Good morning from the Financial Times.
Today is Wednesday, June 4th.
And this is your FT News briefing.
The Dutch coalition government collapsed yesterday.
Meanwhile, Mexico's ruling Morena party may have become even more powerful.
Plus, we'll take a look at how the world's largest bank was nationalized and then reborn.
I'm Mark Filipino, and here's the news you need to start your day.
The Netherlands is in political disarray right now.
Far right leader Geert Wilders pulled his Freedom Party out of the coalition government yesterday, and a little later in the day Prime Minister Dick Schoff announced he was resigning.
The government collapsed after a little less than a year.
Wilders said the other three parties in the coalition wouldn't back his immigration reforms. This now sets up a snap election.
Vilders says he intends to become Prime Minister, but polls say his Freedom Party is actually expected to lose seats.
Now onto Mexico for a controversial election.
This past weekend, for the first time ever, the country voted for its judiciary.
The results are still coming in, but so far only nominees from the ruling Morena Party will sit on the Supreme Court bench. It's got investors spooked and some legal experts worried.
Here to tell us about it is the F .T.'s Christine Murray.
Hey Christine. So walk me through these elections.
What are the details?
So Mexico decided last year to elect all of its judges, which on Sunday meant electing half of all the federal judges.
That's almost 900 across the country.
And 19 of the 32 states decided to hold their own state elections for state -level judges.
JS And voting for judges new approach in Mexico.
Remind me, why did Mexico Institute the system?
CB Yeah, so very few countries elect their judges directly.
And this was a plan from the previous President, Andrés Manuel López Obrador, and his successor, President Claudia Schoenbaum, who supported the reform, was tasked with implementing it.
And the idea was really that this would reduce corruption in the judiciary and make it more accountable to the people.
And a lot of people agree that there are lots of problems with Mexico's judiciary.
A lot of lawyers who are very critical of this reform will tell you that reform was definitely needed, but that they believe that this reform will make the problems worse rather than better.
In general, the candidates for judicial positions in the election had less experience than the sitting justices.
So there's worries that There'll be a long transition period where these new judges will have to learn how to do the job, there will be more arbitrary decision making, and potentially more corruption.
Yeah, tell me a little bit more about that response.
So Mexico's legal community has condemned the process from the beginning, basically seeing this as an attempt to capture the judiciary, which famously clashed with Lopez Obrador multiple times.
Particularly, the Supreme Court, which overturned some of his landmark legislation.
A lot of lawyers here see this as revenge for that, and an attempt to bring the judiciary under the control or stronger influence of the ruling party.
JS Okay, these wider concerns, though, that we're talking about, how might they influence investors in the country?
I mean, what is the wider risk here for Mexico?
Hannah Z Evolution of The Mexican Legal System Hannah Z So investors are deeply concerned by this reform.
When Shane Bao made it clear after her election last year that this was going ahead, the peso weakened significantly and Kopermex, the Employers Federation has said that foreign firms are already trying to avoid the Mexican legal system, you know, as much as possible.
They're already losing confidence in it.
Then the concerns are several.
One of the main ones is that it will become very difficult or impossible to win any kind of case against the government, be that a tax -related case or a competition -related case.
And overall, the worry that decisions are going to become more arbitrary and difficult to predict has investors very nervous.
That's the FT's Christine Murray in Mexico.
Thanks Christine. Thank you.
Eurozone inflation fell below the ECB's target last month.
Data out yesterday showed the figure at 1 .9 % in May, just a smidge under the European Central Bank's goal of 2%.
That's the first time that's happened since September.
Lower inflation could offset some of the impacts from US tariffs and makes it more likely that the ECB will continue to cut interest rates.
The central bank is actually set to meet tomorrow and markets are predicting it will make a quarter point cut.
Yesterday, we looked at US President Donald Trump's proposal to reprivatize two major home mortgage lenders, Fannie Mae and Freddie Mac.
Today, we're talking about a similar situation in the UK.
NatWest, formerly known as the Royal Bank of Scotland.
The UK government spent 45 billion pounds in taxpayer funds to bail out RBS in 2008.
But on Friday, after nearly 17 years of state ownership, the reformed lender was returned to private hands.
Here to tell us about it is my colleague, Akilah Kinio, she covers the banking industry for the FT. Hey, Kiela.
Hey, thanks for having me.
Thanks for being here.
So first of all, tell us about the bailout in 2008.
How big was the Royal Bank of Scotland at the time?
Yeah, so it was a pretty dramatic bailout, precisely because Royal Bank of Scotland, or RBS, as it was known, was the largest bank in the world by assets.
So it had a balance sheet that was worth about 2 .2 trillion, which was larger than the UK's economy at the time.
So when the bank faced a liquidity crunch, the government felt they had no choice but to step in to save basically the economy from collapsing.
And now it's almost two decades later and the government has reprivatized RBS.
Akhilah, why did it take so long?
Yeah. I mean the short answer is the share price just crashed and it was so low that it would have been too heavy a loss for the taxpayer if the government started to sell.
they were kind of forced to hold.
And there were successive governments in those 17 years.
And it was the Conservatives who decided to start selling in 2015.
It's just been a slow process of exiting.
But in the end, taxpayers actually still made a loss.
The state never recouped what they put in to save the economy at the time.
Do people largely see the 17 year period of state ownership as a good thing for the bank?
So I think there's two ways to look at it.
The bank completely transformed in that period, which I think people do see as a good thing.
So it's a much more UK focused retail bank, so it exited 38 countries.
It's really focused on just being a sort of good, boring UK bank, as people think it should be a safe bank.
But in terms of being owned by the government, I think that it's fair to say that that kind of spooked investors and that acted as drag on the bank.
So, now RBS is back to private ownership with a new name, NatWest. Looking ahead then how does NatWest plan on navigating its return as a private bank?
Can it do it? Yeah.
I think, I mean the banks really excited, the management's really excited.
They've been working towards it for years.
Actually, the currency was at the bank at the time of the bailout.
And so one thing that's going to be possible now is that they won't have to buy back their stake from the state, so have capital that they can now use for other things and they want to grow.
I mean they are looking at acquisitions and we reported that they made an offer for Santander's UK business so things like that are definitely in the cards for the bank.
So we talked to our colleague, Amelia Pollard, about US president Donald Trump's proposal to spin Fannie Mae and Freddie Mac off government balance sheets.
They were also taken under conservative ship in 2008.
We asked her whether this was an important inflection point for the recovery from the 2008 crisis.
Here's what she said.
I think there's a real recalibration here happening of this is one of the last vestiges of the financial crisis.
Snowy, the fact that Fannie Mae and Freddie Mac are in government control.
And I think there is mounting pressure, especially as we head into the two decade Mark, to finally move on.
So, Akilah, what do you think?
Do these reprivatatisation drives signal that governments are putting the financial crisis in the rearview mirror?
I think it's really interesting because we're seeing, yeah we are seeing the exact same thing in the UK where, you know, symbolically the bank returned to private ownership and the government stakes at zero, but when banks look around them and the regulatory environment they operate in, it's still very much a framework that was built after the crisis and that they now say has gone too far and is preventing them from growing.
So, yeah. It does feel like a moment for reflection and potentially change.
That's the FT's Akilah Kinyo.
Thanks Akilah. Thank you.
Finally, in South Korea, opposition leader E .J.
Myung, the left wing Democratic Party the presidential election, and it wasn't all that close.
South Korean politics has been in crisis ever since former President Yoon Seok Yol launched a failed coup six months ago.
Top of mind for E .J.
Myung as he comes into office will be how to turn around the country's ho -hum economy.
That'll mean navigating Donald Trump's tariffs.
He'll also have to determine how South Korea deals with being in between a rock and hard place when it comes to U .S.-China relations.
You can read more on all these stories for free when you click the links in our shownotes.
This has been your daily FT News Briefing.
Check back tomorrow for the latest business news.
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