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Deutsche Bank favoring Christian Sewing as new CEO to replace John Cryan

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Management board member of Deutsche Bank Christian Sewing speaks to the media at Deutsche Bank headquarters on October 29, 2015 in Frankfurt, Germany.

Thomas Lohnes | Getty Images

Management board member of Deutsche Bank Christian Sewing speaks to the media at Deutsche Bank headquarters on October 29, 2015 in Frankfurt, Germany.

Deutsche Bank is favoring Christian Sewing to be its new chief executive, replacing John Cryan, a source told CNBC on Sunday.

The decision is not final yet, the source said, but Sewing is seen by the board to be the favorite to take the helm of the troubled German lender.

Deutsche Bank’s supervisory board, which is led by Chairman Paul Achleitner, will hold a call at 1 p.m. Eastern where a decision will be made.

Cryan was on the supervisory board for two years before being made co-CEO in 2015 and then the only chief executive the following year. But under his tenure the German lender has struggled to make a profit, reporting its third consecutive annual loss in 2017.

Investors have punished Deutsche Bank with shares down over 27 percent in the last year.

Deutsche Bank has been weighing a few options for a new CEO, even approaching Goldman Sachs international chief Richard Gnodde to ask if he would be interested in taking the helm, CNBC reported last month.

Sewing is currently the German lender’s co-deputy chief executive officer and co-head of the private and commercial bank. He has been on the management board of the bank since January 2015.

The 47-year-old has worked at Deutsche Bank since 1989 in areas including audit and risk. He has worked in Frankfurt, London, Singapore, Tokyo and Toronto.

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Why violent riots have broken out in Northern Ireland

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A man walks past a hijacked bus burning on The Shankill Road as protests continue in Belfast, Northern Ireland, April 7, 2021.

Jason Cairnduff | Reuters

LONDON — Tensions have erupted in Northern Ireland once again, as U.K. and Irish leaders attempt to preserve a long-standing peace deal in the region.

Violence has plagued the streets of Belfast for the past week and dozens of police officers have been injured amid attacks with petrol bombs, vehicles and rocks.

The renewed unrest comes as Ireland and the U.K. marked the 23rd anniversary of the Good Friday Agreement — a historic truce which brought an end to three decades of sectarian violence.

Now, hostilities have come to a head as leaders scramble to agree on new trade rules between the U.K. and European Union without undermining this agreement. The U.K. – which includes Northern Ireland – left the EU in 2020, whereas the Republic of Ireland remains a member of the union.

The British and Irish prime ministers, as well as Northern Irish lawmakers from across the political divide, have condemned the violence and called for calm.

What is happening now?

Recent rioting on the streets of Belfast has seen primarily Protestant pro-British unionist groups clash with mainly Catholic Irish republicans.

The origins of the protests have been attributed in part to resentment among the British loyalist community at the Northern Ireland Protocol – part of the treaty that saw the U.K. leave the EU.

However, the police’s recent decision not to prosecute senior lawmakers from Irish republican party Sinn Fein for breaking Covid rules, in order to attend the funeral of high-profile former Irish Republican Army member Bobby Storey, has also been cited as lighting the tinderbox.

Paramilitary groups and criminal factions have seized upon the discontent to stoke sectarian violence. Many of those arrested have been minors, some as young as 13, and Northern Irish Children’s Commissioner Koulla Yiasouma has said adults persuading young people to commit violence and vandalism is tantamount to “child abuse.”

Former Irish Prime Minister Bertie Ahern told CNBC Monday that the tensions had been simmering since last year, but said peace commitments from politicians on both sides meant it was unlikely to become a long-term issue.

However, he voiced some concern that the “marching season,” a period of regular marches by Protestant groups between April to August, will be more febrile in the wake of the recent clashes.

How has Brexit affected Northern Ireland?

The Good Friday Agreement, a pair of accords signed on April 10, 1998, brought an end to nearly three decades of sectarian conflict in Northern Ireland, known as The Troubles.

The fact that both the U.K. and the Republic of Ireland were members of the EU was also important and enabled a blurring of borders between the two.

However, the U.K.’s departure from the EU has been accused of undermining the Good Friday Agreement. It mandates either an “Irish Sea border,” between Northern Ireland and the rest of the U.K., or a “hard border” separating Northern Ireland from the Republic of Ireland, which would enrage Irish nationalists.

The Northern Ireland Protocol creates the former – a distinction between Northern Ireland and the rest of the U.K. – and it’s angered the unionist community, which identify as British.

Prior to winning election, U.K. Prime Minister Boris Johnson swore that no government of his would agree to any deal with the EU that saw a customs border for trade crossing the Irish Sea. However, he reneged on that promise within weeks of taking office, leaving unionists feeling disenfranchised and betrayed by London.

BELFAST, NORTHERN IRELAND – APRIL 07: Nationalists and Loyalists riot against one another at the Peace Wall interface gates which divide the two communities on April 7, 2021 in Belfast, Northern Ireland.

Charles McQuillan/Getty Images

U.K. and EU leaders are continuing to finalize the application of trade rules under the Northern Ireland Protocol, although the Financial Times reported Sunday that both sides were optimistic on progress.

Despite the fact that it is not yet fully implemented, goods arriving into Northern Ireland were subjected to EU customs checks in January for the first time.

Ahern suggested that British and European lawmakers will reach an agreement on the border issue, which has caused trade and supply chain disruption, but that might not be enough to put the genie back in the bottle in the short term.

“The million dollar question is: ‘Will that by itself remove the perception that is now ingrained into loyalists that there still is a border down the Irish Sea, that there is this mystical line down the Irish Sea?’ That’s the bit that worries me,” Ahern said.

How will peace be restored?

Among the common institutions enshrined within the Good Friday Agreement was the British-Irish Intergovernmental Conference. However, Ahern highlighted that the group has not met since the governments of Johnson and Irish Prime Minister Micheal Martin took office.

“I see both the government (in Ireland) and the government of the U.K. saying we must implement the Good Friday Agreement … But the one mechanism that’s in the Agreement that both of them have responsibility for is the British-Irish Intergovernmental Conference, and they haven’t met since either government has been elected,” he said.

British and European leaders are now scrambling to establish a way of implementing the Protocol that placates both sides of Northern Ireland’s sectarian divide.

BELFAST – Members of the clergy at the peace wall on Lanark Way in Belfast following a Ecumencial service in response to the recent riots and violence in the city

Brian Lawless/PA Images via Getty Images

DBRS Morningstar, a global credit ratings agency, said cooler heads will likely prevail, but the Irish Protocol is unlikely to be fundamentally reworked since it is the only available alternative to a hard border across the island of Ireland.

“A temporary extension of waivers on post-Brexit checks is likely and could buy time. However, permanent solutions will need to be found that reduce or eliminate trade friction along the Irish Sea while not compromising the EU’s single market,” Jason Graffan and Nichola James said in a recent note.

“If these challenges are left unaddressed or if relations are poorly managed, long-standing security risks to the island of Ireland will persist.”

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Bitcoin hits new all-time high above $62,000 ahead of Coinbase debut

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The Coinbase cryptocurrency exchange application seen on the screen of an iPhone.

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Bitcoin surged to a fresh record high of more than $62,000 on Tuesday, as investors awaited the highly-anticipated stock market debut of cryptocurrency exchange Coinbase.

The price of bitcoin climbed more than 4% in the last 24 hours to hit $62,718, according to data from Coin Metrics. Ether, the second-most valuable digital coin after bitcoin, also set a fresh record, climbing to $2,210.

Coinbase is set to go public on Wednesday, and could be valued at as much as $100 billion — more than major trading venue operators like Intercontinental Exchange, owner of the New York Stock Exchange. Crypto investors are hailing the company’s stock market debut as a major milestone for the industry after years of skepticism from Wall Street and regulators.

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U.S. tech companies and their reliance on Taiwan

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Taiwanese chipmakers are ahead of their international rivals and it will be tough for U.S. tech companies to reduce their reliance on Taiwan, said Sebastian Hou from CLSA.

Tech firms like Apple, Amazon, Google as well as Qualcomm, NVIDIA and AMD rely heavily on Taiwanese contract manufacturers to produce up to 90% of their chips, according to Hou, who is managing director and head of tech research at the brokerage firm.

“It’s going to be a challenging and long journey for them to diversify away, and thinking about how long it takes for the chip development and cooperation — it’s going to take a while,” he said Monday on CNBC’s “Street Signs Asia.

Semiconductors are used in everything, from smartphones and computers to cars as well as home appliances.

While the United States dominates the global semiconductor market share by revenue, Asia is the manufacturing powerhouse, according to a recent report from Bank of America. Asian countries produce more than 70% of global semiconductors — Taiwan and South Korea, in particular, have established unrivaled positions in high-end chip manufacturing capacity, the report said.

A man walks past TSMC’s logo at the company’s headquarters in Hsinchu, Taiwan. TSMC is the world’s largest semiconductor foundry.

Sam Yeh | AFP | Getty Images

Upside for Taiwan chipmakers

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip foundry, is up more than 13% year-to-date. Its rival United Microelectronics Corp — seen as a distant second to TSMC in Taiwan’s contract chip manufacturing space — is up about 16% in the same period.

CLSA has a “buy” rating on TSMC and a price target of 825 New Taiwan dollars ($28.97) — that’s a 35% upside from Friday’s close.

The brokerage has an “outperform” rating on UMC and a price target of 62 New Taiwan ($2.18), a 16.76% upside from last week’s close.

Hou explained that between the two stocks, TSMC has a higher risk — due to a wider spread between its target price and current share price — but it offers greater returns. He added that the price target is “highly achievable” since the company is expected to maintain technology leadership over the next five years and customers are set to rely heavily on it.

China’s SMIC lagging

A report from market research firm TrendForce ranked China’s Semiconductor Manufacturing International Corporation (SMIC) fifth by revenue among the world’s top 10 foundries in February, based on estimated first quarter numbers.

SMIC is China’s largest and most important chipmaker — it is seen as key to Beijing’s plans for self-sufficiency in the semiconductor space, following tensions with Washington. Last December, the U.S. blacklisted SMIC, and restricted American companies from exporting technology to the firm.

Hou explained that it is almost impossible for SMIC to catch up with TSMC and other chipmakers in light of the U.S. sanctions.

The technology gap between SMIC and TSMC is currently about six years, he said. If SMIC cannot acquire the technology it needs to bolster its high-end chip manufacturing capacity, it will fall behind even further, Hou said.

“Which means, it not only cannot catch up, but the gap will further be widened,” Hou said, adding the gap may extend to between seven to nine years.

A report last month from Reuters said the U.S. government has been slow to approve licenses for American firms to sell chipmaking equipment to SMIC.

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