Daily Insolvency News Headlines

Canada (1)
Europe (1)
Germany (1)
Greece (1)
India (1)
Italy (1)

Wed., November 26, 2014

Wed., November 26, 2014

Reserve Bank of India Governor Raghuram Rajan said banks should have more power to recoup money from defaulters to rebalance a system that’s skewed in favor of large companies, Bloomberg News reported. The Indian credit system is unhealthy and rests on an uneven sharing of risks and profits that overprotects big borrowers and forces state-controlled banks to absorb losses in downturns without profiting in good times, Rajan said yesterday. “The sanctity of the debt contract has been continuously eroded in India in recent years, not by small borrower but by the large borrower,” Rajan said at the Institute of Rural Management Anand, in India’s western state of Gujarat. “This has to change if we are to get banks to finance the enormous infrastructure needs and industrial growth that this country aims to attain.” Rajan has proposed penalties and incentives to get lenders to move faster in containing soured debt in an effort to bolster the financial system at a time of slower economic growth. In his remarks, he took a swipe at the whole system, which deprives banks of money they could recover and prompts them to charge a premium for business loans. “When the large promoter defaults willfully or does not cooperate in repayment to the public sector bank, he robs each one of us taxpayers, even while making it costlier to fund the new investment our economy needs,” he said. Read more.

Wed., November 26, 2014

Greek officials held a fresh round of talks with international inspectors in Paris Tuesday in a bid to jump-start deadlocked talks over Greece’s reform and austerity program as the country fast approached a year-end deadline to hammer out a new financing deal with creditors, The Wall Street Journal reported. The talks with the troika—made up of representatives from the European Union, the European Central Bank and the International Monetary Fund—have been stuttering since October, hamstringing Greece’s hopes of negotiating an early exit to its current bailout program. “The two sides converged in many issues, but remain distant in many others,” a finance ministry official said early Wednesday, as the negotiations were still going on after 11 hours. Talks in the French capital were expected to resume Wednesday. “We hope we will complete the review,” Finance Minister Gikas Hardouvelis told reporters before entering the Organization for Economic Cooperation and Development building where the meetings are taking place. Since the start of the Greek debt crisis in late 2009, Greece has sought two international bailouts worth 240 billion euros ($300 million) from its Eurozone partners and the IMF. But the bailouts have come with strings attached: tough austerity measures to fix the country’s public finances and far-reaching reforms to overhaul its economy. Read more. (Subscription required.)

Wed., November 26, 2014

Italy's second-largest steelmaker Lucchini will ask the Italian government for permission to sell its Piombino complex to family-owned Algerian conglomerate Cevital, the company said on Tuesday, Reuters reported. Lucchini was previously owned by Russia's Severstal but was declared insolvent in 2012 and placed into special administration, battered by slowing demand following the 2008-2009 financial crisis and stiff competition from Asia. The company received two offers for its core assets in Piombino, one from Cevital and the other from India's JSW Steel . It said the Cevital offer was more attractive as it foresaw full employment at Piombino, partly by branching out into agriculture, food and logistics operations, without giving any further details. The Piombino complex employs about 2,000 people and can produce up to 2.5 million tonnes of steel a year. The Cevital group includes, mining, food processing, auto distribution and a variety of manufacturing businesses in areas such as glass, cement and metal working. The Italian government has taken a keen interest in the Piombino sale as it struggles to pull the country out of a third recession in six years. Read more.

Wed., November 26, 2014

Germany’s central bank has warned that corporate debt is becoming overpriced and threatens the financial stability of Europe’s biggest economy, the Financial Times reported. The comments from the Bundesbank come as the European Central Bank considers buying corporate bonds to expand its balance sheet and stave off the threat of economic stagnation in the eurozone. “There are signs that the search for yield is leading to exaggerations in certain market segments,” the Bundesbank said on Tuesday, adding that the effect was “clearly perceptible in the markets for corporate bonds and syndicated loans”. Economists from around the eurozone are investigating ways to swell the ECB’s balance sheet by up to €1tn to help boost growth and inflation in the bloc. One idea that officials are looking at is extending the central bank’s asset purchases, currently limited to covered bonds and asset backed securities, to include corporate and sovereign debt. Many analysts expect policy makers to announce an extension in December or early next year. Read more. (Subscription required.)

Wed., November 26, 2014

The European Union authorities are set to unveil a long-awaited investment plan on Wednesday with the ambition of channeling 315 billion euros into public infrastructure projects like transportation, communications and energy over the next three years, the International New York Times reported. The plan, worth the equivalent of $393 billion if it reaches its target, is meant to spur growth among the 28 nations in the bloc, in response to concerns that Europe is tumbling into a lost decade of low growth and high unemployment. The idea is that big projects, as well as programs to finance small and midsize companies, would put more people to work, provide business to construction and other types of companies and their suppliers, while also making the basic underpinnings of European commerce more modern and efficient to raise the region’s competitive status in the global economy. Read more. (Subscription required.)

Wed., November 26, 2014

When Canada disbursed billions of dollars in the auto-sector bailout nearly half a decade ago, it did so without reviewing the automakers’ final restructuring plans and with limited research on how the loans would be repaid, a government watchdog says, The Wall Street Journal Canada Real Time blog reported. Canada’s Auditor General, the equivalent of the U.S. General Accountability Office, highlighted the flaws in the government’s approach to providing the funds to General Motors Co.’s Canadian unit and Chrysler Canada in a report Tuesday. Chief among those flaws, Auditor General Michael Ferguson says, was that Ottawa handed the cash to GM and Chrysler without reviewing a final restructuring plan. The watchdog says that was one of the original conditions attached to financial support. Further, Ottawa had “limited analysis showing how the restructuring actions would improve the financial situations of [GM and Chrysler] Canadian subsidiaries, what concessions had been made by stakeholders, and how the companies would repay their loans.” Read more. (Subscription required.)

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