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QUEST MEANS BUSINESS

EU Summit in Brussels; Concerns about Sovereignty Over Budgets; Interview With Bank of America CEO Brian Moynihan; Rules of Regulation; Future Cities: Doha's New Airport

Aired January 30, 2012 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MAX FOSTER, HOST: It's time to scale the summit. EU leaders meet with a hope of stabilizing the eurozone crisis.

Hong Kong's chief executive, Donald Tsang, tells CNN nobody is immune from the eurozone crisis.

And a bonus battle. RBS CEO bows to public pressure.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Hello to you. European leaders are in Brussels right now for the first summit of the year. Officially, they're talking about finding the balance between austerity and growth for Europe's debt-laden economies, but Greece remains an urgent problem.

Even before the meeting started, cracks appeared over who should manage its budget. Greece has yet to seal a deal with its private creditors, and that's creating a lot of uncertainty for investors. A check of the markets and a warning from Asia in just a moment, but first, let's bring in CNN's Jim Boulden, who's in Brussels. Jim?

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, Max, we're about five hours into this summit, and we've been told the leaders are now discussing what's called the fiscal compact, this idea, of course, of the tighter differentiation between the economies of those countries that use the eurozone.

One of the questions is whether or not Poland will go along with that. The Polish prime minister, Mr. Tusk, not very happy earlier today with some of the ideas that those outside of the euro would not have much say on how the eurozone handles things going forward.

But let me bring in my guest. I've got Peter Spiegel, the bureau chief from the "Financial Times" here. Let's start with Greece, if we can. You broke this story over the weekend, this idea that Germany or some people in Germany would like to have a bit more control over the Greek budget. Maybe not a surprise, but it did not go down well in Athens.

PETER SPIEGEL, BRUSSELS BUREAU CHIEF, "FINANCIAL TIMES": No, it had not gone down well in Athens and, frankly, has not gone down well with other eurozone members. The hear -- the buzz I'm hearing here today but also over the weekend was this is really what they were pushing was sort of usurpation of the actual democratic process in Greece to set their budget. They wanted a budget commissioner that would have veto power over parliamentary decisions on the budget.

And again, there are elements, as you said, within the German finance ministry, and actually in other finance ministries, as well, the Dutch, the Finns, some of these northern creditor countries. But other eurozone members really think this goes a bit too far, and my sense is that it's not going to happen.

Now, the one source I talked to said, look, it is Germany. Germany is the pay master and Germany is the most important country in this discussion, but even that -- even despite that, they think it's not going to go very far.

BOULDEN: So, if they're discussing the fiscal compact, a tighter integration in their economies, they're not talking about losing sovereignty. Because that would actually be losing sovereignty, for Greece anyway.

SPEIEGEL: Yes. It depends on how you define "sovereignty." Obviously, this new fiscal compact is going to require nations to actually put either into their constitution or into national laws rules that say we cannot breach these certain debt and deficit limits.

Now, that is certainly giving up some national control over your own budget. But at least it's your national parliament doing that kind of thing. So, that's the difference.

It's having a bit of a problem in countries like Ireland, where you may have to have a referendum, because the argument in Ireland is, if we're going to give up sovereignty over our own parliament when it comes to the budget, we might have to have a national referendum on it.

Ireland right now does not want a referendum in the midst of this bailout. Real unpopularity towards Brussels right now, so it's a real difficulty for some of these countries. So, this fiscal compact is going to be problematic once they actually get an agreement on it tonight, it has to go out to the various countries for ratification.

And that's where a lot of these populist parties are going to start jumping onto the band wagon. It's going to be an interesting process to see how this plays out over the next couple months.

BOULDEN: Why do you think markets got spooked today after several weeks, actually, of -- and the euro's doing well against the dollar, but something's spooking people again. Is it because we have not seen an agreement between Greece and those private sector -- the private sector involvement of the banks and the hedge funds and the insurance companies?

SPIEGEL: I think that's exactly it. Greece. Everyone took a bit of a sigh of relief at the new year. We saw the ECB intervene, give basically free money to European banks. So, the banking sector, you said a rally in the banking sector, everyone said OK. We're giving a little -- some time to actually get things done.

But this Greece thing has dragged on and dragged on and dragged on, and there is a sense now that, again, these three creditor countries in the north, Germany, the Netherlands, and Finland, do they really want to have a voluntary debt restructuring, or are they just willing to let Greece default?

And if Greece defaults, the contagion effect, it could be disastrous. We may start seeing Italy, Spain, again. We've seen Portuguese bonds go up to 15, 17 percent today. People are believing if you're going to let Greece fall off the edge, who's next? And is it Portugal? Then, does it go to Ireland and Italy?

So, that's the nervousness. We sort of have temporarily solved the bank problem, which was really the risk to the rest of the world because so much is intertwined with the European banking system. But this problem of the sovereigns has not been solved, and as Greece gets dragged on and dragged on, and no resolution, I think the market is getting very, very nervous about that.

BOULDEN: OK, Peter Spiegel of the "Financial Times." Thank you very much.

Of course, we've been here for months, haven't we, Max? Talking about this, every time thinking that maybe the European leaders will get some major decisions to solve this.

Now, things have gotten better over the last few months, no doubt about that. But as we see with the markets today, they want to see action specifically on Greece or find out what it is the European leaders are going to do about Greece if they cannot get an agreement with the private sector.

That's still all to play for. We'll still be here for many more hours tonight, Max. Back to you.

FOSTER: A long day for you, Jim. Thank you very much, indeed, for that. Now, "scared and frustrated," words used by the Hong Kong chief executive to describe how he feels about the future of the world economy.

Donald Tsang admits he's deeply worried about the European debt crisis and the delays in finding a way forward. At the World Economic Forum in Davos, he told Richard why this financial crisis worries him more than others before it.

(BEGIN VIDEOTAPE)

DONALD TSANG, CHIEF EXECUTIVE, HONG KONG: As you know, I've been in public service particularly looking at national financial management for over two decades. In my personal experience, three crises. And two I had to handle personally.

I have never seen a situation whereby the two largest economies are having problems simultaneously. And I have seen an Asian financial crisis, the root cause of that was exuberance in the market. There's a lack of market discipline.

Now, we are seeing not only the failure of the market, you have the lack of a fiscal system and a collapses of a monetary system, as well, all happening at the same time. And it is happening in Europe.

And these things linger on so much. My experience told me that when you've dealt with a problem like that, you have to move very fast, and make sure the market will, then, trust you. This occasion, I think, the market is still waiting out there and trying to bite you.

RICHARD QUEST, CNN INTERNATIONAL: You're being diplomatic when you say you should move very fast. The Europeans have done exactly the opposite. They've taken as long as it's possible to take to deal with the crisis that could engulf your part of the world, too.

TSANG: It will be. Nobody's immune in this, I'm sure. But in the case of Hong Kong, and we are hardly exposed to the sovereign debt in Europe, but there is not a question of direct impact. There's indirect impact.

What about banks counter-parties? What about the major clients? If the major clients or the counter-party banks are in trouble, we're in trouble, as well. And our trade will then slow down and then stop. All these things will impact on us, at the end of the day, reflected in the livelihood of the people whom we serve.

So, I'm scared. I have never seen it like this. And particularly, it's a new experience. The world is far more interconnected now than we were before. If you remember the Asian financial crisis, we were left alone. We fought our own battle. We were told to behave, and we behaved. We did exactly what IMF and everybody told us to do.

And now, they seem to do -- even textbook in Europe. So, I'm scared, too. Have they found some new ways of dealing with a situation like this? So --

QUEST: You sound a little frustrated and, if I may say so, a little bitter about the way in which the Europeans are handling their crisis. That's fair to say.

TSANG: Well, I'm frustrated, because I'm worried about the whole world, not only about Europe and about Asia, as well. I have self- interest, as well, in this, because I believe living in an open society, we're exposed.

QUEST: So, what would you like them to do?

TSANG: Well, they have to -- first of all, they have to -- they have the longer term issues, but they have a short-term issue. They must find a way to resolve the Greek problem. It has to be resolved.

And so, the major redemption taking place in March, everyone is waiting with baited breath, what's going to happen then? And all -- all the development we have so far do not inspire confidence.

QUEST: You are basically saying what most people are thinking, that why should we believe that they can handle this?

TSANG: Well, not to that extent, though. I think they have the ability to handle it, but because of domestic politics, individual national interests and so on, they are dragging their feet to come to what are clearly what -- how the solution should be.

QUEST: So, you believe that the situation, there is a real potential for it to get much worse?

TSANG: Of course it would be. It would be. If somehow you don't stop it -- the trouble in Greece, it will immediately spread to Portugal, and then Spain, and everybody else. And then, of course, become a major issue for all of us.

I don't think that it will just end there. The market, when they smell blood -- and I experienced it personally in 1997, 98 -- when they smell blood, they will then go one after another.

I remember in 1998, we were -- we balanced our books, I got serial debt, and we behaved ourselves. We had reasonable reserves. I thought we had behaved impeccably by IMF standards. I was still attacked by speculators.

(END VIDEOTAPE)

FOSTER: Chief exec Hong Kong, there.

Now, RBS is still handing out mega bonuses even though its chief executive turned down its seven-figure accolade to him. We'll talk about who's getting the big bucks in this age of austerity.

(COMMERCIAL BREAK)

FOSTER: -- America CEO Brian Moynihan says that settlements and refinancing deals are helping the bank move forward. Mr. Moynihan has been speaking to CNN's Poppy -- CNN Money's Poppy Harlow, who's at CNN New York for us. Hi, there, Poppy.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Hi there, good to see you, Max. You know, it's interesting to get to your perspective from Brian Moynihan, especially at this time.

This is one of the biggest banks in the world that has also come under intense scrutiny in terms of the public perception, particularly in the United States after issuing a $5 debit card fee, then having to rescind it due to huge public backlash.

We had a chance to sit down with him, talk a lot about the mortgage mess, where that stands for Bank of America. Also a chance to talk with him about the continuing debate over the 1 percent versus the 99 percent. Take a listen.

(BEGIN VIDEOTAPE)

BRIAN MOYNIHAN, CEO, BANK OF AMERICA: We have to deal with the fact that America is still working itself through the problem -- through the issues of the economics, certainly high unemployment. We've got to make sure we're perceived to be what we are, which is fair, transparent, and clear, and provide tremendous service.

The debit fee brought that all out, and then we put it behind us, and now we'll go forward and make sure we do it right.

HARLOW: Whether it's fair or not, a lot of the backlash against the 1 percent in the 99 percent/1 percent conversation has been against financial institutions across the board. I'd like your take on what you make of the conversation in the United States. Do you think it's an important one, and is it happening in the right way?

MOYNIHAN: I think it's an important one, because in some senses, the reaction to the $5 fee is a -- they're all parts of this thing, which is --

HARLOW: Symbolic of that.

MOYNIHAN: -- which is in tough times, people want to make sure that they have the opportunity to get ahead and be successful, and they also want an opportunity to make sure in tough times that they're taken care of. That's an obligation on a society.

So, I think it's all reflective of that, so I think financial institutions can be singled out, but I think it's a broader question, which is -- and this is what Davos has been about is how all the system works when you're out. It's the best system there is. There's no one that disagrees with that. The question is, at times, it produces excesses and outcomes that people have to look at.

And so, I think this is about that, and we -- we agree it's an important conversation. We have the conversation, because remember, I employ 285,000 people with a vast range of what they do and vast range of how much they're -- how much in compensation they get.

And so, I -- as an employer who wants to be the best place for people to work, I have to think about their implications. As -- cost structure's important, I have to think about that. So, there's a great conversation, an important conversation. I think it's not capable of a sound bite thing. It has to take some thought process.

But behind it is this question of fairness and getting ahead, but the real question behind it is -- you don't have this when you're growing and people feel optimistic. And the issue is, this has been a long time where we haven't been growing as fast as we want, and it's hard to keep the optimism up.

And so, what you hope is 2012 is the year where we pivot to more optimism and more fundamental growth.

HARLOW: Do you think it could be -- is this the year of rebuilding trust for you guys as an institution and just the industry across the board with the masses?

MOYNIHAN: we have to continue to rebuild trust. We -- our customers really like what we do. They've got to -- we've just got to keep working from that out and make sure what we do. And so, that -- whether it's trust or whatever we're doing, is to rebuild credibility of all institutions and just keep driving it forward.

But a lot of it has to be focused on what's important, that's jobs, that's growth, that's things like that. Dragging ourselves back into the debate about what happened five years ago is not necessarily going to help that out. Focus on what's going to happen in the next five years and ten years and fifteen years. I think the dialogue will move there as we move through the year.

(END VIDEOTAPE)

HARLOW: And Max, that was the topic of conversation among US banking CEOs in Davos, same story at CitiGroup. It's still about building trust with the public in the banking institutions.

As for Bank of America, so far so good for the year, up about 30 percent, off about 3 percent today, but the big focus outside of that perception is the mortgage-related losses at the bank.

We delved deeply into that with Brian Moynihan, we've got that on CNN Money, but he said he feels confident about what's ahead in terms of any mortgage-related lawsuits. He said the bank has $16 billion in reserves set aside to deal with that.

I did say, "Is bankruptcy for your mortgage division an option right now?" And he said that is, indeed, on the table, so he did not write that off, which is very interesting.

One last point, one thing that his not on the table at Bank of America right now is any sort of sale of Merrill Lynch. That had been discussed by some as a possibility of some more core asset sales of Bank of America. That, right now, according to Moynihan, not an option. Max?

FOSTER: Poppy, thank you very much, indeed. And you can watch more of that interview with Brian Moynihan online, cnnmoney.com.

The chief executive of the Royal Bank of Scotland has turned down a bonus of $1.5 million. Stephen Hester waived the payments even though it was only half of what he received in 2010. He had faced a storm of criticism since he was awarded the bonus last week. The British Labour Party had vowed to force a parliamentary vote on the issue.

The matter is particularly sensitive because RBS was effectively nationalized during the financial crisis. It is 83 percent owned by the British taxpayer, having received a $70 billion bailout from the UK government.

RBS is still planning to shell out $786 million in bonuses in its investment banking division, where it's still laying off staff. Downing Street says it won't micromanage the Royal Bank of Scotland.

A new study shows that regulatory uncertainty is having a negative effect on two thirds of businesses in the city of London. I'm joined now by Michael Wainwright, a financial services lawyer at Eversheds.

You did speak to lots of people as you were putting this together. It got a good taste of what the city thinks of all this --

MICHAEL WAINWRIGHT, FINANCIAL SERVICES LAWYER, EVERSHEDS: Yes.

FOSTER: -- regulatory talk.

WAINWRIGHT: Yes, we're a city law firm and we're keen to find out what challenges are facing our clients and how they're wanting to respond to them. So, we spoke to about 200 senior executives in the financial services sector in London. Focus groups and so on, to get their views on how regulation is working at the moment, how they would like to see it working in the future.

FOSTER: A lot of those bankers are in London because it seemed to have a bit of a softer touch for regulations. It's a competitive advantage of London. I'm not making any judgments about that, but is there a feeling that it's not going to keep that competitive advantage to the city?

WAINWRIGHT: Well, we still see London as being out in front, but it's under threat, and I think very few people are feeling it as a soft touch at the moment. We've got all sorts of regulatory change facing the institutions in the city. Not just from within the UK, but internationally. And people are struggling in some cases to cope.

FOSTER: What about the accusation that they got in this terrible mess because there wasn't enough regulation, created a global financial crisis, got some global banks based in London. What's their view of that? How are they responding to that?

WAINWRIGHT: Well, it was a global crisis, so it's not just an issue for London. There is a lot of change in store. There are concerns that the change that's being proposed is very much about fixing what went wrong last time and one thing that came through was that people in the city would like to see regulatory change being driven more by what should be achieved in the future.

FOSTER: It's happening everywhere, though, isn't it, tighter financial regulations? So, is it just a threat that they would go to a different city, or is it a reality?

WAINWRIGHT: There -- there's a real threat. If you look at the top 100 listed companies in London, a lot of their activities are outside the UK, so relocating is a real possibility for them.

On the other hand, London has done extremely well up until now, and we see that continuing.

FOSTER: What about bonuses, because people look at these bonuses, even though RBS's chief exec has got a very small bonus compared with a lot of bank chief execs. There's a lot of outrage about that. I guess any sort of regulation there is something that they would fight.

WAINWRIGHT: Not at all. In fact, one of the findings that came up was that the city really supports the FSA's initiative on its remuneration code. We're trying to relate remuneration to what people are delivering and the risk that they take.

So, there -- I think in general, the city is looking for rules that can bolster your framework, but people also want to know where they stand with the regulator.

FOSTER: Michael Wainwright, thank you very much, indeed.

Richard's up next in Doha, where they're transforming desert sand into a state of the art welcome mat.

(BEGIN VIDEO CLIP)

QUEST: When we come back after the break, from the old to the very new airport, hoping to bring millions of passengers to Doha.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

FOSTER: Doha's new international airport may still be under construction, but it's on the way to being world class. Its creators are pouring $14 billion into the project. It's being built on 65 million cubic meters of sand dredged from the Gulf and brought ashore.

The airport is the first to be designed with help from a carrier, thanks to input from Qatar Airways. By 2018, it's expected to handle 50 million passengers a year, making Qatar's capital not only a future city, but also a global hub.

The man behind it is one of Doha's most influential businessmen. He gave Richard an exclusive and detailed tour.

(BEGIN VIDEOTAPE)

AKBAR AL BAKER, CEO, QATAR AIRWAYS: Look, Reynaldo (ph). This should be both male and female.

UNIDENTIFIED MALE: Yes.

BAKER: Look what he did. This is wrong.

QUEST (voice-over): Flamboyant and fiercely competitive, Akbar al Baker is unlike any other airline CEO, and is not a man that leaves you in any doubt about his opinion. Especially when it comes to Doha's new airport.

BAKER: You see the retail sign there?

QUEST (on camera): Yes. You're going to have all the big names?

BAKER: All the big names.

QUEST (voice-over): No detail is too trivial for the man known simply as Chief.

BAKER: When they were drilling the hole, they dent it, so you can see -- you can see? The depression in the steel plate. Come, come here, you can see it.

QUEST (on camera): Oh, yes, yes. I can see it, I can see it, yes.

BAKER: Yes, this will be rejected. This is --

(LAUGHTER)

QUEST: Are you a nightmare? Are you a perfectionist?

BAKER: This will be rejected.

QUEST: No, sure. You'll put yourself in an early grave.

BAKER: No, I won't. I enjoy this.

QUEST: I know you do. Mischief-making.

QUEST (voice-over): Born in Doha, Akbar became chief exec of Qatar Airways in 1997. He's driven the expansion of the airline from a small, regional carrier with small planes to a global airline with 103 aircraft and 255 more on order.

In so many ways, this is his airport.

QUEST (on camera): And when would you hope to open the --

BAKER: I will keep my fingers crossed to have it open by 12 of December, 2012.

QUEST: Twelve --

BAKER: So, it will be 12-12-12.

QUEST (voice-over): At an estimated cost of $15 billion, the new airport will employ 40,000 people. The scale of every component is being built with the intention to make Doha one of the dominant hubs in the Middle East.

QUEST (on camera): This is the larger of two new maintenance hangars. To get an idea of how bit, I've got to go in the middle.

I have three airports to say to you. Denver, Hong Kong, and Heathrow terminal 5. What do you say in terms of teething problems and getting it right on day one?

BAKER: We will not allow any teething problems to happen, because we will test it for so long time that all the bad tooth is extracted so that we don't have any teething problems for anybody.

Only be tested. Rehearsed for six months before we transfer.

QUEST (voice-over): Building terminals is a habit here. The existing Terminal B is less than a year old. The Arrivals Terminal was opened in December 2010.

And now, a whole new airport. The perfect barometer of Doha's growth and ambition.

QUEST (on camera): And to the critics who would say too much, too fast, and too extreme, of which this new airport is an example, I'm sure you have a robust reply.

BAKER: I have, because they do not have the courage and they do not have the capability and they do not have the vision to achieve what we have achieved.

QUEST: Runway 34 Right is an achievement in itself. At 4,850 meters long, it's the longest runway in the region. It means the A380 super jumbo can take off from here fully fueled, fully laden, even in the blistering heat of the Doha summer.

QUEST (voice-over): The new airport will open with a capacity of 24 million passengers per year. This airport is about more than just bringing people to Qatar. Seventy percent of the passengers transfer through Doha on their way to somewhere else.

BAKER: What you see once it's opened at the end of next year is not final. We have another expansion to do on either side when we go to the 50 million passenger capacity by -- before 2020.

This is all leather. And --

QUEST (voice-over): So much for the big picture. It never takes the chief long to return to what he really loves, the detail.

BAKER: This is Korean?

UNIDENTIFIED MALE: Yes.

BAKER: It gives you the impression of -- the impression of sand dunes.

QUEST (on camera): Yes.

BAKER: It's too late now. Your plans.

This should not happen.

QUEST: Did you ever doubt it would happen?

BAKER: No. His Highness has a very clear vision. And a lot of asses will be kicked to achieve that.

QUEST: Yes, it's very beautiful.

Of the many prestige projects in Qatar, the new airport is truly on the front line, because for the millions of passengers who transfer through here each year and never actually leave the airport, the terminal building will be their lasting impression of Doha.

(END VIDEOTAPE)

FOSTER: Meanwhile, sings of hope. Why the head of Italy's Central Bank says he sees progress in the debt-scarred country.

(COMMERCIAL BREAK)

FOSTER: Welcome back, I'm Max Foster. These are the main headlines this hour.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (Speaking foreign language).

FOSTER (voice-over): Dramatic video posted online appears to show a Syrian tank being blown up. And the flashpoint is in Homs, where fierce fighting is underway. Opposition activists say at least 46 protesters were killed there today. We're told security forced killed 14 others everywhere in Syria, bringing Monday's death toll to 60.

In the past few hours, the White House called Assad's fall inevitable. E.U. leaders are trying to hammer out a fix for the Eurozone debt crisis at the European Council summit in Brussels. They're striving for a balance between strict austerity measures and policies that will boost growth. But disagreements say they haven't handled Greek debt could once again derail their efforts.

Florida will be the biggest primary to date in the U.S. presidential race and the Republican candidates have escalated the fight ahead of Tuesday's contest there. Polls show Mitt Romney heading into it with a widening lead over Newt Gingrich, but Gingrich insists he's in it for the long haul.

Discount carrier Spanair has filed for bankruptcy protection in Barcelona. Thousands of passengers were left stranded over the weekend after the carrier grounded its fleet. Spanair says it's working to try to get refunds back to at least some of its customers. Last week, Qatar Airlines walked away from talks to take over the money-losing airline.

A trader has denied losing Swiss bank UBS more than $2 billion through unauthorized trading. Kweku Adoboli has pleaded not guilty to charges of fraud and false accounting. Adoboli was a trader in UBS's global equity's division. He appeared in court earlier today in London. The judge set a trial date of September the 3rd.

(END VIDEO CLIP)

(MUSIC PLAYING)

FOSTER: For all this week, we bring you interviews from Davos in what we're calling Davos Plus, from that Swiss mountaintop. We've heard from top guns in business and politics, among them Italy's central bank chief. He weighed in on the ECB's efforts to bolster the Eurozone.

Ahead of that, he talked to Richard about debt-stricken and downgraded Italy. There are signs of hope. (Inaudible) costs have been easing. So Richard asked him if Italy is now emerging from the crisis.

(BEGIN VIDEO CLIP)

IGNAZIO VISCO, ITALIAN CENTRAL BANK GOVERNOR: It's not part of the crisis, but it has made a lot of progress, thanks both to its own act and to the policies of -- that have been conducted, started by the ECB on the liquidity front for banks.

QUEST: We'll talk about the ECB in a second. In terms of Italy, the new government of Mario Monti, reforms have been put in place. Now it really is a question of implementing those reforms, isn't it, if the gains in the market are to be sustained?

VISCO: You're right. I think reforms, structural reforms have also already been implemented on the pension front, which is an extremely important area of the economy, even if it is on the fiscal side and not on the real economy or the growth side.

On the growth side, I think there is a clear idea on the part of this moment that reforms have to be comprehensive. They started with liberalizing a number of sectors. They're going to reduce the burdens on the (inaudible) side, then they have to do something on the liberal (ph) market.

QUEST: Now, as governor, are you confident that those reforms will not slide and backtrack? And what has happened before, you know as well as I do, good promises, poor delivery.

VISCO: No, I think this is a -- obviously, I have to be confident. But I think I'm optimistic because I see there is a lot of action on the part of this government (ph), and I think also the population is backing it.

QUEST: The Greek situation has raised fears about the strength of the banking system. If banks have to take serious haircuts on their Greek debt. How worried are you about any effect or, indeed, any credit crunch that there will be in the Italian banking system?

VISCO: Yes, first of all, the Italian banking system is not exposed directly to Greece. So it is an indirect effect. At the same time, there has been a substantial reduction in wholesale funding, and there might have been not-so-good prospects on the debt renewals.

The LTRO's by sent (ph) -- by the ECB has improved the reliability side, and this means that the credit crunch has been -- probably has been substantially reduced.

QUEST: Everything I've read on the LTRO says that it's basically the ECB funding large swathes of Europe's banks, the Eurozone's banks.

VISCO: That's nonsense. This is not so. The ECB has substituted for a freezing of the wholesale funding market.

QUEST: But they are the primary funder now of -- for the market.

VISCO: But what they are doing now with this, they have helped banks maintaining their assets, both in terms of loans to houses and enterprises, and intent -- without the leveraging on their performance (ph).

QUEST: So really, the ECB's LTRO three-year money was crucial in this?

VISCO: I think so. I think so. And it will be crucial also in the months coming.

QUEST: Why?

VISCO: Because it will put banks -- the banking sector in safe territory. Most of the risks for a real economy for -- are coming from the financial sector and banking sector. The Italian banking sector is on -- in terms of fundamentals, in good shape. The risk of a substantial difficulty in the funding may be seen on financing the real economy.

QUEST: So the -- come back to the point, though. The ECB is, in many cases, playing a role as lender of last resort now, to the banking structure.

VISCO: Of course. It is not the lender of last resort to the states (ph).

QUEST: Yes.

VISCO: It is a lender -- it is not a lender of last resort to the state who stop (ph). But it is performing the role of lender of last resort to banks, and this is part of a monetary policy action -- unconventional, perhaps -- under today's way of saying, but certainly very conventional under yesterday, in order to reduce the risks, even on price stability from -- that may come from bank problems.

(END VIDEO CLIP)

FOSTER: A tough start to the week for Europe's major stock (inaudible) sees those worries over Greece hit banking stocks in particular and investors also, anxiously (inaudible) Portugal's borrowing costs from the U.S. came, disappointing numbers showing consumers spent less than expected in December.

That plays into the U.S. markets. Let's see how they are doing. They're also concerned about, you know, whether or not there will be another Greek bailout, down 0.15 percent, so not down as far as they were earlier.

Coming up on QUEST MEANS BUSINESS, a bold new plan to eliminate tropical diseases. Drug makers, governments and organizations of all kinds, all in on the act, ahead as GlaxoSmithKline tells us why it's so important. That's after the break.

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FOSTER: Well, if you've never heard of sleeping sickness or Chagas disease, that could be all that's changed. Some of the world's biggest drug companies have joined forces with governments and charities to combat tropical diseases over the next decade. The Bill and Melinda Gates Foundation, GlaxoSmithKline and Pfizer are among those who've joined the initiative.

There are 10 specific diseases on the group's hit list to be eradicated by 2020. They include leprosy, blinding trachoma and Guinea worm disease. Many of them are among little -- are little known, really, outside the developing world.

Now the World Health Organization says these neglected tropical diseases affect 1.4 billion people worldwide, many of whom are children. Fourteen billion drug treatments will be donated to the group, despite what it says is a generous contribution, the World Health Organization says an additional $2 billion will needed to treat everyone who's at risk.

I sat down with the head of GlaxoSmithKline, Andrew Witty, and the Tanzanian director of preventative services, Dr. Donan Mmbando, a little earlier. I started off by asking Dr. Mmbando what effect free drugs will have on helping his nation's health.

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DR. DONAN MMBANDO, TANZANIAN MINISTRY OF HEALTH AND SOCIAL WELFARE: To be able to control and eliminate these diseases, the government alone cannot be -- cannot manage. That is why we are working through the strategy of public-private partnership so that our partners will complement the government's budgets to be able to implement these activities for the impacts.

And for -- in so doing, we are actually, as a government, for example, last year, we did set aside about $250,000, U.S. dollars, for clearing and distribution of related (ph) medicines from pharmaceutical industries. This is a government contribution, but we are also doing that to clear the medicine from the port and distribute to users.

FOSTER: Sir Andrew, how do you decide when to give away free drugs and when to charge for it, because you have to make a profit. Your shareholders, I'm sure, are asking that question.

SIR ANDREW WITTY, CEO, GLAXOSMITHKLINE: Correct, and we have a very clear tiered pricing approach, which essentially means the richest countries in the world have a high price, and those in the middle and the very poorest in the world have the lowest, or in many cases, we'll donate for free, particularly when it comes to neglected tropical disease, where the vast majority of the billion people who are affected live in the absolute poorest of the poorest areas of the poorest countries.

Then you really have to be talking about drug donation. And this year alone, we'll donate somewhere between 600 billion tablets to countries like Tanzania.

FOSTER: What's it costing you? Is there a figure?

WITTY: Well, across the whole industry, we're going to be donating over a billion and a half treatments a year. I think individual companies will have different cost exposure. I think for all of us we've taken the view that this is a really meaningful contribution that we can make towards global public health for diseases which have been neglected for 50 or 60 years.

We can make a difference, and we can lift a lot of families and children out of a cycle of poverty and illness, which is preventing economic development.

FOSTER: How do you guarantee to Sir Andrew, for example, that these aren't going to end up in criminal hands or so just businesses' hands?

MMBANDO: We have a well-established system of monitoring for the items, for medicine that we receive at the country level (ph). Once the medicines arrives, it's the role of the ministry to clear this from the ports and put this in the books of the ministry so that they can now be distributed with respect to regions, for endemic (ph) regions.

And therefore the recipient regions, they also have a system of receiving and accounting for the medicines. So through that way, they are acknowledged. Additionally, we have a supportive supervisory mechanism to monitor how these medicines have been used against a number of patients who have been attended.

FOSTER: Are you 100 percent convinced about that at this point? Are you keeping checks on that?

WITTY: Oh, no, obviously we keep a very close eye on what the distribution into the country is, because the last thing we want is this medicine being diverted. I would say that, over the last several years, there's been a huge improvement in the level of professionalism and focus of African administrations, obviously including Tanzania.

And our experience over the last 10 or 12 years of this type of scale of program has been very, very positive, very few examples of diversion. And I'd go further than that and say as we're just bringing to the end malaria vaccine trials, which have also been done in countries like Tanzania, the level of physician expertise and integrity in these countries is really excellent.

So to be honest with you, this is -- I think the issue is a -- it's a theoretical issue. It's not the biggest issue.

The biggest issue is making sure we get cooperation of all the partners, and we get good distribution on the ground so that when the stuff arrives at the port, it goes quickly to the villages and there are health care workers there who can then properly administer the medicines. That's really where the focus needs to be in many of these countries.

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FOSTER: It's a big task. Until 2020, we'll see what happens.

Now still to come on QUEST MEANS BUSINESS, Philips loses its stock (ph). The Dutch electronics giant suffers a fourth quarter loss (inaudible) about who's to blame and what they're doing about it.

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FOSTER: Electronics giant Philips is sounding downbeat about 2012 after it swung to a net loss in the last three months of 2011. The Dutch company lost around $211 million in the fourth quarter, blaming sluggish sales in its TV division. Nina Dos Santos sat down with the chief executive of Philips, asked what happened.

FRANS VAN HOUTEN, CHIEF EXECUTIVE, PHILIPS: During 2011, a quite a lot of things happened. We realized that we are not yet at the growth and performance rate that we'd like Philips to be.

We initiated several programs under the umbrella of accelerate to beef up and speed up innovation, which is our lifeblood, to propel growth, but also to start address margins improvement and working capital reduction.

This is a journey of a couple of years, where we are very confident that we can bring Philips to a higher run rate of top and bottom line. We have formulated midterm targets for 2013 to drive growth profitability and ROIC. And we feel that we --

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VAN HOUTEN: -- are on the right path to achieve that.

NINA DOS SANTOS, CNN ANCHOR, QUEST MEANS BUSINESS: Sorry, what are the --

VAN HOUTEN: The targets are -- the midterm targets that we've formulated are 4 to 6 percent growth, 10 to 12 percent EBITDA and 12 to 14 percent ROIC.

DOS SANTOS: Do you think that you're realistically going to be able to achieve those targets, given the fact that we are in the times of austerity and you've been focusing your business increasingly on health care, but obviously countries across Europe are cutting their health care budget.

VAN HOUTEN: Philips' position in health care, energy efficient lighting and consumer health and well-being, these are three good markets that play to the trends in the world. We are well positioned. We are bringing out innovations that have increasingly good traction.

Let me give you an example of that. We have just launched our heart navigator that allows for minimally invasive treatment of cardiac diseases. We can even replace a heart valve through a minimally invasive incision.

These are things that the world needs. It will make the health care system more productive and it is better for patients. So by accelerating innovation, Philips can come at a structurally higher growth rate.

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FOSTER: Meanwhile, Ryanair's latest results prove that even as the European economy wilts, it's possible to boost earnings. The low-cost airline has raised its full-year profit forecast. It says it's charging higher fares, more than making up for the drop in the number of flights and higher fuel costs.

Third quarter earnings beat estimates. The airline made $20 million compared to the loss in the same period last year. But if oil prices remain volatile, Ryanair's deputy chief executive says the extra costs will have to be passed on to customers.

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HOWARD MILLAR, DEPUTY CEO, RYANAIR: The fuel prices in the -- in the most -- in the last quarter were up 18 percent, average fares rose by 17 percent.

So if fuel prices are on the rise and we want to maintain profitability, we do have to pass on the fuel price increases in the form of higher average fares. However, our average fare in this fiscal year ended March 12th, will only be the same as it was in 2007. So it's still extraordinary value for our consumers.

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FOSTER: Well, investors in Asia are bracing for grim earnings reports from several Japanese tech giants this week. Sony has been warning of a fiscal year net loss of more than $1 billion. Among the reasons, Japan's soaring yen, which increases the price of exports.

And last year's devastating flood in Thailand, Panasonic is also expected to post a net loss for its fiscal year. And other big companies reporting earnings this week including Toshiba, Honda, Sharp and Hitachi.

Now onto weather, an extreme cold and heavy snow is gripping parts of eastern Europe, and meteorologist Jennifer Delgado can tell us more about that from the Weather Center.

Hi, Jennifer.

JENNIFER DELGADO, CNN METEOROLOGIST: Hi, Max. You're right. We're dealing with bitter cold conditions through parts of eastern Europe. And this is going to stick around, it looks like all the way through the end of the week. If you look at the numbers right now, -18 degrees in Moscow, -17 in Kiev, -13 in Warsaw, and even over towards the west, going to be cool over there.

We're talking about 0 for London and the same for Glasgow, but again, the real concern is going to be eastern Europe right now, as I show you. And we add in the wind, look what it feels like. It feels like -26 in Moscow, the same in Kiev. And -20 in Warsaw.

And we do know reportedly six people have died from this cold spell through parts of Romania, and this, as I said, is not letting up anytime soon because we do have this ridge of high pressure over towards the east, and that is just pulling in that frigid air. And this means temperatures are going to be running about 10 to 20 degrees below average, anywhere in that eastern European region.

And to give you a better idea of the forecast, where the numbers should be, upper Kiev, typically, you should see temperatures climbing to about -2, overnight lows should be -7. Look where your numbers are going to be. The clouds are going to be around, temperature only climbing to a high of 19 on Wednesday, and the overnight lows dropping down to -27 by Thursday.

And as I mentioned to you, we're also talking about parts of England. Your numbers are really going to be tumbling, too, as we hide into Thursday as well as into Friday, temperatures are going to be well below freezing. And here's the forecast for you, that gives you an idea, and it gives you time to bundle up and get prepared for the cool conditions that are spreading through parts of Europe.

Now in addition to the cold weather, we're also talking about some snow out there. You can see for areas, including southern parts of France through central areas, including Italy, right along the Alps, what a heavy snowfall coming down and more on the way for parts of Turkey as well as into Georgia, southern parts of Russia, but let me show you what it's looks like through parts of Turkey.

And travel was delayed for a while. They had to delay and cancel some flights there. You're looking at a woman walking through the snowy street.

And those conditions are going to stay bad. We do know that some of the streets have been cleared, but in some locations, they've picked up about 25 centimeters of snowfall, and more is going to be on the way, and you're probably wondering how's this affecting travels?

I take you back over to our graphics, actually, things are fairly quiet, from Milan we're looking at some snow delays in the evenings, 15-30 minute delay, and then for Geneva in the afternoon, for Tuesday, 60-90 minute delays, but certainly for areas over towards the east, we're also including some more snow for Istanbul.

We're talking some winds, but again, some of that snow is going to cause you an extra wait for Tuesday, and even potentially into Wednesday. Max, so , if you thought it was cold out there right now, you're really not even getting a taste of (inaudible) temperatures --

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FOSTER: (Inaudible) complaining, you know.

DELGADO: Yes, definitely.

FOSTER: I am. Those pictures are dramatic. Thank you so much, Jennifer.

DELGADO: You're welcome.

FOSTER: Now if you think your job is stressful, careercast.com has come up with a list of the most anxiety-inducing jobs. It evaluated 11 factors, including deadliness, working in the public eye -- don't know about that -- physical demands and the risk to one's life. So it's perhaps not surprising that enlisted soldier is the most stressful job on the list. Firefighter is number two. Third place, airline pilot.

Military general is fourth and rounding out the top five? Police officer. Number six, event coordinator. I think that is stressful, having met a few, followed by a public relations and senior corporate executives. Photojournalist is the ninth most stressful job and number 10, taxi driver, certainly in the city center, I'd say. We'll be back in just a moment with some tweets from the top for you.

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FOSTER: Now tonight's "Top Tweets" come from the top of the European Council all the way to the man atop a media empire.

First, Herman van Rompuy, the president of the European Council tweets this: "We must slash deficits, but not our investments for the future, e.g. in education or the green economy."

The foreign minister of Sweden, Carl Bildt, tweets this: "Now truly urgent that U.N. Security Council supports Arab League and E.U. efforts to stop bloodshed and achieve transfer of power in Syria."

And finally, on the reports that Facebook will go public, Rupert Murdoch, who once owned social media website MySpace, has now taken to Twitter, it seems, tweets this: "Nothing wrong with MySpace price. Just our totally screwing up every way. Agree Facebook revenues will zoom, but still Apple cheap."

The point he's making there is that Apple's profits are so much higher than Facebook at this point, and for some top tweets of my own, do check out @MaxFosterCNN.

Now U.S. consumer spending was flat in December as households for the largest rise of income in nine months (inaudible) savings potentially signaling slower consumption early in 2012. It was the weakest reading on spending since June.

Still, economists were cautiously optimistic that rising wages as labor markets improve will keep demand supported. The Dow is currently down just 16 points for you. That is QUEST MEANS BUSINESS. I'm Max Foster in London. Thank you for watching.

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