Monday's business news review
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What are the main business stories covered today?
Breakfast Business with Enterprise Ireland on Newstalk. But first, let's have a look at the main business stories in the newspapers and websites, which we shall do in the esteemed company of Kathleen Brooks from XTB. Good morning, Kathleen. Good morning, Joe. You didn't stay up late to watch the golf by any chance. I did. Yeah. You're as tired as me. Yeah, exactly. But yeah, it was a bit of a nail biter at the end. Oh my God, my nails are bitten down to the quick. Anyway, let's do a little bit of... Let's start with banks. The Italian bank Unicredit is hoping to buy Commerzbank in Germany.
Yes, absolutely. So it's been trying to since September last year. It's actually got a 29% stake in Commerzbank. There's a big push from Berlin against this. As you can imagine, Germany aren't too keen on having an Italian bank take over their second largest lender. But... Unicredit is really trying to pull out all the stops to get this deal over the line. So it's open to making its board more German to just help Berlin say yes to this deal. Does that mean meet on time, unlike in Italy? Exactly. Well, they could actually put the HQ because they own another German bank. So they could combine that with Commerzbank and then have that as a separate HQ in Berlin. That's how far they're willing to go. So I think the lunch times would be a lot shorter, to be honest.
But, you know, it really is a sign of how the periphery of Europe is really starting to regain its strength as Germany's economy really struggles. And I think this is something that Berlin, that the German government is going to have to address. really get used to.
What is Unicredit's plan regarding Commerzbank?
The talks, they've stalled, but this is the first olive branch, actually, that Unicredit and Italy have given to Germany, who sees this as a very hostile move.
And yet, Europe acknowledges that it needs some cross-border champions, i.e. a big European champion. And at the first opportunity to create one, the Germans say, actually, we're not so keen on those cross-border stuff. Anyway... Talking about cross-border trade deals, South Korea wants to renegotiate its trade deal with America.
Oh yeah, Trump's tariffs once again. So it is trying to reopen the negotiations with the US, essentially because to secure a better tariff rate back in July, it agreed to $350 billion of investment in the US. South Korea is saying that it cannot do this in cash and that it essentially would need to, it's unaffordable. I mean, no wonder it's $350 billion, right? Which country can do that? But they signed this deal to get their, reduce their tariff rate to 15% from 25%, all good and rosy. But now that they're looking at the detail of it, not so good and rosy. So basically they've said that they've got $410 billion of FX reserves. This is South Korea has said this. And if they were to invest $350 billion in cash in the US, it could essentially push them into a financial crisis down the road, or people could get spooked by the fact that they've reduced their FX reserves by so much.
So, ultimately, it's a highly unusual move by the US to demand such large investment in return for a tariff rate. It's very unusual.
It's literally a blank check from Trump literally said, give us the huge amount of money and I will spend it as I see fit.
It's on her. Exactly. And they control the investment. He wants to control the money as well. And South Korea, I think rightly, is pushing back on this. Now, it's interesting because they're obviously not the only country or bloc that has been... That's had to pledge huge amounts of investment. Obviously, the EU has. Loads of other countries have as well. But it's really interesting that now that the reality is hitting, it's like, actually, this is not a great deal. So let's reopen those negotiations. And with everything with President Trump, it is a negotiation. So he is going to meet with some South Korean officials this week. And, you know, but I think it feels... Quite unfair. It certainly puts the US as a massive advantage that could essentially destabilise the global economy.
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