Daily Insolvency News Headlines

Tue., September 16, 2014

Tue., September 16, 2014

The European Central Bank should begin large-scale bond buying to ensure that weak price pressures do not further undermine demand in the eurozone, the Organization for Economic Cooperation and Development said on Monday, as it cut its forecast for growth in the developed world, the International New York Times reported. “A moderate expansion is underway in most major advanced and emerging economies, but growth remains weak in the euro area, which runs the risk of prolonged stagnation if further steps are not taken to boost demand,” the O.E.C.D. said in a report. The United States will post 2014 growth in gross domestic product of just 2.1 percent, the organization said in an update to its annual forecasts, worse than the 2.6 percent it had previously expected. The eurozone, which has 18 member nations, will grow only 0.8 percent, the O.E.C.D. said, revising downward its previous forecast for an expansion of 1.2 percent. The eurozone, which has 18 member nations, will grow only 0.8 percent, the O.E.C.D. said, revising downward its previous forecast for an expansion of 1.2 percent. “Given the low-growth outlook and the risk that demand could be further sapped if inflation remains near zero, or even turns negative, the O.E.C.D. recommends more monetary support for the euro area,” the organization said. “Recent actions by the European Central Bank are welcome, but further measures, including quantitative easing, are warranted.” Read more. (Subscription required.)

Tue., September 16, 2014

The Bank of Portugal has appointed a new leader to run the ‘‘good’’ bank created after the bailout of the Portuguese lender Banco Espírito Santo, after the unexpected resignation on Saturday of its top management, the International New York Times DealBook blog reported. Portugal’s central bank chose Eduardo Stock da Cunha on Sunday to take over as chief executive of Novo Banco from Vítor Bento, who stepped down on Saturday along with his two main lieutenants. Mr. Bento and his team resigned abruptly after only two months in charge, citing the fact that their mandate had “significantly changed” since Mr. Bento was appointed in July to run Novo Banco’s predecessor, Banco Espírito Santo. Mr. Stock da Cunha was set to return to Lisbon from London, where he has been an executive at Lloyd’s Banking Group. Mr. Stock da Cunha previously worked for Santander Totta, the Portuguese subsidiary of Banco Santander, Spain’s largest bank by assets. The abrupt management reshuffle is another blow for Portuguese regulators, who have been struggling to engineer a rescue of Banco Espírito Santo after the bank was undone by its exposure to its struggling corporate parent. The healthy assets of the bank, one of Portugal’s largest financial institutions, were transferred in early August to Novo Banco as part of a bailout and with a view to then sell Novo Banco to private investors. Read more. (Subscription required.)

Tue., September 16, 2014

The prospect that Irish banks could offload some of their problematic mortgage debts as part of the European Central Bank’s asset-backed security-purchase programme receded this weekend as ECB vice- president Vitor Constancio said the bank would need state guarantees in order to buy lower-ranking debt, the Irish Times reported. At the end of two days of finance ministers meeting, the ECB’s second-in-command said the bank would need some kind of guarantee if it was to buy the riskier debt held by European banks. “We will buy the senior tranches of ABS [asset-backed securities]. If we would have to broaden the programme to include the so-called mezzanine tranches, where there is more risk, for that we would indeed some kind of guarantee,” Mr Constancio told reporters in Milan. He pointed out that, in the US, 82 per cent of the mortgages are securitised via Fanny Mae and Freddy Mac, which are public entities. His comments echo similar comments by Mario Draghi following Friday’s euro group meeting. France and Germany had earlier outlined their opposition to the idea of providing state guarantees for mezzanine debt in a paper circulated ahead of the eurogroup and Ecofin meeting in Milan. After the meeting on Saturday, Minister for Finance Michael Noonan declined to proffer his views on the demand by the ECB for state guarantees, pointing out details of the asset-backed securities purchase programme were still being worked out. Read more.

Tue., September 16, 2014

John Caudwell, the outspoken founder of Phones 4U, has called for the markets regulator to investigate whether the “bully boy” mobile phone industry acted in collusion to cause the demise of the high street retailer on Monday, the Financial Times reported. Phones 4U’s collapse into administration has put the jobs of almost 6,000 people and the future of 550 UK stores at risk – making it the largest retail failure on Britain’s high streets since the demise of Comet in 2012. Mr Caudwell, who sold the business for £1.5bn in 2006 to Providence Equity Partners and Doughty Hanson, told the FT that there had “probably been some collusion to ruthlessly eliminate Phones 4U from the high street”. He called on the Competition and Markets Authority to investigate why the three of the UK’s four mobile operators had decided to withdraw from Phones 4U in the space of a year, describing it as an “unprecedented attack” by “multinational bully boys to kill a healthy business”. The smallest operator, Three, withdrew in April 2012. “Where is the regulator? Where is the government?” Mr Caudwell said on Monday. “This is a blatant attempt to remove competition. I fear that there has probably been some collusion to ruthlessly eliminate Phones 4U from the high street. The only beneficiaries are the networks.” Read more. (Subscription required.)

Tue., September 16, 2014

The world's second-largest economy is faring worse than previously thought, with government stimulus measures proving too short-lived to counter China's sharp real-estate downturn or to prop up flagging factory output, The Wall Street Journal reported. The latest indicator of China's deceleration came over the weekend with a sharper-than-expected drop-off in industrial production for August to 6.9% year-over-year, the slowest pace since 2009, during the global financial crisis. The news sent the Hong Kong stock market into the red Monday; the sagging Australia dollar fell, as did prices of crude-oil futures on London and New York exchanges. Several financial institutions lowered their growth forecasts for China's economy. Most, including UBS Securities, ING, Barclays and Royal Bank of Scotland, said they expect Beijing will now miss its about 7.5% growth target for 2014 by as much as 0.3 percentage point. The falloff comes as Europe is stumbling and the U.S. recovery looks more moderate than expected, leaving the world in search of economic growth. It also tests the Chinese leadership, which has tried to maneuver between long-term efforts to restructure the economy—a transition that means less lending and growth—and the near-term bid to prop up growth, generate jobs and raise living standards. Read more. (Subscription required.)

Tue., September 16, 2014

The proposed changes to Jamaica’s bankruptcy and insolvency law has been overhauled after several deficiencies were pointed out by stakeholders, The Gleaner reported. The bill, which seeks to repeal the existing bankruptcy law and to create new provisions to govern the regulation of bankruptcy and insolvency in Jamaica, has been criticised by stakeholders, and Justice Minister Mark Golding told the Senate last Friday that given the large number of amendments proposed in the 113-page report, it was decided to prepare a new bill. The bill outlines the circumstances under which an act of bankruptcy is committed, the procedures for filing a bankruptcy petition and the procedures to be followed in respect of the administration of the estates of bankrupts. Read more.

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