The Shanghai government has approved a city-owned investment company to buy non-performing loans from local banks, state media reported on Friday, becoming the latest Chinese local government bracing for an expected rise in bad debt, Reuters reported. Shanghai's launch of a dedicated "bad loan bank" follows similar moves by the wealthy eastern provinces of Jiangsu and Zhejiang. Analysts expect a rise in bad loans in the coming years as China's economy slows, with loans to local governments and industries suffering from overcapacity a key source of concern. Unlike earlier bad loan banks, Shanghai has authorised an existing state-owned firm, Shanghai State-owned Assets Operation Co Ltd, to purchase non-performing loans and other assets from local financial institutions, rather than creating a new entity, China Business News reported, citing a source close to the firm's parent company. Shanghai State-owned Assets already owns equity in local banks including Bank of Shanghai, Shanghai Rural Commercial Bank, and the brokerage Guotai Junan Securities. The central government established four national-level asset management companies (AMCs) in 1999 to clear off bad loans from the biggest state-owned banks. They purchased about 2.38 trillion yuan in bad loans between 1999 and 2008. Read more.
Daily Insolvency News Headlines
Fri., March 7, 2014
Foreign investors are looking to snap up what is left of Germany's once-booming solar industry, in time to benefit from an expected global recovery in the sector, Reuters reported. During the last decade, Germany pioneered the solar industry by throwing billions of euros in subsidies at it, making it the world's largest market for solar panels in the process. But a massive shakeout during the last three years, triggered by plunging state support for solar energy, led to a wave of insolvency filings and turned Germany into a hunting ground for foreign investors looking to buy assets - from solar panel factories to retail operations - on the cheap. A diverse group of parties, including small boutique outfits and large industrial conglomerates, has emerged, and analysts believe they will remain in the chase for Germany's insolvent solar groups, lured by engineering expertise and strong brands as well as an expanding market. Read more.
Greece's four big, systemic banks will need another €5.8 billion ($8.0 billion) to shore up their fragile balance sheets, the country's central bank said Thursday, in order to cope with a growing mountain of bad loans that have become another painful legacy of Greece's protracted debt crisis, The Wall Street Journal reported. In a statement, the Bank of Greece said the four banks—National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA—would need to present plans by mid-April detailing how they would raise that capital, such as by selling assets, going to the capital markets or appealing for further state aid. Eurobank, now under state control, faces the biggest shortfall—it needs another €2.9 billion in capital—followed by market leader National Bank of Greece, which must raise some €2.2 billion, the central bank said. Piraeus faces a €425 million shortfall, and Alpha Bank needs €262 million. Including two other, smaller lenders, the capital needs facing Greece's entire banking sector total €6.4 billion. The four big banks hold about 95% of the country's banking-sector assets. After a deep, six-year recession, a pricked property bubble, withdrawals by depositors and an unprecedented €200 billion sovereign-debt restructuring, Greece's banks are struggling. This year, they were recapitalized with the help of a European Union loan, but together they still hold some €70 billion in bad loans—a sum equal to a third of Greece's annual gross domestic product. Read more. (Subscription required.)
A former deputy governor of Indonesia's central bank was charged Thursday with allegedly taking bribes and abusing power in a bank bailout, as corruption emerges as a top issue in coming elections, The Wall Street Journal reported. Budi Mulya denies any wrongdoing in the US$750 million bailout in 2008 of PT Bank Century, now called PT Bank Mutiara. "I understand all the sentences, but I don't understand the substance," Mr. Mulya said in his only comment after state prosecutors finished reading the charges for trial, which began Thursday and is expected to last three to six months. His lawyer, Ruhut Pangaribuan, told reporters after the trial that Mr. Mulya rejected the charges. The central bank and the government have defended the decision to inject $750 million into Bank Century, saying if it had closed down amid the global financial crisis depositors might have withdrawn their money from Indonesian banks, leading the country's banking system to collapse as in the aftermath of the 1997-98 Asian financial crisis. State prosecutors charged Mr. Mulya with allegedly accepting one billion rupiah (about $86,000) from Bank Century founder Robert Tantular in September 2008, a month before the bank requested a bailout. Read more. (Subscription required.)
NAMA has so far placed 296 individual developers or groups of developers into receivership, the Irish Independent can reveal. Based on figures provided, since its inception in 2009 the National Asset Management Agency has moved against 37pc of the developers it has dealt with, including high-profile ones such as Sean Dunne, Paddy Shovlin, Bernard McNamara, Richard Barrett and Johnny Ronan of Treasury Holdings. But last night, Fianna Fail finance spokesman Michael McGrath said he was "highly concerned" at the high number of developers who have been moved against. "NAMA must only move as a last resort. The time has come for an impact study to see if NAMA's approach is too aggressive," he said. Read more.
Japan’s government said Bitcoin isn’t a currency amid calls for its regulation a week after the bankruptcy of Mt. Gox, the Tokyo-based exchange that was once the world’s biggest. There is no law to define Bitcoin and relevant ministries are gathering information on it, Prime Minister Shinzo Abe’s cabinet said in a statement in response to questions from an opposition party lawmaker. Bitcoin transactions can be taxed, according to the statement obtained by Bloomberg News. Japan isn’t the only country grappling with the regulation of Bitcoin. In the U.S., states are wrestling with how digital-currency businesses could be regulated as money transmitters, while Russia has said Bitcoin is illegal under current law and Finland plans to treat it as a commodity. Japan’s banking law doesn’t allow lenders to broker Bitcoin transactions or set up accounts for customers to store the digital assets, according to the statement. Democratic Party of Japan lawmaker Tsutomu Okubo, a former vice finance minister, called on the government to rectify the lack of regulation last week. Read more.