Capital One Buys Discover; US Warns Israel

Bloomberg Audio Studios, Podcasts, Radio News. 0:00:09.480 --> 0:00:10.080 Good morning. 0:00:10.080 --> 0:00:13.040 I'm Nathan Hager and I'm Amy Morris. Here are the 0:00:13.080 --> 0:00:14.680 stories we're following today. 0:00:15.000 --> 0:00:17.760 We begin with a big deal in the financial industry. 0:00:17.880 --> 0:00:22.239 Capital One Financial is buying Discover Financial Services. We get 0:00:22.239 --> 0:00:24.240 the details from Bloomberg's Doug Prisner. 0:00:24.480 --> 0:00:26.920 It's an all stock deal valued at thirty five point 0:00:26.920 --> 0:00:30.200 three billion dollars, and it creates the largest US credit 0:00:30.240 --> 0:00:33.880 card company by loan volume. Historically, Capital One is catered 0:00:33.880 --> 0:00:37.000 to subprime customers who carry a balance on their cards 0:00:37.040 --> 0:00:39.479 each month. In recent years, the bank's been trying to 0:00:39.479 --> 0:00:43.720 attract premium customers. Discover is long focused on prime customers 0:00:43.760 --> 0:00:47.520 with better credit ratings. This deal comes after major declines 0:00:47.560 --> 0:00:50.160 and Discover shares during the second half of last year. 0:00:50.280 --> 0:00:53.560 It followed a warning on lapses in compliance. The issue 0:00:53.640 --> 0:00:57.640 ultimately led to the resignation of then CEO Roger Hawkschild 0:00:57.840 --> 0:01:00.360 in New York. I'm Doug Prisner Bloomberg Radio. He Doug, 0:01:00.400 --> 0:01:03.200 thank you and checking shares of both companies. Discover Financial 0:01:03.200 --> 0:01:06.000 shares are up more than eleven percent this morning. Capital 0:01:06.040 --> 0:01:08.959 One is down more than five and a half percent. 0:01:09.160 --> 0:01:11.959 And the financial industry is also in focus in Europe, 0:01:12.040 --> 0:01:15.000 shares of Barclays up more than four percent. The British 0:01:15.000 --> 0:01:17.240 bank is going on a major cost cutting drive and 0:01:17.280 --> 0:01:20.680 returning billions to shareholders. We get more from Bloomberg Financial 0:01:20.720 --> 0:01:22.319 reporter Tom Metcalf. 0:01:21.959 --> 0:01:24.880 The big number is ten billion pounds both by dividends 0:01:24.920 --> 0:01:27.839 and buybacks, and that's coming through I think between twenty 0:01:27.880 --> 0:01:30.120 twenty four and twenty twenty six. So yeah, that is 0:01:30.160 --> 0:01:33.120 a nice focus on returns and obviously they're sort of 0:01:33.200 --> 0:01:35.240 very much embracing that. The other thing is is really 0:01:35.319 --> 0:01:38.000 relation to the investiator bank. That's in many people view 0:01:38.080 --> 0:01:40.440 why the shares might be a bit depressed just because 0:01:40.440 --> 0:01:43.080 it takes up something like sixty three percent of risk 0:01:43.080 --> 0:01:45.520 weighted assets for the whole group and what the bark 0:01:45.640 --> 0:01:47.840 is sent today as expected, we're going to see that 0:01:47.880 --> 0:01:49.240 reduced down or we're going to try and make that 0:01:49.280 --> 0:01:51.840 reduced down to about fifty percent. And that's not by 0:01:51.880 --> 0:01:54.760 necessarily cutting the investment bank, but that's by really focusing 0:01:54.800 --> 0:01:56.040 on the retail side of things. 0:01:56.120 --> 0:01:59.920 Bloomberg Financial reporter Tom metcalfs as Barclays is also overhauling 0:02:00.000 --> 0:02:04.520 its operations and reorganizing into five new divisions. Those will 0:02:04.560 --> 0:02:08.079 consist of its UK retail bank, a UK corporate bank, 0:02:08.360 --> 0:02:12.320 a private bank and wealth management arm, an investment banking division, 0:02:12.440 --> 0:02:14.080 and a US consumer bank. 0:02:14.200 --> 0:02:16.720 Well, we also have earnings out of the Asia Pacific. Today, 0:02:16.760 --> 0:02:20.720 amy shares of BHP are down about two percent. First 0:02:20.720 --> 0:02:23.680 half net income plunged eighty six percent from the year 0:02:23.720 --> 0:02:26.880 before after oversupplying the nickel market forced the world's biggest 0:02:26.919 --> 0:02:29.400 minor to write down the value of key assets. We 0:02:29.440 --> 0:02:31.640 talked about the results with CEO Mike Henry. 0:02:31.960 --> 0:02:34.280 Balance sheet remained strong, with netded at twelve point six 0:02:34.320 --> 0:02:37.160 billion dollars and all of that has allowed us to 0:02:37.160 --> 0:02:41.760 declare an interim dividend of seventy two US since per share. Now, yes, 0:02:41.840 --> 0:02:44.040 we have had a couple of exceptionals, including in our 0:02:44.120 --> 0:02:46.840 nickel business. Now, by way of a bit of context, 0:02:46.880 --> 0:02:50.000 the nickel business is the smallest by some margin business 0:02:50.000 --> 0:02:52.040 within the BHP portfolio. 0:02:51.480 --> 0:02:54.600 And beyond nickel, BHP CEO Mike Henry says, iron ore 0:02:54.680 --> 0:02:58.760 remains the company's most important revenue earner. Prices for steelmaking 0:02:58.800 --> 0:03:02.160 material surged twenty eight percent over the reporting period and 0:03:02.200 --> 0:03:05.639 remain historically high, and that's prompting major producers like PHP 0:03:06.000 --> 0:03:08.679 to consider development of once stranded deposits. 0:03:09.320 --> 0:03:12.079 Back here in the US, earning season is nearing an end, 0:03:12.120 --> 0:03:15.360 but it's not over yet. This week's big focus comes 0:03:15.360 --> 0:03:19.000 tomorrow when high flying chip maker and Video releases results. 0:03:19.200 --> 0:03:22.480 Bloomberg's Charlie Pellett says it'll put a big spotlight on 0:03:22.639 --> 0:03:23.840 artificial intelligence. 0:03:24.120 --> 0:03:27.960 The stock is up almost fifty percent this year. Sarah Hunt, 0:03:28.040 --> 0:03:31.840 chief market strategist at Alpine Woods Capital Management, says there's 0:03:31.880 --> 0:03:33.720 a lot riding on this report. 0:03:33.880 --> 0:03:36.600 This is the big question. Yes, this is great technology, 0:03:36.680 --> 0:03:39.320 can you monetize it? And Vidia is the poster child 0:03:39.360 --> 0:03:41.280 for that because it's the demand for those chips that's 0:03:41.320 --> 0:03:44.280 fueling everybody's usage of all of this. If they have 0:03:44.480 --> 0:03:47.960 any kind of wobble that anyone can say, well, maybe 0:03:47.960 --> 0:03:49.520 this isn't as fast and as quick as we thought 0:03:49.560 --> 0:03:51.080 it was going to be. I think that the whole 0:03:51.160 --> 0:03:52.280 story comes into question. 0:03:52.440 --> 0:03:56.880 It's lofty valuation means there's little room for disappointment in 0:03:57.000 --> 0:03:59.720 New York. Charlie Pellett, Bloomberg Radio. 0:03:59.600 --> 0:04:02.680 All right, Charlie, thank you. Let's turn to geopolitics now, 0:04:02.720 --> 0:04:05.520 starting with developments in the Middle East. The US is 0:04:05.560 --> 0:04:08.760 preparing to warn Israel not to attack the southern Gaza 0:04:08.840 --> 0:04:11.240 city of Rafa. This is coming in a draft text, 0:04:11.240 --> 0:04:13.320 and we get the details from Bloomberg's Ed Baxter. 0:04:13.880 --> 0:04:17.000 This is a UN Security Council resolution warning against a 0:04:17.160 --> 0:04:21.320 Rafa assault, as well as calling for a temporary cease fire. 0:04:21.839 --> 0:04:25.120 The resolution would say that an offensive would result in 0:04:25.279 --> 0:04:29.640 further harm to civilians and further displacement, including potentially into 0:04:29.720 --> 0:04:33.720 neighboring countries. The draft says that could have serious implications 0:04:33.720 --> 0:04:37.120 for regional peace and security. Up to now, the US 0:04:37.160 --> 0:04:39.920 has been reluctant to back cease fire proposals and stood 0:04:40.000 --> 0:04:44.279 strong with Israel, but now apparent Biden administration frustration with 0:04:44.400 --> 0:04:47.640 Prime Minister Benjamin nettan Yahoo, who says he plans to 0:04:47.680 --> 0:04:50.880 go ahead with the assault if hostages aren't returned by 0:04:51.200 --> 0:04:53.400 Ramadan at Baxter Bloomberg Radio. 0:04:53.480 --> 0:04:55.120 All right, thank you, Ed, And we should note that 0:04:55.240 --> 0:04:59.360 Ramadan starts in roughly three weeks on March eleventh. Meantime, 0:04:59.440 --> 0:05:02.880 Russia's in Ukraine goes on, and this morning the Ukrainian 0:05:02.920 --> 0:05:05.960 Air Force says it shut down all twenty three drones 0:05:05.960 --> 0:05:09.880 and missiles fired from Russia overnight. Our regional governor says 0:05:10.000 --> 0:05:13.400 three people were hurt. The war continues without fresh assistance 0:05:13.440 --> 0:05:16.200 from the US and now. President Biden says he is 0:05:16.240 --> 0:05:19.039 willing to meet with House Speaker Mike Johnson to discuss 0:05:19.080 --> 0:05:22.400 stalled aid for Ukraine and Israel. He says the death 0:05:22.400 --> 0:05:26.040 of jailed Russian opposition leader Alexi Nevali adds to the 0:05:26.200 --> 0:05:27.279 urgency of the moment. 0:05:27.480 --> 0:05:29.880 The way they're walking away from the President Russia, the 0:05:29.880 --> 0:05:32.760 way they're walking away from NATO, the way they're walking 0:05:32.800 --> 0:05:34.880 away from leading our obligations. 0:05:35.200 --> 0:05:37.120 He I guess you're shocking. 0:05:37.240 --> 0:05:38.599 I've been for a while. 0:05:38.760 --> 0:05:39.880 I've never seen you like it. 0:05:40.400 --> 0:05:43.599 President Biden says he's considering new sanctions on Russia over 0:05:43.640 --> 0:05:46.719 the death of Alexi Nevali, but with sanctions already on 0:05:46.880 --> 0:05:49.200 Russia over the war, it's not clear how much more 0:05:49.279 --> 0:05:50.080 the US can do. 0:05:50.360 --> 0:05:53.760 Man Russian President Putin may be violating UN sanctions with 0:05:53.800 --> 0:05:56.880 his latest move to boost ties with North Korea. According 0:05:56.920 --> 0:05:59.640 to state media, Putin gave North Korean leader Kim Jong 0:05:59.720 --> 0:06:02.640 un a brand new car. A Kremlin spokesman says it's 0:06:02.680 --> 0:06:06.360 an Oorus. It's a Russian made alternative to Mercedes. Luxury 0:06:06.480 --> 0:06:09.200 vehicles are on the UN Security Council's list of banned 0:06:09.240 --> 0:06:11.800 items for export to North Korea, but there's little the 0:06:11.839 --> 0:06:13.920 Council can currently do to punish Putin. 0:06:14.560 --> 0:06:17.159 And in China, the weak property market remains a major 0:06:17.200 --> 0:06:20.480 concern for authorities, and now China is ramping up support 0:06:20.520 --> 0:06:22.720 for the property sector with one of its biggest rate 0:06:22.800 --> 0:06:27.040 cuts ever. Bloomberg Daybreak Asia anchor Brian Curtis has more 0:06:27.080 --> 0:06:27.800 from Hong Kong. 0:06:28.400 --> 0:06:30.760 Chinese banks cut the five year loan prime rate by 0:06:30.760 --> 0:06:33.960 twenty five basis points to three point nine to five percent. 0:06:34.279 --> 0:06:36.120 It was the first cut in the rate in eight 0:06:36.160 --> 0:06:39.279 months and the biggest ever. The one year rate was 0:06:39.320 --> 0:06:42.080 maintained at three point four to five percent. Now, the 0:06:42.200 --> 0:06:45.200 move on the five year raises expectations of more aggressive 0:06:45.240 --> 0:06:48.080 measures in the coming months. The lower rate will allow 0:06:48.160 --> 0:06:50.920 more cities in China to reduce the minimum mortgage rates 0:06:50.920 --> 0:06:53.479 for home buyers, although we have to say the reaction 0:06:53.680 --> 0:06:57.359 in the markets today was underwhelming. In Hong Kong, Brian Curtis, 0:06:57.400 --> 0:07:04.039 Bloomberg Radio. 0:07:01.520 --> 0:07:02.839 And that's time to take a look at some of 0:07:02.839 --> 0:07:05.000 the other stories making news in New York and around 0:07:05.080 --> 0:07:07.360 the world. For that, we're joined by Bloomberg's Michael Barr, 0:07:07.400 --> 0:07:08.400 Good morning, Michael. 0:07:08.240 --> 0:07:11.600 Good morning, Nathan. Former President Donald Trump is now comparing 0:07:11.640 --> 0:07:15.080 the sudden death of Russian opposition leader Alexing Navaldi to 0:07:15.160 --> 0:07:18.920 his own political problems. According to Trump, Navaldi's death has 0:07:19.000 --> 0:07:22.520 quote may be more and more aware of what is 0:07:22.560 --> 0:07:26.240 happening in our country and that rigged elections and grossly 0:07:26.320 --> 0:07:31.320 unfair courtroom decisions are destroying America. Presidential rival Nikki Haley 0:07:31.440 --> 0:07:34.960 jumped on Trump for refusing you condemned Vladimir Putin. 0:07:35.320 --> 0:07:37.280 I don't know why he keeps getting weak in the 0:07:37.360 --> 0:07:39.800 knees when it comes to Russia. But I'll tell you 0:07:39.840 --> 0:07:41.640 what Russia is not getting weak in the knees. 0:07:42.160 --> 0:07:45.680 Haley spoke on the campaign trail in Camden, South Carolina. 0:07:46.320 --> 0:07:49.280 President Joe Biden is said to have raised forty two 0:07:49.400 --> 0:07:52.840 million dollars for his re election campaign and the Democratic 0:07:52.880 --> 0:07:56.440 Party in January. The president now heads the West Coast 0:07:56.520 --> 0:08:00.320 for events with deep pocketed donors. Biden's campaign and says 0:08:00.360 --> 0:08:03.400 the president ended January with the one hundred and thirty 0:08:03.600 --> 0:08:07.680 million dollar war chest for his re election effort. Nearly 0:08:07.760 --> 0:08:11.920 the entire California coastline is under flood advisories affecting about 0:08:11.920 --> 0:08:15.520 thirty seven million people. Days of heavy rain in the 0:08:15.600 --> 0:08:19.600 drought stricken state has left the soil saturated, causing the 0:08:19.720 --> 0:08:22.640 risk of dangerous flash flooding in the Bay Area of 0:08:22.680 --> 0:08:25.520 The rain washed out part of Highway eighty four in 0:08:25.960 --> 0:08:31.120 Almeda County, causing traffic delays. Caltrans spokesman Bartney. 0:08:31.000 --> 0:08:36.040 The pavement slips down right or becomes unnavigable, so we 0:08:36.120 --> 0:08:37.480 can't have people driving on. 0:08:38.200 --> 0:08:41.280 Residents of San Francisco say they are afraid for the 0:08:41.320 --> 0:08:45.000 homeless because of the flooding. Supporters of a ceasefire between 0:08:45.080 --> 0:08:48.160 Israel and Hamas held a rally in Paterson, New Jersey. 0:08:48.360 --> 0:08:52.480 One of the attendees included Reverend Barry Graham, pastor at 0:08:52.640 --> 0:08:56.439 Canaan Baptist Church of Patterson. We see the death, we 0:08:56.520 --> 0:09:00.560 see the destruction, we see little children being carried out, 0:09:00.760 --> 0:09:04.480 and I can't understand how anyone of good faith could 0:09:04.520 --> 0:09:08.520 stand and not be convicted by what they see. Other 0:09:08.600 --> 0:09:11.960 attendees said the US cannot remain complicit. The anger from 0:09:11.960 --> 0:09:14.880 the New York Archdiocese continues over the funeral of a 0:09:14.920 --> 0:09:18.720 transgender community leader at Saint Patrick's Cathedral in Manhattan. The 0:09:18.800 --> 0:09:22.760 Roman Catholic Archdiocese of New York condemned Thursday's funeral of 0:09:22.840 --> 0:09:26.920 Cecilia Gentilli. Tintilly, who was fifty two, was known as 0:09:27.000 --> 0:09:29.960 a leading advocate for other transgender people, as well as 0:09:30.000 --> 0:09:33.679 sex workers and people with HIV. Her funeral drew hundreds 0:09:33.679 --> 0:09:37.520 of enthusiastic people to the church. Kathy run, a communications 0:09:37.559 --> 0:09:42.000 director for the National LGBTQ Task Force, told ABC seven 0:09:42.120 --> 0:09:45.120 it was more celebratory than we normally see in a 0:09:45.200 --> 0:09:47.800 Catholic church, and actually it was kind of refreshing. 0:09:48.120 --> 0:09:51.880 I think when one of the eulogists, you know, used 0:09:52.320 --> 0:09:56.880 the word for prostitute in Spanish, and I looked at 0:09:56.880 --> 0:09:58.600 the person sitting next to me and said, wait till 0:09:58.640 --> 0:09:59.320 they translate that. 0:10:00.200 --> 0:10:02.600 In a written statement, the past here of Saint Patrick's, 0:10:02.640 --> 0:10:06.719 the Reverend Enrique Salvo, said they had no idea our 0:10:06.840 --> 0:10:10.679 welcome in prayer would be degraded in such a sacrilegious 0:10:10.720 --> 0:10:13.760 and deceptive way. Global News twenty four hours a day 0:10:13.800 --> 0:10:15.959 and whenever you want it with Bloomberg News. Now, I'm 0:10:15.960 --> 0:10:17.280 Michael Barr. This is Bloomberg. 0:10:17.360 --> 0:10:24.280 Nathan all right, Michael, thanks time out for the Bloomberg 0:10:24.320 --> 0:10:26.480 sports Update brought to you by Tri State out of 0:10:26.559 --> 0:10:27.959 Years John stash All Ranks. 0:10:28.040 --> 0:10:30.440 Nathan Jack Vaughn joined the Brooklyn Nets as an assistant 0:10:30.520 --> 0:10:33.559 back in twenty sixteen. Four years later, the Nets fired 0:10:33.640 --> 0:10:36.800 Kenny Atkinson, Vaughn philed in. Steve Nash was then brought 0:10:36.800 --> 0:10:39.480 in his coach and Vaughn went back to being an assistant, 0:10:39.520 --> 0:10:42.480 and then early twenty twenty two, Nash got fired, Vaughan 0:10:42.559 --> 0:10:45.880 returned his head coach, held the job until yesterday. Fired 0:10:45.920 --> 0:10:48.120 with the Nets twenty one and thirty three. Their most 0:10:48.160 --> 0:10:51.480 recent game was a loss in Boston by fifty points. 0:10:51.520 --> 0:10:54.000 Assistant Kevin Ollie takes over. He coached Yukon of the 0:10:54.080 --> 0:10:57.840 National championship a decade ago in Tampa. Full Yankee team workout, 0:10:57.840 --> 0:11:01.880 including the prize offseason pickup Juan Soto. He's only signed 0:11:01.920 --> 0:11:03.240 for this upcoming season. 0:11:03.600 --> 0:11:06.480 For me, I'm just focusing in twenty four I'm here 0:11:06.520 --> 0:11:10.400 to play baseball. I'm focusing on playing this year and 0:11:10.559 --> 0:11:12.200 try to win as much as you know we can 0:11:12.280 --> 0:11:14.240 and being a championship to New York. 0:11:14.320 --> 0:11:17.120 Yanke you GM. Brian Cashman recently admitted the odds are 0:11:17.200 --> 0:11:20.199 this is a one years situation, but for now Aaron 0:11:20.280 --> 0:11:23.120 Judge will have another star joining him in the lineup. 0:11:23.640 --> 0:11:25.280 I'm excited. I'm excited. 0:11:25.360 --> 0:11:25.520 You know. 0:11:25.600 --> 0:11:27.280 It's he's a generational talent. 0:11:27.320 --> 0:11:27.480 You know. 0:11:27.520 --> 0:11:30.000 We give up quite a few, you know, special pitchers 0:11:30.960 --> 0:11:34.960 in the package. But I think everybody, everybody in Pinchtrofts 0:11:35.000 --> 0:11:37.360 is looking forward to having won Soto Grissom, you know, 0:11:37.640 --> 0:11:40.000 due all those guys you know in Pinchtrops. So it's 0:11:40.000 --> 0:11:41.560 going to be a fun years. 0:11:41.720 --> 0:11:44.280 Also from baseball, Red Sox signed the leader William Hendricks 0:11:44.280 --> 0:11:46.200 for two years. He may not pitch much, if at all, 0:11:46.240 --> 0:11:48.839 this season due to Tommy John surgery. The Giants signed 0:11:48.880 --> 0:11:51.560 thirty seven year old Pablo Sandoval for if he makes 0:11:51.559 --> 0:11:53.920 the team a third stint in San Francisco, part of 0:11:54.000 --> 0:11:58.320 three World Series Championship Teams Series MVP back in twenty twelve, 0:11:58.360 --> 0:12:01.680 sand of bal hasn't played the Major se The Lerner 0:12:01.760 --> 0:12:05.120 family has owned the Washington Nationals since six two years ago, 0:12:05.200 --> 0:12:07.520 they put the team on the market. Now they're taking 0:12:07.559 --> 0:12:11.120 them off. William Byron won the rain del A Daytona 0:12:11.200 --> 0:12:13.480 five hundred hockey. The Ruins beat Dallas four to three 0:12:13.520 --> 0:12:15.240 and a shootout the Stars at the Garden tonight to 0:12:15.280 --> 0:12:18.040 play the Rangers of one seven in a row Minnesota 0:12:18.040 --> 0:12:21.320 Big Vancouver with a football like score of ten to seven. 0:12:21.400 --> 0:12:24.040 The Wild scored seven goals in the third period. John 0:12:24.040 --> 0:12:25.480 Stashaway Bloomberg. 0:12:25.080 --> 0:12:30.559 Sport from coast to coast, from New York to San Francisco, 0:12:30.920 --> 0:12:36.000 Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business 0:12:36.000 --> 0:12:39.840 app in Bloomberg dot com. This this is Bloomberg day Break. 0:12:40.920 --> 0:12:41.360 Good morning. 0:12:41.360 --> 0:12:43.199 I'm Nathan Hager on a morning where we have two 0:12:43.360 --> 0:12:46.240 big stories in the financial sector. Capital One is buying 0:12:46.280 --> 0:12:49.320 Discover Financial and a thirty five billion dollar all stock 0:12:49.360 --> 0:12:53.280 deal that will create a credit card juggernaut. And Barclays 0:12:53.320 --> 0:12:55.520 is embarking on a major cost cutting drive with a 0:12:55.559 --> 0:12:58.960 goal to return at least twelve billion dollars to shareholders 0:12:59.280 --> 0:13:02.160 in the UK. For more on these stories, we're joined 0:13:02.160 --> 0:13:05.000 by Bloomberg's Charlie Wells. And Charlie, let's start off with 0:13:05.040 --> 0:13:07.880 this Capital One Discover deal. What is the goal here 0:13:07.920 --> 0:13:11.040 for both these companies to engage in this massive tie up. 0:13:11.480 --> 0:13:13.720 Well, the goal here really is to compete. And I mean, 0:13:13.760 --> 0:13:16.920 you know, there have been such intense credit card wars 0:13:16.960 --> 0:13:19.440 in the United States over the past few years. And 0:13:19.520 --> 0:13:23.719 what really happens here is Capital One gets size, they 0:13:23.720 --> 0:13:27.040 get size, and they get the technology that comes from Discover. 0:13:27.480 --> 0:13:29.760 So what is so unique about Discover is that they 0:13:29.800 --> 0:13:32.640 have their own payment networks and that is something that 0:13:32.679 --> 0:13:35.040 is actually very enviable for a lot of credit card 0:13:35.120 --> 0:13:37.920 companies because it gives them a lot of control over 0:13:38.000 --> 0:13:41.720 how much they can charge merchants. Now, what's also interesting 0:13:41.720 --> 0:13:44.680 about Discover and what is really attractive for Capital One. 0:13:44.800 --> 0:13:47.280 We know that Capital One has been trying to get 0:13:47.400 --> 0:13:51.040 more prime borrowers over the past few years, and finally 0:13:51.080 --> 0:13:53.880 with Discover, they're getting a huge tranch of those prime 0:13:54.000 --> 0:13:55.119 Discover borrowers. 0:13:55.320 --> 0:13:59.120 That's a really interesting point because in their history Capital 0:13:59.160 --> 0:14:02.920 One and Discover have both catered to a very different 0:14:03.000 --> 0:14:04.360 type of customer, haven't they. 0:14:04.679 --> 0:14:07.839 That's exactly right, and look, Capital One largely subprime. These 0:14:07.840 --> 0:14:10.400 are the sorts of borrowers who tend to have balances, 0:14:10.800 --> 0:14:13.400 you know, on their books at the end of the 0:14:13.600 --> 0:14:16.480 statement period. Over the past few years, we've really seen 0:14:16.520 --> 0:14:19.360 a lot of marketing, you know, celebrities like Jennifer Garner, 0:14:19.440 --> 0:14:23.720 Samuel Jackson in commercials asking that question what's in your wallet, 0:14:23.920 --> 0:14:26.800 whereas Discover, you know, they have that more prime borrower. 0:14:26.840 --> 0:14:29.920 And what's great about prime borrowers for credit card companies, 0:14:30.080 --> 0:14:31.640 they tend to spend more and they tend to be 0:14:31.680 --> 0:14:32.200 more loyal. 0:14:32.800 --> 0:14:35.960 And on the opposite side of the coin, Barclays sounds 0:14:36.000 --> 0:14:38.280 like it's going to be spending less or at least 0:14:38.280 --> 0:14:42.120 cutting costs with this major cost cutting drive, and it's 0:14:42.160 --> 0:14:44.440 going to involve a pretty major restructuring as well. 0:14:44.720 --> 0:14:47.840 That's exactly right. So this is Barkley's first major strategy 0:14:47.920 --> 0:14:50.960 update since twenty sixteen, and it is a really big 0:14:51.120 --> 0:14:54.400 test for the ceocs than kind of Krishnan. And what 0:14:54.560 --> 0:14:57.280 is actually happening at Barkley's is really this pressure to 0:14:57.400 --> 0:15:01.200 improve share price performance. So Barkley's has lagged a lot 0:15:01.280 --> 0:15:04.240 of peers, and the goal here really is to kind 0:15:04.240 --> 0:15:09.520 of bring expenses under control, to return capital to investors 0:15:09.600 --> 0:15:13.200 via share of buybacks and dividends, and to simplify the 0:15:13.240 --> 0:15:15.760 bank in a lot of ways, to overhaul its operations, 0:15:15.800 --> 0:15:20.160 reorganizing into five new divisions UK retail Bank, UK Corporate Bank, 0:15:20.200 --> 0:15:23.280 a private bank, and a wealth management arm, as well 0:15:23.320 --> 0:15:26.760 as an investment bank. Decision and a division excuse me, 0:15:26.800 --> 0:15:27.920 and US Consumer Bank. 0:15:28.080 --> 0:15:31.800 So how could a restructuring like this get Barclays toward 0:15:31.880 --> 0:15:33.880 this goal that it's put out there of a twelve 0:15:33.920 --> 0:15:36.640 percent or more return on equity in the next two years. 0:15:37.000 --> 0:15:38.880 It's difficult, and I think a lot of this points 0:15:38.920 --> 0:15:42.320 back to that investment banking division, because that just soaks 0:15:42.440 --> 0:15:46.160 up so much capital that Barclays has, you know, at 0:15:46.160 --> 0:15:49.160 the expense of other parts of the business. You know, 0:15:49.360 --> 0:15:51.680 what we're seeing at Barclays is a little bit of 0:15:51.720 --> 0:15:55.240 an increased focus on the retail business. So you saw 0:15:55.720 --> 0:15:57.840 in recent weeks that it announced it would acquire a 0:15:57.840 --> 0:16:01.240 lot of Tesco Plc's banking business, and that is a 0:16:01.320 --> 0:16:03.360 very high street bank here in the UK, and that 0:16:03.440 --> 0:16:06.400 seems to indicate an attempt to go into some of 0:16:06.440 --> 0:16:09.720 these to these parts of banking that you require less 0:16:09.760 --> 0:16:11.640 capital but could be potentially more lucrative. 0:16:14.360 --> 0:16:17.440 This is Bloomberg Daybreak Today, your morning brief on the 0:16:17.480 --> 0:16:21.040 stories making news from Wall Street to Washington and beyond. 0:16:21.080 --> 0:16:24.080 Look for us on your podcast, beed by six am 0:16:24.200 --> 0:16:28.400 Eastern each morning on Apple, Spotify, and anywhere else you 0:16:28.480 --> 0:16:29.600 get your podcasts. 0:16:29.840 --> 0:16:32.520 You can also listen live each morning starting at five 0:16:32.600 --> 0:16:35.160 am Wall Street Time on Bloomberg eleven three to zero 0:16:35.240 --> 0:16:38.040 in New York, Bloomberg ninety nine to one in Washington, 0:16:38.200 --> 0:16:41.040 Bloomberg one oh six to one in Boston, and Bloomberg 0:16:41.120 --> 0:16:42.800 ninety sixty in San Francisco. 0:16:42.960 --> 0:16:46.520 Our flagship New York station is also available on your 0:16:46.600 --> 0:16:52.080 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty plus. 0:16:52.160 --> 0:16:55.760 Listen coast to coast on the Bloomberg Business app, serriusxmb 0:16:55.920 --> 0:16:59.680 iHeartRadio app, and on Bloomberg dot Com. I'm Nathan Hager, 0:16:59.800 --> 0:17:00.200 and I 0:17:00.320 --> 0:17:03.880 Maybe Morris Join us again tomorrow morning for all the 0:17:03.960 --> 0:17:06.720 news you need to start your day right here on 0:17:06.920 --> 0:17:14.000 Bloomberg Daybreak