Daily Insolvency News Headlines

Mon., November 17, 2014

Mon., November 17, 2014

China’s bad loans jumped by the most since 2005 in the third quarter, fueling concern that a cooling economy will be further weakened as banks limit lending to avoid credit risks, Bloomberg News reported. Nonperforming loans rose 72.5 billion yuan ($11.8 billion) from the previous quarter to 766.9 billion yuan, the China Banking Regulatory Commission said in a statement on Nov. 15. Soured credit accounted for 1.16 percent of lending, up from 1.08 percent three months earlier. China is heading for the weakest economic expansion since 1990, and Communist Party leaders have discussed lowering the nation’s growth target for 2015, according to a person with knowledge of their talks. Bankers’ low appetite for risk and their rising concerns about asset quality are leading to a “sluggish” expansion in credit, according to UBS AG. Bad loans are “likely to rise for the next few quarters as a result of the slowdown in the Chinese economy,” Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp., said before the statement. Read more.

Mon., November 17, 2014

American companies have plowed more money into the Netherlands than any other country in the world — for five years running. This does not reflect a new fascination with pot or pancakes, the International New York Times reported. It is about the taxes, or lack of them. The laws in Netherlands shield a variety of profits from taxation, making it attractive for big multinational companies like Starbucks, Google and IBM to set up offices. Even rock stars like the Rolling Stones and U2 have taken advantage of Dutch tax shelters. The same goes for Luxembourg, Bermuda, Ireland and the British Caribbean countries like the Cayman Islands. Along with the Netherlands, those places rank among the top destinations for foreign direct investment from the United States, according to a review of data collected by the Bureau of Economic Analysis that shows how entrenched tax avoidance strategies have become. Global authorities are now aiming to close the loopholes that have let such locales flourish and have allowed multinational corporations to legally avoid paying billions of dollars in taxes. On Friday, European Union authorities publicly accused the Netherlands of making a special deal with Starbucks that helped the coffee company lower its taxes, seeing it as potentially illegal state aid. Read more. (Subscription required.)

Mon., November 17, 2014

Despite Bangladesh Bank efforts in bringing out business from default culture, the uptrend in classified loans continue for the consecutive third quarter in September, the Dhaka Tribune reported. It rose to 11.6% in July-September quarter from 10.75% in the previous quarter, according to Bangladesh Bank data. The rate had dropped to 8.93% in December last from 12.79% in the previous quarter, thanks to huge loan rescheduling taking advantage of a relaxed policy. The central bank measure failed to help sustain the reduced default loan and got back to the previous uptrend from March quarter, rising to 10.45%. Finance Minister AMA Muhith recently said the country’s business has come out of default loan culture and expressed the hope it would be reduced further to 8% from existing 11%. The amount of total default loans stood at Tk57,300 crore in September, increasing by around Tk6,000 crore from Tk51,344 crore in June, according to Bangladesh Bank data. The four state-owned banks accounted for 36% or Tk20,800 crore of the total default loans. Read more.

Mon., November 17, 2014

Japan’s economy unexpectedly shrank in the third quarter, according to government data released there on Monday, extending a painful slump triggered by an increase in the national sales tax and making it more likely that policy makers will put off a second tax hike scheduled to take effect next year, the International New York Times reported. The two-stage tax increase has become an all-consuming political issue in Japan, to the point that Prime Minister Shinzo Abe is considering dissolving Parliament and calling fresh elections, people close to him say. Monday’s economic report is seen as critical to Mr. Abe’s decision, which is widely expected to come this week. The preliminary report, issued by the Cabinet Office, showed that gross domestic product fell at an annual pace of 1.6 percent in the quarter through September. That added to the previous quarter’s much larger decline, which the government now puts at 7.3 percent, revised downward from 7.1 percent in its last report. The third-quarter G.D.P. figure confounded analyst forecasts, which were mostly more optimistic. Economists surveyed by news agencies and think tanks had been forecasting annual growth of slightly more than 2 percent on average. Read more. (Subscription required.)

Mon., November 17, 2014

More than a trillion euros of government bonds may have to change hands if eurozone regulators press ahead with ambitions to toughen rules governing banks’ sovereign debt holdings, new analysis shows, the Financial Times reported. A limit on banks’ exposure to their own government’s debt could prompt a €1.1tn rebalancing of euro area sovereign debt portfolios, mostly away from banks’ home governments, according a report from Fitch Ratings. The biggest impact would be felt in the German government debt markets, as banks were forced to shed €330bn of Bunds. The next biggest overhaul would be in Italian debt, where €243bn of sovereign bonds would have to change hands, and then Spain, where the figure would be €206bn. In Greece €16bn-worth of government bonds would have to change hands. As a share of government debt, the largest rebalancing would be in Spain, where bonds worth more than 20 per cent of general government gross debt would have to be put up for sale. Germany, the Netherlands and Belgium would all have to see a rebalancing of more than 10 per cent of gross government debt. Read more. (Subscription required.)

Mon., November 17, 2014

Belgian law firm Deminor said it had been contacted by 15 to 20 investment firms considering legal action over the failure of OW Bunker, the world's largest shipping firm which filed for bankruptcy a week ago, Reuters reported. Deminor, which specialises in representing institutional investors in class actions against public listed companies, did not say on Friday which investors had contacted it and gave no further detail on possible actions over the company's collapse. OW Bunker, Denmark's the third-largest company by revenue, said on Nov. 7 it filed for bankruptcy after an alleged fraud by unnamed senior employees in its Singapore subsidiary cost it at least $125 million and banks refused new credit lines. The company listed as recently as March in the second-biggest stock market flotation in Denmark since 2010. South Korea's two major refiners are also considering legal action to recover losses tied to the company's collapse. Read more.

Syndicate content