Daily Insolvency News Headlines

Mon., June 29, 2015

Mon., June 29, 2015

Greece will keep its banks closed on Monday in a bid to prevent its banking system from collapsing, a bank official said, after the European Central Bank moved to cap the amount of emergency loans it provides for the country’s cash-strapped lenders, The Wall Street Journal reported. The ECB said earlier on Sunday that it wouldn’t increase the lifeline of emergency liquidity that has been sustaining Greece’s banks, even as nervous Greek depositors appeared to withdraw their money at a greater pace over the weekend. Greece’s move to avert the threat of a bank run comes amid a dramatic escalation of the country’s debt crisis after Greek Prime Minister Alexis Tsipras surprised European policy makers Friday by calling a Greek referendum on whether to accept the terms of the country’s creditors to unlock badly needed financial aid. Mr. Tsipras’s gambit means Athens will almost certainly default on a €1.54 billion ($1.72 billion) payment it owes the International Monetary Fund on Tuesday. Greece’s international bailout expires the same day, meaning the country would no longer be under the umbrella of an international rescue package. On Saturday, finance ministers of other eurozone countries rejected Greece’s request for a one-month bailout extension to give it time to hold the referendum. Read more. (Subscription required.)

Mon., June 29, 2015

European Central Bank policy setters are considering keeping Emergency Liquidity Assistance open to Greek banks on Monday but imposing a higher valuation discount on the security they offer in return for the funding, people familiar with the matter said, Reuters reported. If the haircut on the assets Greek banks give for Emergency Liquidity Assistance is increased, it would, however, curb their use of such finance. "There is a possibility of an extension," said one of the people with direct knowledge of the ongoing telephone discussion among the ECB's decision-making Governing Council, adding that a bigger 'haircut' is being discussed. Because this valuation calculation is not publicised, it would not be clear how much of the ELA banks could use. Read more.

Mon., June 29, 2015

As it turns out, the Greek crisis ends not with a bang, but with a referendum, the International New York Times reported in a commentary. It has been easy to ignore the doings in Greece for the last few years, with the perpetual series of summits in Brussels that never seem to resolve anything. But it’s time to pay attention. These next few days are shaping up to become a transformational moment in the 60-year project of building a unified Europe. We just don’t yet know what sort of transformation it will be. The immediate headlines that got us to this point are these: After an intractable series of negotiations over a bailout extension with Greece’s creditors, the nation’s left-wing government left the table Friday and said it would hold a referendum on July 5. Greek leaders think the offer on the table from European governments and the International Monetary Fund is lousy, requiring still more pension cuts and tax increases in a depressed economy, and intend to throw to voters the question of whether to accept it. Whatever the exact phrasing of the question (and assuming the referendum goes forward as planned), it really boils down to this simple choice: A “Yes” vote means that Greece will continue the grinding era of austerity that has caused so much pain to its citizens over the last five years, in exchange for keeping the euro currency and the monetary stability it provides. A “No” vote almost certainly means that the country will walk away from the euro and create its own currency (which will surely devalue sharply), bringing financial chaos in the near term but creating the possibility of a rebound in the medium term as the country becomes more competitive with its devalued currency. Read more. (Subscription required.)

Mon., June 29, 2015

After more than a week of a brutal selloff in Chinese stocks, the country’s central bank on Saturday took a rare easing step, cutting both its benchmark interest rates and the amount of reserves certain banks are required to hold, The Wall Street Journal reported. In a statement, the People’s Bank of China said both steps were aimed at lowering borrowing costs and “stabilizing growth” in the world’s second-largest economy. The PBOC cut its one-year benchmark lending rate by a quarter of a percentage point to 4.85% and its one-year deposit rate by the same scale to 2%. At the same time, it also lowered the reserve requirement by half a percentage point for banks with sizable lending to farmers and small businesses. The central bank has rarely cut both interest rates and the reserve-requirement ratio on the same day. The last time it did so was in October 2008, the height of the global financial crisis. Read more. (Subscription required.)

Mon., June 29, 2015

Just more than €1 billion of taxable income was sheltered from tax through the use of various property reliefs, Minister for Finance Michael Noonan has confirmed, the Irish Times reported. In a written reply to Fianna Fáil’s finance spokesman, Michael McGrath, Mr Noonan said the figure totalled €574 million in 2012 and €450 million provisionally in 2013. Figures for last year are not yet available. “The deputy should note that these are the claims for the year, rather than the actual tax cost, and that the claims may not be fully used in the year due to insufficient income being available to absorb the claim, or due to the impact of the high income earner’s restriction,” the minister added in his reply. In addition, Mr Noonan said the Revenue Commissioners collected €22.1 million over the same two years from the 5 per cent property relief surcharge introduce on January 1st, 2012. This comprised €10.7 million in 2012 and €11.4 million in 2013. Read more.

Mon., June 29, 2015

Bank creditors to Drydocks World (DDW), Dubai’s maritime engineering business, are expecting to receive proposals from the government-owned company to restructure some of the US$2.3 billion debt it refinanced in 2012, The National reported. Recent talks with creditors have left them convinced that the company, owned by the Dubai World conglomerate, will seek to change the terms of its agreement to repay some $800 million of bank loans in the summer of 2017. “We’re fully expecting a second round of restructuring, but there have been no formal proposals yet,” said one banking executive, speaking on condition of anonymity. A spokesman for DDW declined to comment on the possibility of a new round of restructuring. A source close to the company, who asked not to be named, said that a new deal on the $800m of debt would be a sensible option for the company to consider, given the global environment of lower interest rates than when the previous deal was hammered out, and the emirate’s improved economic prospects. Read more. (Subscription required.)

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