Good morning from the Financial Times.
Today is Thursday, June 5th and this is your FT News Briefing.
Apple's artificial intelligence rollout in China is hitting a bit of a rough patch and Wells Fargo got a huge gift from the Fed this week.
Plus, meet the soon -to -be newest member of the Eurozone, Bulgaria.
I'm Mark Filippino, and here's the news you need to start your day.
Apple is planning on rolling out artificial intelligence services in China with the help of Alibaba, but a regulator in Beijing is now standing in the way.
Apple's AI product is called Apple Intelligence.
In China, it would be supported on Alibaba's latest models.
And politically Alibaba was supposed to help smooth the way into the Chinese market.
But even with this in, sources say Apple is having a hard time getting Apple Intelligence past the cyberspace administration of China.
The delayed rollout appears to be a casualty of the US -China trade war.
US President Donald Trump's tariffs have basically taken a sledgehammer to the relationship.
And Apple in particular finds itself in the crosshairs.
Trump is threatening the tech giant with 25 % tariffs on its devices if the company doesn't reshore its manufacturing.
Apple share price is down more than 16 % this year.
The Federal Reserve lifted a huge weight off Wells Fargo's shoulders this week.
The central bank removed an asset cap on the lender that imposed as punishment for a fake accounts scandal.
So now, Wells Fargo can finally grow its business, but it may have some trouble catching up.
Here to explain is the FT's Financial Regulation Editor, Martin Arnold.
Hey Martin. Hi Mark.
Okay, so first of all, just tell me a little bit about this asset cap.
Right. So the Federal Reserve imposed this asset cap on Wells Fargo, restricting it from growing beyond the two trillion dollars in assets that it had in 2017 as part of a wider set of restrictions that were imposed on the bank because of its fake accounts scandal that involved them essentially creating accounts for customers without their knowledge.
And so, this was the main punishment and it really has held back Wells Fargo over the past decade, in terms of its ability to grow and to expand, and it's really lagged behind the other big banks in the U .S. JS.
Why did the Federal Reserve eventually remove it?
So, what the Fed said was that it has determined that Wells Fargo has met all the conditions force required by the enforcement action.
And I think that that really reflects a lot of the intense work that Wells Fargo has done under Chief Executive Charlie Scharff, who was hired from JP Morgan in 2019 in addressing a lot of the governance failures, a lot of the behavioral failures, cultural failures, And they've really had to work very hard over the last six or seven years to get many of these restrictions lifted on the bank.
And the biggest of them was this asset cap, which has now been removed.
So Martin, Wells Fargo can finally spread its wings and expand its business.
Do we have a sense of what direction it's gonna go in?
It's not totally clear.
The bank hasn't said what it now plans to do with this extra capacity.
But analysts are expecting, in the first instance, that one of the things the bank will do is go after lending growth.
The bank is more of a traditional bank.
It doesn't have the kind of Wall Street investment banking and capital markets trading businesses that some of the other big banks have. The other thing that it could do is that it's had to spend a lot of money and employ a lot of people to work on getting these restrictions lifted.
And a lot of these people can either be laid off or redeployed, and so this is going to be an opportunity to cut costs but also to grow.
And eventually, what the Wells Fargo can now consider is whether it could look at perhaps doing some acquisitions, but I don't think anybody expects them to go charging into an acquisition straight away.
Soterios Johnson Speaking of big moves, can Wells Fargo, which is the fourth largest bank by assets in the US, catch up with its rivals.
It's lost so much ground over the past decade as a result of not only the asset cap, but also just the damage that was done to its reputation by this terrible scandal.
And I think the idea that it could very quickly catch up is unrealistic, especially as, when you think about the US banking market, But it's actually not really growing.
Lending is pretty flat in the US and there's not a huge amount of deposit growth.
So there's not huge opportunities to grow.
You've got to take market share from other banks and they're not going to be just allowing Wells Fargo to come in and take huge amounts of market share off them.
Martin Arnold is the FT's financial regulation editor.
Thanks, Martin. Thanks.
President Donald Trump had an hour long phone call with his Russian counterpart yesterday, and Trump said afterwards that Vladimir Putin is not ready for quote immediate peace with Ukraine.
Trump described the call as good, but warned that President Putin is planning to retaliate against Ukraine for its recent drone strike on a bomber fleet deep within Russia.
Earlier on Wednesday, Ukrainian President Vladimir Zelensky refused Russia's terms for peace, which he said would, basically, amount to Ukraine surrendering.
Bulgaria will join the Eurozone next year.
The European Commission granted the Eastern European country the green light yesterday.
Bulgaria is now the 21st member to join the single currency bloc, but it did not come without a bit of drama along the way.
Here unpack all this and what it means for the eurozone is the F .T.'s EU correspondent, Paola Tama.
Hi, Paola. Hi, Mark.
So, Paola, why did Bulgaria want to adopt the euro as its main currency to begin with?
Well, all EU countries except for Denmark are under an obligation to eventually join the euro area, which brings a number of benefits.
It should bring price stability for the citizens, it increases purchasing power over time and also the single currency strengthens over time compared to local currencies.
So, it is a natural path that most EU members that are not yet Euro era members are on, and Bulgaria was very keen to be part of the single currency area.
When did it start the process of trying to adopt the euro?
So, formally, Bulgaria launched the process in 2020, and they were too meant to be joining the euro era already last year, but, unfortunately, they did not fulfill the inflation criteria due to a bout of inflation which spiked around the globe.
All your countries have to fulfill a number of criteria.
These have to do with price stability, macroeconomic stability, interest rate stability and also their central bank needs to be independent.
Finally, Bulgaria cleared the last threshold, this last criteria about inflation in April this year, and therefore the Commission and the European Central Bank gave it the green light yesterday for the first time to be able to join the Euro area from January 1st, 2026.
Now was there any pushback to Bulgaria joining the Eurozone?
There was, and there still is.
Mostly internally, it has become a subject of debate in Bulgaria.
There was a number of protests in February, they even set fire to the buildings of the European Commission in Sofia.
And most recently, over the weekend, there was a rally which saw several thousands protest against joining the single currency, mostly led by pro -Russian, far -right, populist forces.
That has not deterred the government, however, which is going forward with adoption in 2026.
OK, so there's been this pushback, and the euro and the Eurozone, you know, they've had their ups and downs, debt crises, arguments over common borrowing.
What does Bulgaria joining do to the bloc's economy, if anything?
Well, it is not a huge significance in terms of size, Bulgaria is one of the smaller economies in the EU.
However, it has some symbolic significance, if you want, around the continued belief and continued desire to be part of this single currency bloc, which as you said has had its ups and downs, but as recently as 2023 another member joined Croatia and two more which are Sweden, and the Czech Republic are on their way.
As the EU Commissioner for the Economy told us yesterday, it shows that there is continued appetite for the eurozone.
And it also strengthens the role of the euro internationally.
So this is a positive for the euro as a whole.
That was the FT's Paola Tama.
Thanks, Paola. Thank you, Mark.
You can read more on all these stories for free when you click the links in our show notes.
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