Vince Cable has issued a stark warning to Britain's leading boardrooms that they need to crack down on bonuses to restore public trust and avert the threat of fresh legislation to limit executive pay, The Guardian reported. The business secretary fired off a warning to the 100 biggest UK-listed companies about the damage big pay deals can have on their image, before Barclays' annual meeting on Thursday, where protests about the bank's £2.4bn bonus pot are expected to be registered by disgruntled shareholders. "Getting pay wrong damages popular trust in business and undermines the duty to promote the long-term success of the company," Cable said, in a letter to directors who chair the remuneration committees that set senior pay at the UK's largest companies. His letter is being sent as the annual general meeting season of leading companies gets into full swing, allowing shareholders to vote on the pay deals of directors. Two years ago, a record number of remuneration reports was voted down by investors. Read more.
Daily Insolvency News Headlines
Wed., April 23, 2014
Cuba and the Paris Club of wealthy creditor nations are working to resume talks over billions of dollars of official debt in a new sign the communist government is interested in rejoining the global economy, Reuters reported. A Paris Club delegation quietly travelled to Havana late last year to meet with Cuban bank officials, who were prepared with various proposals and appeared eager to strike a deal, according to Western diplomats. Previous negotiations broke off in 2000 and obstacles remain to reviving serious talks, said the diplomats, who spoke on condition of anonymity because they were not authorized to speak publicly. They said Cuba must first show creditors its books, which so far it has refused to do. Cuba considers its level of foreign reserves a state secret and publishes scant data on its current account and foreign debt, which it last revealed for 2010. Still, the diplomats have taken Cuba's readiness to talk as an indication it may be willing to play by the rules of international finance. Read more.
China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt, Bloomberg News reported. The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company. China’s slowing economy has made it tougher for borrowers to repay debt, driving up banks’ sour loans for a ninth straight quarter as of December to the highest level since 2008, data from the banking regulator show. New nonperforming loans amounted to more than 60 billion yuan ($9.6 billion) in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported on April 9, citing people it didn’t identify. Read more.
Unemployment remains a key factor behind insolvency in Hungary. In about 3 out of 4 cases, low or nonexistent income is the reason why people in Hungary run up debt, debt collector company Intrum Justitia noted in a survey on insolvency, Portfolio.hu reported. While umeployment still rates high among the triggers that eventually lead to bad debt, the figure is now lower than in the 2013 survey, Intrum Justitia found. While almost 50% of debtors were affected by the unemployment problem last year, the same issue was the key culprit in a slightly lower 43% of the insolvency cases in the 2014 survey. This year's survey has revealed a decline in the number of clients who mentioned living on the dole as the reason for the inability to keep up with payments. The launch of the public work programme is the most likely reason for this change. Wage garnishment remains a major trend, having increased almost threefold since 2010. Intrum Justitia reached 80,000 debt restructuring deals last year, preempting legal proceedings against debtors, CEO Péter Felfalusi said. Read more.
Creditors – including HM Revenue & Customs – could lose more than £150m a year if the government applies the Jackson reforms to insolvency cases, a new report claims. Research commissioned by R3, a trade body for insolvency professionals, found litigation currently brings in £300m a year from insolvent businesses. Of this, up to £70m relates to money owed to HMRC, with the rest owed to businesses, The Law Society Gazette reported. The report found the majority of claims relate to cases worth less than £50,000, which are unlikely to be pursued if success fees and ATE insurance premiums have to be paid out of any damages awarded, as stipulated by the Jackson reforms, which came into force last April. CFA-backed insolvency litigation currently realises around £150m every year, the report added. The government had exempted insolvency claims from the Jackson reforms but plans to apply the new rules from next April. Philip Sykes, deputy vice-president of R3, accused the government of ‘lazy thinking’ by applying blanket rules to every type of litigation. ‘Insolvency litigation is absolutely in the public interest, and it is absurd that the government is considering making it all but impossible for such cases to continue,’ said Sykes. Read more.
American investment firms have found numerous opportunities to capitalize on the turmoil in Europe’s banking sector by buying distressed assets. But one major private equity firm, Kohlberg Kravis Roberts, is taking a novel approach, the International New York Times DealBook blog reported. K.K.R., along with the restructuring firm Alvarez & Marsal, has signed a preliminary agreement to join forces with two of Italy’s largest banks to try to revitalize a pool of soured corporate loans, according to a statement on Tuesday from the banks, UniCredit and Intesa Sanpaolo, and the two firms. The arrangement, the details of which are subject to continuing discussions, may allow the banks to maintain a degree of control over the loans and share in any financial improvement. By contributing restructuring expertise and additional capital, the firms may help increase the likelihood that the loans will be paid back. The companies did not say how large the potential loan pool would be or how much money would be committed to the project, though they said more details would be disclosed after further discussions. Read more.