Daily Insolvency News Headlines

Argentina (1)
China (1)
Europe (1)
Italy (1)
Japan (1)

Fri., September 19, 2014

Fri., September 19, 2014

Ultrasonic launched talks with creditors to try and avoid an insolvency and formally fired its two top executives on Thursday after they disappeared along with the Chinese shoemaker's cash, Reuters reported. Earlier this week, the German-listed firm said chief executive Qingyong Wu and chief operating officer Minghong Wu had gone missing at the weekend, and most of its cash reserves in China and Hong Kong had vanished. Ultrasonic said in a statement on Thursday that the company'ssupervisory board had dismissed them, saying they had drawn down a credit facility in August and transferred the money to China from Hong Kong before disappearing. Shares in Ultrasonic fell by more than a third and have lost more than 80 percent of their value in the past week. The shares were down 39 percent on the day at 1.33 euros after trading near 7 euros one week ago. The Ultrasonic scandal follows similar problems with other China-based German-listed companies and has led to calls for investors to refrain from investing in unknown Chinese firms. Read more.

Fri., September 19, 2014

The Italian economy is struggling to emerge from a prolonged recession and Prime Minister Matteo Renzi needs now to firmly push through his bold reform agenda to address Italy's structural weaknesses and unleash the country's growth potential while continuing to reduce its huge debt load, the International Monetary Fund said Thursday, The Wall Street Journal reported. In its annual staff report completed at the end of August after bilateral consultations with Rome, the IMF forecast a 0.1% drop in Italy's gross domestic product in 2014, highlighting the challenges that Mr. Renzi faces as he tries to push the country out of its third recession since 2008. The IMF sees Italy's growth picking up to 1.1% in 2015 assuming that credit conditions normalize and that the new easing measures announced by the European Central Bank to support the eurozone economy come into effect. It stresses, however, that Italy remains exposed to external shocks stemming from geopolitical tensions in Europe and to a dangerous combination of stagnation and low inflation. "Tight credit conditions, weak corporate balance sheets, and deeply-structured rigidities continue to weigh on domestic demand," the report said. Read more. (Subscription required.)

Fri., September 19, 2014

Argentina is holding a gun to the head of Citigroup, a lawyer for the bank told a three-judge panel in Manhattan on Thursday, the International New York Times DealBook blog reported. The bank has found itself in an awkward position: It must decide between defying a New York court order or a sovereign government, a move that it says would result in “grave sanctions” from Argentina. “We’re going to obey, and if we obey, we have a gun to our head and the gun will probably go off,” Karen Wagner, a lawyer representing Citigroup, said. The bank is the latest financial group to be caught in the battle between a group of bondholders and Argentina that prompted the country’s default this summer and threatens to engulf financial institutions which have until now watched from the sidelines. Standing before a three-judge panel of the United States Court of Appeals for the Second Circuit, Ms. Wagner argued that the bank would suffer “serious and imminent hazard” if it obeyed a ruling from United States court judge that blocks it from making payments to bondholders. The appeal comes on the heels of a ruling by Judge Thomas P. Griesa of the United States District Court in Manhattan that prevents Citigroup’s Citibank Argentina branch from transferring $5 million in interest payments to bondholders by Sept. 30. Ms. Wagner appealed to the court to extend that payment deadline. Read more. (Subscription required.)

Fri., September 19, 2014

Banks borrowed less than expected from the European Central Bank in a disappointing start for a program intended to encourage more lending to businesses and households and to pump money into the ailing eurozone economy, the International New York Times reported. The central bank said on Thursday that it would allot nearly 83 billion euros, or about $107 billion, to 255 commercial banks next week. Estimates of how much money banks would borrow had varied widely, but many analysts said before the announcement that anything less than €100 billion would be a disappointment. The program is part of a broader effort by the central bank to inject as much as €1 trillion into the eurozone economy, and the borrowing data on Thursday was closely watched as an indicator of whether the central bank would be able to meet its goal. The loans are meant to drive down the cost of borrowing and encourage lending, especially in countries like Italy and Portugal, where a lack of credit has impeded economic growth. Read more. (Subscription required.)

Fri., September 19, 2014

Economist Paul Krugman thinks that if Japan’s sales tax reaches 10%, it could mean a disastrous return to deflation, The Wall Street Journal Japan Real Time blog reported. In an interview published this week in Shukan Gendai, a weekly Japanese magazine, Mr. Krugman, a Princeton University economist and New York Times columnist, weighed in on Prime Minister Shinzo Abe’s economic policy as Mr. Abe’s administration closes in on the two-year mark in December. Saying that Mr. Abe has listened to the wrong people, Mr. Krugman argued that Japan’s economic recovery has been thrown into doubt by the April increase in the national sales tax to 8% from 5%, according to the Japanese-language article. The magazine didn’t make his comments available in English. Mr. Abe is weighing whether to go ahead with plans for a further increase to 10% in October 2015. Mr. Krugman, a Nobel laureate in economics, said the prime minister should go in the opposite direction and cut the rate back to 5%, then work to raise inflation expectations. Read more. (Subscription required.)

Fri., September 19, 2014

Another rural bank has been shuttered by the Bangko Sentral ng Pilipinas, ABS-CBN News reported. The Monetary Board (MB) placed the Rural Bank of Padre Burgos (Southern Leyte), Inc. under the receivership of the Philippine Deposit Insurance Corporation (PDIC) last September 12. The PDIC took over the bank on September 15. The rural bank's head office is located in Poblacion, Padre Burgos, Southern Leyte. As of June 30, 2014, records showed the bank has 6,120 accounts with total deposit liabilities of P32.6 million. Of the total, 6,108 deposit accountshave balances of P500,000 or less and are fully covered by deposit insurance. The estimated total insured deposits amounted to P24.7 million. Upon takeover, PDIC said all bank records shall be gathered, verified and validated. The PDIC assured depositors that all valid deposits shall be paid up to the maximum deposit insurance coverage of P500,000. Read more.

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