Daily Insolvency News Headlines

Asia (1)
Austria (1)
China (1)
Europe (5)
Germany (1)
Ireland (1)
Portugal (1)
Spain (1)

Fri., July 25, 2014

Fri., July 25, 2014

Espírito Santo Financial Group SA, which holds 20% of Portuguese lender Banco Espírito Santo SA, has filed for creditor protection in Luxembourg, becoming the third company in the group to do so in less than two weeks, The Wall Street Journal reported. "Espírito Santo Financial Group SA has asked the Luxembourg courts for controlled management following the company's conclusion that it is unable to meet its obligations under its commercial paper program and obligations associated with the company's stand-alone debt obligations," it said in a statement. Espírito Financial Group's shares have been halted from trading since July 10, when the company said it was assessing the impact of troubles at Espírito Santo International SA, which owns 49% of the financial group. Espírito Santo International, which was found to be in serious financial condition by an audit ordered by the country's central bank, filed for creditor protection last week. Its main unit, Rioforte Investments SA, filed for protection this week. Read more. (Subscription required.)

In a related story, Reuters reported that an investigating judge has named Ricardo Salgado, head of Portugal's Espirito Santo banking family and former chief of Banco Espirito Santo (BES), as a suspect in a long-running money-laundering and tax evasion investigation. Read more.

Fri., July 25, 2014

A group of Chinese investors is in talks with the bankruptcy estate of Icelandic bank Islandsbanki, which was previously known as Glitnir and failed in 2008, over buying a stake in the up-for-sale bank, a finance ministry source said on Thursday. The source told Reuters that among the investors were Chinese bank ICBC, insurer China Life Insurance Company and a large Chinese private equity fund. Creditors own 95 percent of Islandsbanki through ISB Holding while the government owns 5 percent. Steinunn Gudbjartsdottir, chairperson of the bankruptcy estate, said the estate was at an early stage of talks with investors but did not identify these. "It's pleasing that there is an interest in the bank. It shows foreign investors have a strong belief in the future of the Icelandic economy and that the country can lift capital controls," she said. Glitnir and Iceland's other biggest banks, Landsbanki and Kaupthing, crumbled within weeks of each other under large debt, sending Iceland into deep recession and prompting the introduction of capital controls to stop a currency tailspin. Creditors to the old banks took large stakes in the new domestic lenders which emerged from the crisis and have been waiting for several years to get their money back. The capital controls cannot be removed until a deal to wind up the left-overs of the old banks - around 2,500 billion Icelandic crowns ($21.73 billion) in cash, shares and bonds - is reached with creditors. Read more.

Fri., July 25, 2014

The loophole that allowed Irish banks not to disclose their property losses during the crash has finally been closed, the Irish Times reported. Under new international accounting rules, which will take effect in 2018, banks will be obliged to provision for souring loans much earlier. The Irish banking meltdown in 2008 on the back of the collapse of Lehman Bros in the US highlighted how little capital banks held to cover a slump in the value of the assets on their books, forcing the public to bail out many lenders. Amid a welter of regulatory reforms following the crisis, the Group of 20 leading economies (G20) called for a single global accounting rule that would force lenders to make provisions for souring loans much sooner after a loan is made, so banks have time to plug any capital gaps. The downside is that bank results will become more volatile, given that lenders have habitually delayed taking losses on bad loans partly to smooth their reported profits over time. Read more.

Fri., July 25, 2014

Highlighting the risk of investing in startups, goodz GmbH, a Berlin based company that did an equity crowdfunding round this past Spring, has filed for bankruptcy, Crowdfund Insider reported. goodz was an “e-boutique”, launched in February 2014, that featured cutting edge products in a curated e-commerce platform that was determined to target only responsible and well made products. The company was founded by Jeffrey van Ede, the former VP of Sony Europe and CEO of Sony Germany. The crowdfunding campaign on Seedmatch raised €100,000 from 134 investors. The company had been seeking follow on funding but was unable raise additional capital and just recently decided to seek insolvency. Read more.

Fri., July 25, 2014

Austria's upper house of parliament passed a law on Thursday that will wipe out the claims of subordinated debt holders in Hypo Alpe Adria, Reuters reported. The law, which enters uncharted territory for debt markets because the creditors had guarantees from Hypo's home province, had been expected to pass after being approved by the lower house of parliament earlier this month. Read more.

Fri., July 25, 2014

A strong start to the tourist season helped Spain’s unemployment rate fall to its lowest in two years while two banks with large local customer bases said business had picked up, fuelling hopes the country’s economic revival is gathering pace, the Irish Times reported. With a minister suggesting the government might raise its GDP forecast, data showed joblessness fell at the fastest quarterly rate on record between April and June. Spain has been in and out of recession since a housing bubble burst in 2008, saddling its banks with billions of euros of soured property assets and loans and leaving millions of labourers out of a job. The crisis sent the unemployment rate from a low of 8 per cent in 2007 to a high of 27 per cent last year. Read more.

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