Daily Insolvency News Headlines

Bahrain (1)
Brazil (1)
China (1)
China (1)
Europe (1)
India (1)
Portugal (1)

Tue., September 2, 2014

Tue., September 2, 2014

Auditor KPMG has refused to approve bailed-out Banco Espirito Santo's first-half report and accounts, published on Monday, citing the bank's failure to provide adequate information on its financial position and also warned of possible further losses, Reuters reported. BES's consolidated report confirmed a loss of nearly 3.6 billion euros (4.73 billion US dollar), first revealed on July 30, largely due to its exposure to its founding Espirito Santo family's crumbling business empire. The losses forced the Bank of Portugal to step in on Aug.3 with a 4.9 billion euro rescue plan for the country's biggest bank, using public funds. Regulators also decided to put BES's healthy assets into a new entity, Novo Banco, while BES's exposures to the troubled Espirito Santo business empire as well as its Angolan subsidiary will move into a "bad bank." KPMG, which had been hired to audit the results, said in a report published alongside BES's accounts that these did not provide any adjustments and additional information required as a result of the rescue. KPMG said this meant the BES report no longer provided adequate information on BES' financial position and operations. Read more.

Tue., September 2, 2014

In a situation eerily reminiscent of the perfect storm that engulfed Irish property developers at the end of the boom, fears are growing over the astronomical debt exposure of developers in China, the world’s second-largest economy, where house sales and prices are falling rapidly, the Irish Times reported. Cash-strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005. Homebuilders in the world’s most populous economy got $5.9 billion (€4.5 billion) from foreign banks, up 39 per cent on the same period last year, according to data compiled by Bloomberg. Builder debt has soared to 128 per cent of equity, the highest since 2005, according to a gauge of 84 companies. New home prices fell in July in almost all cities the government tracks and developers are missing sales targets. “Higher leverage on the balance sheet will give developers a higher financial burden,” said Agnes Wong, credit strategist at Nomura Holdings Inc in Hong Kong. “That means that if presales are not going as quick as they expect it can translate into trouble more easily than before.” Premier Li Keqiang is allowing builders to expand financing channels in a bid to stem the slowdown in an economy that derived 16 per cent of its growth from property development last year, according to the World Bank. China’s home sales fell 10.5 per cent in the first seven months of the year compared to the same period in 2013 to 3 trillion yuan (€371 billion), Moody’s Investors Service said in an August 29th report. New construction declined 20 per cent across the country, according to another report from Fitch Ratings. Read more.

Tue., September 2, 2014

Growth in China’s vast factory sector slackened in August as foreign and domestic demand slowed, surveys showed Monday, stoking speculation that further stimulus measures would be needed to prevent the economy from stumbling, the International New York Times reported. At the same time, surveys of purchasing managers across Asia told a tale of fewer new orders and faltering exports, but with brighter spots like India and Taiwan. The official purchasing managers index from China’s National Bureau of Statistics fell to 51.1 in August from a 27-month high of 51.7 in July, as factories continued a two-year trend of shedding jobs. A Reuters poll of economists had forecast a figure of 51.2 for August. A level of 50 or higher indicates expansion in activity, while anything lower signals contraction. A breakdown of the official survey showed that output, employment, new orders, delivery time and raw material inventory all worsened, with the labor market showing the most weakness. Read more. (Subscription required.)

Tue., September 2, 2014

The prospect of quantitative easing in Europe is reviving the market for risky bank debt, with two European lenders testing the waters on so-called contingent capital, or CoCo, bonds after a monthslong drought, The Wall Street Journal reported. CoCos—which can convert to equity or be wiped out if the issuer's capital levels drop below a threshold—had a booming start to the year as banks took advantage of record low rates to bolster their balance sheets ahead of a banking-system health check this fall. Issuance surged to a record €33.6 billion ($44 billion) in the first half of the year, before the market ground to a halt in July when financial difficulties at Portugal's Banco Espírito Santo and U.S. Federal Reserve Chairwoman Janet Yellen's warning about the high price of risky debt prompted investors to pull back. On Monday, though, two European banks started meeting investors to gauge interest in Cocos they plan to sell. Italian bank UniCredit SpA and Spanish peer Banco Santander SA are hoping to become the first banks to issue CoCos in Europe since mid-June. Analysts say the two banks will be helped by expectations the European Central Bank may soon take more aggressive measures to jump-start the region's flagging economy, prompting yields on most types of debt to fall. Read more. (Subscription required.)

Tue., September 2, 2014

Batelco will pursue its former Indian business partner for $212 million it says he owes the company, even though he was declared bankrupt last week, the Bahraini telecom operator said on Sunday, Reuters reported. Chinnakannan Sivasankaran, the chairman of Chennai-based Siva, filed for bankruptcy in the Seychelles after a British court in June ordered Siva and Sivasankaran to pay the money to Batelco's wholly owned subsidiary BMIC. This related to their failed Indian joint venture. The court also issued an indefinite worldwide freeze on the defendants' assets. "Mr Sivasankaran's bankruptcy will not thwart our determination to recover the substantial monies that he owes us," Batelco chief executive Alan Whelan said in a company statement. An official receiver has been appointed as the manager of Sivasankaran's assets and BMIC is the largest creditor, Batelco said. Siva sold a 43 percent stake in now-defunct mobile operator S Tel to Batelco in 2009. S Tel struggled to compete against its better-resourced and longer-established rivals and as of the end of 2011 had 3.55 million mobile subscribers, a 0.4 percent market share. In February 2012, S Tel was ordered stripped of its licences as part of a wider corruption investigation affecting India's mobile market that pre-dated Batelco's investment. Read more.

Tue., September 2, 2014

Workers in Brazil’s automotive industry have become accustomed to seeing their sector break new records, with Latin America’s biggest country becoming the fourth largest car producer in the world over the past decade, the Financial Times reported. But last week, 930 employees at General Motors’ plant in São José dos Campos near São Paulo were forced to accept a five-month “lay-off” or suspension to avoid outright dismissals. The country’s weak economy, which was revealed on Friday to have slipped into a technical recession in the second quarter, is undermining the industry, leading it to report its first annual fall in car sales in a decade last year – a trend that has continued into 2014. Read more. (Subscription required.)

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