Daily Insolvency News Headlines

Fri., May 1, 2015

Fri., May 1, 2015

Klagenfurt am Wörthersee, an Alpine lake city almost 350km from Vienna, was once the idyllic backdrop to one of the most calamitous banking collapses in Europe. Now, it is closing in on a new claim to fame: as the venue for a trial run for as-yet-untested rules within the EU on who foots the bill when banks go bust, the Financial Times reported. Investors, including Pimco, one of the world’s largest bond investors, have more than €11bn at stake in the final act of what was once Hypo Alpe Adria (HAA), the lender nationalised in 2009 amid allegations of mismanagement that saw managers jailed, politicians shamed and Austrian taxpayers faced with €5.5bn in costs. On March 1, reeling from news that Heta, the “bad bank” created to dispose of the non-performing portion of HAA, could need another €7.6bn state aid, Austria’s financial regulator put the bank into resolution after the government said it would not provide any more money. In response, Heta suspended bond payments, including payments on bonds guaranteed by its home state Carinthia, until at least May 2016 while it decides which creditors get paid first out of its remaining monies. Read more. (Subscription required.)

Fri., May 1, 2015

Bahrain's central bank said on Thursday it had placed two Iran-linked companies, Future Bank and Iran Insurance Co, into administration to protect the rights of depositors and policyholders, Reuters reported. In a brief statement, the central bank did not elaborate on why it took the action or give any information about the two companies. It said it wished "to reassure both the local and international financial community that this measure is an isolated incident and will not impact any other bank or insurance company in the kingdom. "Indeed Bahrain's banking and insurance sectors remain sound, well-capitalised, well-regulated and continue to develop and grow with confidence." Calls to the two companies offices in Bahrain on Thursday evening were not answered. Future Bank, based in Manama, is a commercial bank which was founded in 2004 as a joint venture between two Iranian banks - Bank Saderat and Bank Melli - and Bahrain's Ahli United Bank , according to its website. Its assets totalled 597.2 million dinars ($1.58 billion) last year, when it made a profit of 17.9 million dinars, according to its latest financial statement. Read more. (Subscription required.)

Fri., May 1, 2015

The European Central Bank provided more financial assistance to Ireland at the height of its banking crisis in 2010 than any central bank has ever provided to any country, according to the bank’s former president. Jean-Claude Trichet told Irish politicians on Thursday that the ECB had extended emergency liquidity assistance to the country’s banking sector equivalent to 100 per cent of its gross domestic product, the Financial Times reported. “That was one quarter of the ECB’s total lending at the time and was totally unprecedented,” he said. “We helped Ireland more than any country; more than any central bank did for any country.” Mr Trichet was speaking during sometimes testy exchanges with members of a parliamentary committee conducting an official inquiry into the causes of the Irish banking collapse. There is a lingering view in Dublin that the ECB effectively bounced Ireland into seeking its €67bn bailout from international creditors by threatening to cut off the emergency liquidity. But Mr Trichet insisted the reality was “to the contrary”. Read more. (Subscription required.)

Fri., May 1, 2015

More State banks have defended the standard variable rates (SVR) they impose on some mortgage customers. They said that while rates are kept under review there are no imminent plans to lower them, the Irish Times reported. Permanent TSB claimed that its SVR of 4.5 per cent was “competitive in the current market” adding that it “broadly reflects the various cost inputs including the cost of funds which the bank raises from a variety of sources including the retail deposit market in Ireland and the international money markets”. When asked if there were any plans to reduce the rates in light of changing market conditions and pressure from Government, a spokesman would say no more than they “always monitor our rates and will continue to do so”. Read more.

Fri., May 1, 2015

Royal Bank of Scotland warned it faced a tough 2015 as it plunged to a loss in the first three months of the year, weighed down by £856m of misconduct and litigation charges, The Guardian reported. The 79%-taxpayer-owned bank prepared the way for further penalties for foreign exchange rigging – including possible criminal charges – by setting aside a further £334m for manipulation of the £3.5tn-a-day global currency markets. The cost comes on top of the translatlantic settlement with major banks in November when a record £2.6bn of fines were levied on major players in the market, including £400m on RBS. The Edinburgh-based bank is still in discussions with governments and regulatory authorities about its forex dealings. “These include advanced settlement discussions regarding the criminal investigation being conducted by the [US department of justice] and with certain other financial regulatory authorities and RBS expects that it will incur financial penalties in conjunction with any such settlements,” the bank said. The additional costs show that the foreign exchange scandal remains far from resolved; Barclays has set aside £2bn for potential penalties and RBS admitted it was yet to make any provision for the cost of an investigation by the EU. Read more.

Fri., May 1, 2015

Carcraft, once described as the UK's leading car supermarket, has gone into administration today, resulting in the loss of around 550 jobs, The Telegraph reported. The announcement was made to shocked staff at the Rochdale head office at 10.30am today. Grant Thornton, the financial services company, has been appointed as administrator. Carcraft will now cease trading and all employees have been made redundant. According to a statement made by Grant Thornton today, Carcraft is "heavily loss-making", recording losses of £8m per annum "for a number of years". Carcraft, which is the UK's seventh largest second hand dealership chain, has an annual turnover of £120m and operates 10 sites nationwide. Read more.

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