Daily Insolvency News Headlines

Austria (1)
Canada (1)
China (1)
Greece (1)
Romania (1)
Spain (1)

Tue., March 3, 2015

Tue., March 3, 2015

A political clash between Spain and Greece deepened after a top Spanish official said Greece is negotiating a third bailout with the European Union, a claim denied by a representative of the eurozone’s finance ministers, The Wall Street Journal reported. Talks on a new bailout would be a severe embarrassment for the Greek government, which is still balking at the terms of the current one. The comment from Spain is the latest in a series of barbs being traded between officials from both countries, with the left-wing government in Athens accusing the conservative government in Madrid of putting pressure on Greece to accept continued EU monitoring over its finances, in contravention of the political program under which the Syriza party won a Greek election in January. The dispute rose to a new level Monday, when Spain’s Finance Minister Luis de Guindos said EU and Greek officials are currently negotiating a third bailout for Greece. Mr. de Guindos’s office said such a bailout could imply between €30 billion ($33.6 billion) and €50 billion ($56 billion) being transferred to Greece, but the figure should be taken as an estimate rather than an actual offer on the table. Greek officials declined to comment. A spokeswoman for Jeroen Dijsselbloem, the Dutch finance minister who is president of the group of eurozone finance ministers, said a third bailout program “is not being discussed in the Eurogroup.” Read more. (Subscription required.)

Tue., March 3, 2015

Troubled Chinese property developer Kaisa Group announced an onshore debt restructuring plan involving 48 billion yuan ($7.6 billion) in a move aimed at restoring the financial and operational stability of the company. The debt plan, which would not entail changes in the guarantees, securities or outstanding principal claims, involves a reduction in interest payments and tenor extensions, the Shenzhen-based developer said in a stock exchange notice. Further details about the key terms and implementation of the onshore restructuring plan would be announced later, it said. The mid-sized developer shocked markets last month when it said its borrowings as at end-2014 stood at 65 billion yuan ($10.4 billion), a figure that was more than double its last reported level in June last year. Last month, Developer Sunac China Holdings agreed to acquire a 49.25 percent stake in Kaisa, saving the company from becoming the first Chinese property firm to default on its offshore debt. It is now trying to persuade its creditors to agree to the debt restructuring plan announced on Monday in order for that deal to proceed. Read more.

Tue., March 3, 2015

Creditors of Austrian "bad bank" Heta Asset Resolution may face debt haircuts or the prospect of having the wind-down vehicle for defunct lender Hypo Alpe Adria eventually go bankrupt, the co-head of Austria's financial watchdog said, Reuters reported. The Financial Market Authority stepped in on Sunday to take control of Heta and imposed a debt repayment moratorium after the government refused to plug a looming capital hole exposed by an outside audit. The FMA now needs to work out a plan that treats all creditors equally. Asked by broadcaster ORF how creditors might be asked to help pay for the wind-down costs, FMA co-head Klaus Kumpfmueller said in an interview aired on Monday: "For example, via a debt haircut on the bonds and liabilities that Hypo has. That would be one possibility. If subsequently it is in the public interest that a resolution within a resolution scheme is no longer justified, then Heta could eventually also enter insolvency." Authorities chose a wind-down over insolvency in the first place so that debt guarantees from Hypo's home province and the federal government would not immediately come due and so the agreed sale of Hypo's Balkans network could proceed, he said. Read more.

Tue., March 3, 2015

Barclays chief executive Antony Jenkins is on Tuesday set to accept his first bonus since taking charge three years ago, in a sign that bankers are showing less restraint even though pay remains a political flashpoint, the Financial Times reported. Of the UK’s biggest banks only one chief executive — Ross McEwan of Royal Bank of Scotland — has declined to take an award for 2014. HSBC rejected calls for bonuses to be cut in response to the tax evasion scandal at its Swiss private bank, arguing this dated back to 2005-2007, before the current management team took over. Stuart Gulliver, the bank’s chief executive, earned £7.6m last year, including a bonus that was docked by £500,000 to reflect a fine for rigging foreign exchange markets. Lloyds Banking Group’s chief executive, António Horta-Osório, pocketed an £800,000 bonus for 2014, on top of his £1m salary. His total remuneration was £11m including the value of share payouts from a three-year long term incentive plan. Simon Walker, director-general of the Institute of Directors, says banks should “ask themselves two key questions” before making decisions on pay: First, is there a clear relationship between financial reward and long-term performance? Second, are the rewards being shared appropriately between shareholders, customers and employees? “Too often the answers to these questions have been ‘no’,” says Mr Walker. The banks’ attitudes towards pay are reigniting the debate about how they pay top staff in a country that still bears the scars of massive bailouts, mis-selling scandals and tens of thousands of job cuts. With a general election barely two months away and after the public uproar over the HSBC scandal, a political backlash is also a risk. Read more. (Subscription required.)

Tue., March 3, 2015

Financial institutions are at the epicentre of the financial storm in the Caribbean. Take the case of Sagicor Financial Corp., a leading regional life insurer, based in Barbados. Because the country’s sovereign debt has been downgraded several times, Sagicor’s corporate debt rating has also suffered. In January, the company abruptly announced it was relocating its head office outside of Barbados, shocking the island’s 290,000 citizens. Canadian lenders have it even worse. Our banks are often praised for sidestepping the U.S. mortgage crisis and for avoiding the ugly economic woes that still wreak havoc in Europe, but the truth is, they’ve hit trouble in paradise. Royal Bank of Canada, Bank of Nova Scotia and Canadian Imperial Bank of Commerce are by far the Caribbean’s three largest lenders, dominating both personal and commercial banking. Combined, they’ve written off more than $1 billion in the region since the Great Recession. To stanch the bleeding, the banks have been restructuring their regional operations by shrinking their footprints and by leaning on specific countries, such as energy-rich Trinidad and Tobago, to drive growth. At first it seemed like a smart plan, but then energy prices plummeted. Some 45% of Trinidad’s GDP comes from the energy industry, as do 80% of its exports. Shareholders barely noticed when Canada’s banks started suffering from this tropical malaise five years ago. Because the Big Six lenders were on a tear, many of their mistakes were glossed over. Bank CEOs, however, have warned that the bull run is waning. Read more.

Tue., March 3, 2015

Ten Airways (X5, Bucharest Baneasa) has filed for insolvency protection with a Bucharest court which, if granted on March 5, will allow the airline to restructure and resume operations. The carrier recently had its Air Operators Certificate (AOC) reinstated by the Romanian civil aviation authority (Autoritatea Aeronautică Civilă Română - AACR) roughly a month after it was initially revoked, the carrier's managing director Dumitru Pupescu has confirmed to ch-aviation. The Mediafax news agency reports the airline's largest creditors are its employees who are still owed outstanding wages. The carrier, which specalizes in ACMI/charter operations and had dabbled in the LCC market with its failed Fly Romania (X5, Bucharest Otopeni) venture, encountered problems last year when it lost several ACMI contracts among them one with Air Moldova (9U, Chisinau). In addition, the Economica newspaper reports the carrier's backer Ovidiu Tender was sentenced at the end of 2014 to 11 years and four months in prison for his alleged involvement in a money laundering case with local petrochemical firm, Carom Oneşti. The case, however, has yet to be finalized. Read more.

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