In this episode of The Big Question, Barclays Europe CEO, Francesco Ceccato, joins Euronews’ business editor, Angela Barnes, at the World Economic Forum in Davos, Switzerland. The bank boss shares his views on financing the AI boom and the “fragmented” capital markets in Europe.
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00:00No single company or government can finance all the AI infrastructure or energy needs.
00:05Our capital markets in Europe are fragmented.
00:07Getting to cleaner energy is a dial and not a switch.
00:17Hello, I'm Angela Barnes and welcome to this episode of The Big Question from Davos in
00:22Switzerland. Well, on The Big Question, we speak to some of the most influential people in the
00:28world of business. And today I'm joined by Francesco Ducato, the CEO of Barclays Europe.
00:35Francesco, it's a pleasure to have you on the show.
00:38Pleasure to be here with you.
00:39Thank you very much. So what a lot to talk about. But first of all,
00:44from your conversations that you've been having and what you've been seeing,
00:47what are the most significant economic trends or risks this year? And how do you see
00:53them impacting the European financial sector?
00:57So the theme this year at Davos is collaboration in a digital age. And clearly what that aims to
01:04get behind is how can we harness the power of technology to ultimately reignite growth
01:11without ultimately having an inflationary problem that comes back. And AI, in our view,
01:19is going to be something that we need to embrace. But it comes with a lot of different
01:25follow on components, including needing a lot of energy. And so energy provision
01:32and energy security is an important theme here as well.
01:42I want to talk to you about Barclays AI report, which has just been released.
01:46Can you just summarize for me some of the key findings in that report?
01:51Yes. So I think it's important to tie it together with the report that we published
01:56roughly this time last year, which was about the impact that AI can have to boost productivity,
02:05in particular support aging populations who are perhaps becoming less productive and to aid them
02:10in ultimately creating better economic outcomes. This year, what we're focused on is how do you
02:18actually think about the energy needs of the AI investment that we're going to have to make?
02:23Because no single company or government can finance all the AI infrastructure or energy needs.
02:29We need to see a large investment in energy to support the AI infrastructure. Why is that?
02:35Because every application of AI requires lots of computing power. The latest
02:43colossus AI supercomputer that Elon Musk is investing in has 200,000 GPUs. That requires
02:50a huge amount of energy. And we are seeing more and more GPUs added as the use cases in the
02:58applications of AI become more and more sophisticated and wide ranging. And what
03:03the report says is that energy demands are going to go up massively between now and 2030.
03:10And we see the potential for real infrastructure investment needed. I mean, just to give you
03:18one metric, the IEA is projecting that 1000 terawatts hour are going to be needed for all
03:27the data centers in the world. And of course, it's data centers that can perform these AI calculations.
03:34And therefore, you know, our view is that we need to understand that energy infrastructure
03:41is critical to supporting the AI, which tying it back to last year's report is critical to
03:47productivity. Francesco, there is a lot to take in there. But do you think Europe is prepared
03:52for that? Or is it a case of it's now getting prepared for the enormity of what's needed to
03:58invest in this AI infrastructure? I think it's important that we prepare for it. AI is one way,
04:06one technology that can help us and resolve some of our problems. But it needs investment. And it
04:13can't all be coming from governments because they're fiscally constrained. In many cases,
04:18it can come from the capital markets, but our capital markets in Europe are fragmented.
04:24And therefore, we need to reform them. And we need to do that quickly. And this is something
04:28that President von der Leyen talked about. It needs to happen with less red tape and with more,
04:34if you like, straight through processing of the type of project that can bring real economic
04:40advantage. I just wanted to ask you about sustainability and digital transformation.
04:44How do you envision these influencing Barclays strategy for Europe when it comes to sustainability
04:51and digital transformation? So I think with sustainability, our strategy revolves around
04:57the transition. And what's important is to recognize that getting to cleaner energy is
05:05a dial and not a switch. And that means that we have to keep supporting our clients who are
05:11wanting to transition. And we can support them with advice, with financing, and with facilitation
05:16of financing through the capital markets. So that's the first piece. The second piece is to
05:22know that from our perspective, our target of 1 trillion of sustainable and transition finance
05:28by 2030 is still something that we as Barclays Europe want to continue to contribute very
05:35meaningfully to. And that's what we have been doing. And the third component of our strategy
05:41is to continue to support companies at the early stage in the clean tech business that can
05:49continue to drive technological change that can help the energy transition itself. Those would
05:54include, for example, our investment into a company that does solar energy, but not through typical
06:01solar cells, but through solar tubes. We are invested in an insulation company. We are invested
06:08in a green hydrogen company. And these are all examples of that specific strategy to invest the
06:14group's balance sheet to ultimately support the transition. And Francesco, more widely,
06:20what role do you see European banks playing in addressing global challenges like climate change
06:26and digital innovation? Just on the climate change side, many banks have analogous strategies to
06:31ours. So I think we've covered that to some extent. With digital innovation and digitalization,
06:37I think it's important to realize that in Europe, our digital infrastructure needs modernization.
06:43Once it's been modernized to really be contributing to the economy, it needs power. It needs energy.
06:50And we'll come to that in a moment. But again, our objective here is to be a supportive partner
06:58for not just companies, but also governments or indeed individuals to have the right advice to
07:05be able to navigate these changes and to be able to draw the financing. It may be from our balance
07:10sheet. It may be from the capital markets. We can facilitate that and always to give the best
07:15advice we can. Brilliant. Francesco, thank you very much for all of your insights. It's great
07:20to have you on The Big Question. And thank you very much all for watching this episode of the
07:25show from Davos in Switzerland. Don't forget, you can catch all our shows on the Euronews YouTube
07:30channel. And you can also go to the Euronews website, the business section and catch all our
07:35Big Question episodes there. Thank you very much.