A group of euro-skeptics that has opposed Germany’s participation in the currency said on Monday that it had filed a lawsuit to block a plan at the heart of efforts to prevent banking crises in Europe, the International New York Times reported. But the suit at the country’s Constitutional Court was given even less chance of success than previous attempts, which created a stir last year by challenging policies intended to prevent disintegration of the eurozone. The new suit asserts that plans for a so-called banking union, which would grant bank regulation powers to the European Central Bank, would make German taxpayers liable for bank failures in other countries and is therefore illegal. “Countries like Germany with her cooperative and saving banks sector will share the risks of banking mismanagement in France and southern Europe,” the group, Europolis, said in a statement. But that argument might be difficult to make, given that German banks, including Hypo Real Estate and Commerzbank, have been among the most troubled in the eurozone, and among the costliest to rescue. Read more. (Subscription required.)
Daily Insolvency News Headlines
Tue., July 29, 2014
Ireland could save up to €375 million a year in interest costs on our national debt if it can secure an agreement to refinance €15 billion worth of IMF loans from the Troika bailout programme, the Minister for Finance Michael Noonan said Monday, the Irish Times reported. Speaking at the launch of the National Treasury Management Agency’s annual report, Mr Noonan said about €18 billion of the €22 billion owed by Ireland to the IMF is financed at a cost of just under 5 per cent a year. This compares with a rate of 2.3 per cent currently for Irish 10-year bonds. He said Ireland would look to refinance about €15 billion of this, in three tranches of €5 billion over the next 18 to 24 months. Mr Noonan said a “residue” of debt would remain with the IMF to retain the Troika arrangement alongside the European Union and the European Commission. Commenting on the potential savings, Mr Noonan said: “Depending on the day, it would be somewhere between €20 million and €25 million for every €1 billion that we would refinance on the market.” Mr Noonan said the IMF’s chief executive Christine Lagarde has indicated her support for a refinancing of some of its loans. However, repaying part of this funding early would trigger a clause in the bailout agreement that would require Ireland to repay its European loans at the same time. Read more.
An international court ruled that Russia owes shareholders of the now-defunct oil giant Yukos more than $50 billion for what it described as the Kremlin's "devious and calculated expropriation" of assets designed to bankrupt the firm, The Wall Street Journal reported. The compensation award is the largest the Permanent Court of Arbitration in The Hague has ever rendered, lawyers said. But it is only half what shareholders had sought, and any attempts to collect are expected to drag on for years. "It may be another long battle," said Emmanuel Gaillard, the lawyer who represented GML Ltd., the Gibraltar-registered vehicle formerly known as Menatep, through which Yukos's former owner, Mikhail Khodorkovsky, and his colleagues held their controlling stake. Once Russia's largest oil company, Yukos was hit with tens of billions of dollars in back-tax claims starting in 2004, and its main assets were sold off to state-controlled Russian companies. Read more. (Subscription required.)
The biggest political crisis that President Benigno S. Aquino III of the Philippines has faced in four years in power could damage his image as a crusader against corruption and undermine his ability to deliver on overhauls to sustain strong economic growth, the International New York Times reported. The Supreme Court has declared partly illegal a 145 billion peso, or $3.34 billion, economic stimulus fund that Mr. Aquino created in 2011 from budget savings. Economists are concerned that controversy over the stimulus is slowing public spending because officials are wary about accusations of recklessness and are subjecting decisions to more scrutiny. “If this leads to a slowdown in spending, the risk to growth is on the downside,” Shanaka Jayanath Peiris, the International Monetary Fund’s resident representative in the Philippines, said on Friday. The I.M.F. cut its growth forecast on Friday for the Philippines to 6.2 percent from the 6.5 percent it forecast in March, partly because of slower spending. The government has set a target of a growth rate of 6.5 percent to 7.5 percent for gross domestic product this year, after 7.2 percent last year. Read more. (Subscription required.)
Greece wants the European Central Bank's health checks on its four biggest banks later this year to take account of their new restructuring plans rather than being based on last year's balance sheet data alone, a Greek finance ministry official said on Monday, Euractiv reported. Greek finance minister Gikas Hardouvelis raised the concerns at a 8 July meeting of EU finance ministers, the official told Reuters, as Athens wants to avoid the ECB calling for new capital to be raised following the tests when restructuring plans are already in hand but not yet implemented. The ECB is reviewing the asset valuations of the eurozone's 128 most important lenders to assess their ability to withstand future crises and Greece's top four lenders will be among them. The results will be announced in October, before the ECB takes over as the eurozone's banking regulator on 4 November. At issue for Athens is whether its big banks may face a new call to fill significant capital holes, which could crimp their ability to fund an economy on the cusp of recovery after a six-year depression, since elements of the restructuring plans are still some way off being implemented. Read more.
Portugal's central bank said late on Monday that if Banco Espirito Santo posts a loss larger than its existing capital cushion of 2.1 billion euros ($2.8 billion), a capital increase will be used to guarantee adequate solvency levels, Reuters reported. Earlier, Expresso newspaper's online edition said BES was likely to report a loss of around 3 billion euros on Wednesday after having to assume additional debt liabilities linked to the troubled Espirito Santo group of its founding family. BES officials were not immediately available to comment. Three of the Espirito Santo family holding companies, including ESFG, which holds a 20 percent stake in BES, have requested creditor protection this month. Read more. (Subscription required.)