On News Desk Managing editor Jill Deesis there, Trump's announcement came as the US Naval Institute said that the single American aircraft carrier stationed in the Asia Pacific region was being diverted to the Middle East.

4:18 All oil producers in the Middle East are continuing to shuttle large volumes of crude out of the Persian Gulf, keeping global prices in chech sources of tel Bloomberg the incognito crossings through the Strait of Four Moves. They're running aut full tilts despite recent attacks on vessels in Brooks Don Mertow explains how what's happening.

4:37 Is oil tankers are staying darker for longer. They're turning those transplonters off and they're just disappearing off of the satellite map. Then they'll show up ten days later. And so there's this big gap in knowledge for traders and buyers and sellers on exactly how much is making it through. People have been estimating about four million barrels a day, you know, only a fifth of what had been going through before the war.

5:01 Brooks Dan Merta there As the US Treasury Secretary Scott Basan says, the United States is getting ready to squeeze around with unprecedented economic pressure. Credits greated the announcement with skepticism, given the country is already subject to thousands of sanctions and a naval blockade.

5:16 Franc is scrambling to contain the fallout from a cyber attack on its tax collection agency. Close to seven hundred thousand personal and business accounts were affected, and the government is holding a crisis meeting today Bloomberg's Tia Adabaio reports Hack.

5:31 Has gained access to sensitive tax information during an attack that took place across June and July that included taxable income and tax withholding rates, along with details about the addresses and sizes of properties. The government is beginning to notify those affected today as a judicial investigation gets underway.

5:50 Prime Minister Sebastian Leconnu is also bringing ministers together to review the response and strengthen cybersecurity in London. Tia Adabaio bloom Gradio.

6:01 Emergency services in Belgium are battling what's being called the largest wildfire in the country's history. About two thy seven hundred hectares have burned and six hundred residents have been evacuated. No homes have been damaged, but the blaze and the Fana Nature Reserve is now nearing the German border. The fire follows weeks of hot and dry weather that have already triggered major blazes across Europe. Alexander Held is a wildfire and forestry expert at the European Forest Institute.

6:28 We can build wildfire capability and capacity from a fire service perspective, but we also need the same efforts actually from communities, from policies, from agriculture, from forest.

6:42 Free Alexander held there as meteorologists worn record temperatures mean the wildfire season man stretch well into the autumn. Those are you top stories this morning.

6:53 On the markets, the Msisia Pacific Index is up two tenths of eight percent, eurostocks fifty futures are up three ten of eight percent, and the tenure treasure reeled is down a basis point at four point sixty seven percent.

7:05 In a moment, we'll bring you more on the debate over bank regulations in Europe, plus what Donald Trump pulling back on military exercises in Asia means for South Korea. But another story that caught a rye this morning as well, on the importance of vision for CEOs but also for chefs. Our opinion columnist Howard try One has been writing about this in the context of the Paris chef Berrncreo, who died last month. He was best known for his restaurant Septeam in the eleventh ar and Dismat and the offshoots in the neighborhoods that have become quite famous as well. Beyonce, a notable customer of sep Team in the time that I was living in Paris. But when Howard visited the septem Wine Bar recently, the discussion was all about Grebbo's legacy,

7:44 his co founder and best friend is carrying on with the businesses. But Howard writes that for such enterprises it is the guiding spirit of the founder that's paramount, and this idea of vision being perhaps more important than a line in the budget. And this is where the connection to see.

8:00 Comes in, because don't we all know businesses where the founder has been so crucial and without the founder it's just not the same. And everything emanates from the personality of the founder. I often go to well every year I go to Founders Forum and you get all these tech CEOs from around the world. They ouse charisma and then when that's gone, I mean, take a look at Steve Jobs and Apple. You know when his influence wasn't there.

8:27 You can see the succession is difficult. Businesses struggle to evolve and thrive for a moment, and there's no guarantee of success, especially in the world of hospitality, but a founder's vision and the reputation, as we know, can really help to carry a business forward to its next face.

8:41 Yeah, and Desan having built up a team around you that trusts and believes, I suppose, and can carry on afterwards. So a really interesting piece from Howard. Why you want put a link to us in our podcast show notes. Well, let's bring you more out on the battle between bankers and regulators in Europe on big changes to the global banking rule book. This as it's being reported that JP Morgan's CEO spoke directly to the UK's Chancellor to urge him not to raise taxes on banks. Our senior finance reporter Lauren in And joins us now for more. Laura, good morning. First of all, on this call between Jamie Diamond and John Healey, not the first time Jamie Diamond has made this point, but how significant is it that

9:15 he said it directly to the Chancellor.

9:17 To beynes, I think we would very much expect that as soon as Jamie Diamond had an audience with the Chanceller he would in fact to make those points. As you say, he has been very public honor, so it's entirely consistent to that he would share his public views privately with the Chancellor. As to whether it will actually change anything. I mean, we all have long known that, you know, Jamie Diamond and other bank CEOs are not fans of bank tax, and that's essentially what Jamie told the new Chancellor during their call last week.

9:44 So in that.

9:45 Sense, we would not expect bankers to be fond of bank tax, and we would expect them to warrant that if the UK implements bank taxes there will be a negative impact not just on banking but on the economy as a whole, because that is their party.

9:58 Line and they'll pass on.

10:00 And Laura, you're reporting today looks more broadly at how the efforts from European bank CEOs are pushing back against certain rules, how that's playing out in the European Union. Just remind us what those rules they're pushing back against actually are.

10:14 So, if not the most that they're pushing back in certain rules, it's more that when the European bankers look at the totality of the rules, but also the way they are supervised, they feel that they are burdened too much. So it's things like the capital rules, but it's also things like day to day supervision, the number of forms, a number of inspections, all those things coupled with in the EU, there's a lot of barriers still between what you can do across the EU's national borders, and those actually trap a lot of capital and liquidity in individual EU member states in a way which is costly and which is problematic for the banks. So what the European banks have been doing for quite some time is banking

10:55 is a global business, both for business and for investment, and they're looking at what's happening in the US, where there has been a big push around deregulation, around loosening burdens, and they're saying, well, this is a global business. We need Europe to act so that we can be competitive in a global market.

11:12 And that's what's going on now.

11:14 And look, those calls aren't falling on deaf ears. We have seen the European Commission proposing some changes in this area, but are they going to help create that more level playing field for European banks.

11:25 We do still need to wait and see.

11:26 So what the European Union has mostly done so far is point to areas where they're going to work on in areas where they will propose changes in the first quarter of twenty twenty seven. So I think what the banks would say is they feel like Europe has definitely been lagging and what they saw in this Grand Plan for Competitiveness last month was a willing list for Europe to really tackle some of these challenges. But how Europe's going to tackle these challenges is not going to become clear until the actual plans are revealed next in the first quarter off next year. But months of plans are revealed by the European Commission. European rulemaking and changes are slow, So you have the Commission, but then you have everyone

12:08 else in Europe gets to way in through the European Parliament and also through the European Council, so it takes a long time to get things agreed in European change.

12:17 And that has been one of their.

12:18 Frustrations as well, because even I know Jamie Dimond is comparing about the UK, has been complaining about the UK. But in the UK things happen much faster now and the UK has done more to les, has done more in a shorter place of time to lessen burdens and its banks than what's happening in the EU.

12:35 Well, talk us through then, Laura, how these proposed changes are going down with EU regulators.

12:40 EU regulators are concerned about some of the potential changes. Because the European politicians are obviously chasing growth, are chasing competitiveness, they're quite alert to these concerns that banks are raising about. European banks have long lost out to US banks including Jamie Diamonds, Japan Morgan, so parts are very attuned to that.

13:01 To growth, to compessionists.

13:02 Regulators are more naturally concerned about financial stability.

13:07 They're concerned about your going too far.

13:09 They're concerned that if some of the rules are lightened, that could pay the way for the next financial crisis. A particular sticking point, and this is very much for people who follow up very closely, is around the output floor. The output floor is something which was introduced, which is being introduced by the final post crisis capital reforms, and that was designed to make it harder for banks to use models to aggressively to reduce their capital requirements. The US has said it's not going to apply the output floor.

13:40 You are very much once to also not. European banks will very much love not to apply the output floor. Regulators are concerned. European commissioners said that they will revisit the output floor. So I think the output floor is going to be a key battleground between the natural inclinations of regulators and whilst the European Commission wants to do within Europe.

14:01 Okay, Laura, thank you very much for joining us, and kind of congratulate you on the best explanation I've heard of the Eiffel Floor in a long time for what is a very complex and long running debate over that piece of regulation. Our senior finance supporter Laura in in there, and you can read Laura's full piece Banks cheer as Trump's regulatory rollback spreads to Europe. It's at Bloomberg dot Com and of course on the terminal. Stay with us.

14:23 More from Bloomberg Daybreak Europe coming up after this.

14:27 Now, US President Donald Trump has announced plans to substantially reduce joint military exercises with South Korea. He says the drills were expensive and sent an inappropriate signal to North Korea. Our chief Asia correspondent Roslyn Matheson joins us now for more. Ros Good morning. What do we know about why President Trump has made this call?

14:47 Then, well, it's a bit of a mystery, as to why perhaps someone just mentioned this in passing to him, that these drills were kicking off and they are quite large in scale, and that got his attention for his ayre over the level of the US military commitment to these drills, which is not small in scale, and so he says it's too late to counsel, but he wants and reduced.

15:12 It's very unclear.

15:13 Whether he can or how they be reduced at this very late stage. I mean, months of planning goes into these things. But what drove it in the minute? I mean, he made a reference to what he called his good relationship with the North Korean leader Kim Jong un, and so it would send an inappropriate signal to North Korea.

15:32 But there hasn't really been a lot of interaction.

15:33 Between the US and North Korea in the current Trump administration, And of course he had those summits with Kim in his first administration and then things kind of fell apart in the relationship. And of course there's no sign that Kim feels a great need or desire to engage with the US at this point in time, so whether that's a factor is unclear. It's obviously also probably crossed old Trump's mind. In fact, he made an to this in his statement, saying that, you know, South Korea had failed in his mind to support the US or declined to get involved in the US Israeli war on Iran.

16:12 South Korea, like many.

16:13 Other countries, was quite reticent to do so. So perhaps he's drawing a line between the level of US military involvement and support for South Korea and what he sees is a lack of South Korean support for the US where needed. But there's possibly also an economic and business imperative to this, because they are getting to the pointy end South Korea in the US on this idea of these strategic investment projects, and there are reports that Washington is a bit concerned that things are moving too slowly, are trying to push Soul to speed up things, to announce specific projects. And Donald Trump does like to link business with geopolitics. So perhaps it's all three, but that's still unclear.

16:54 What does it mean though this was in the short term for South Korea.

16:58 Well, it's obviously concerning for South career to have this happen at a very late stage and then to understand exactly what that means for the drills but also you know that pattern again of concern that in a pinch, with the US now still truly come to the aid of South Korea and others in the region. You can imagine Japan and Taiwan also watching this closely. Is another sign that the US is no longer truly committed to the defense of the region if needed.

17:25 So there's that aspect of it.

17:27 There's also what does this mean in terms of signals if any or North Korea? And there actually the South Korean presidently has been pushing for dialogue with North Korea. He's been trying to reduce military tensions, and so if the US has started to crack the door on that a bit, they probably would be quite happy to see.

17:47 That is.

17:49 Using these drills as an avenue towards that the best way to go about it in the South Korean mind And obviously, again the biggest concern for them probably right now is what does this about their potential future defense of South Korea.

18:03 How worried should those are the Asian nations really be though, Ross, Well.

18:07 That's the question.

18:08 Was this just you know, Donald Trump linking South Korea in the minute because someone mentioned these druls that happened to be starting right now, Is it again this sense of grievance that he's got with other countries in Europe, the UK, others in Asia, Australia as well, for you know, not coming to join him in the US militarily in the action against Iran, and whether he now uses this as leverage against other places as well, well, I'm sure they're watching this very closely, and it just fits that pattern again. You know, Donald Trump has been very critical of NATO. He's questioned the European commitment to NATO and financially and pushed them to do much more for their own self defense. And so it's very much in line

18:56 with that narrative. And again he does like to blur the lines between economics, politics, geopolitics, security, business, you name it. And so you know, seeing this as a retaliatory step, you know, that's something that we probably would not have seen previously. And so of course they'll be concerned and watching this closely, but for now it seems to be contained.

19:18 To South Korea.

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