Daily Insolvency News Headlines

Mon., December 15, 2014

Mon., December 15, 2014

Poland's financial regulator KNF is seeking court approval for ailing credit union SKOK Wolomin to be declared bankrupt, a step that would allow depositors to get their money back through the country's bank guarantee fund, Reuters reported. SKOK Wolomin has 2.3 billion zlotys ($684 million) of deposits covered by Poland's Banking Guarantee Fund. It is the latest Polish credit union to run into trouble in an industry which has come under fire for weak management and poor supervision in the past. KNF is stepping up oversight, aiming to mirror its successes in the country's wider banking industry, which is considered one of the healthiest in Europe. Polish credit unions account for just 1.1 percent of banking sector assets, with SKOK Wolomin having around 3 billion zlotys of assets. "There will be no panic, as it is clearly visible that the process of credit unions restructuring is well managed. Some credit unions are being taken over by banks, while others' deposits will be paid by the (Banking Guarantee) Fund," BESI analyst Kamil Stolarski said. In the past few months, Bank Pekao SA received an approval to take over credit union SKOK Kopernik, while Alior Bank took over SKOK Swietego Jana z Ket. Read more.

Mon., December 15, 2014

Germany’s family-owned companies, the backbone of the country’s economic strength, fear they may have to scale back investments and cut jobs if a top court this week orders an overhaul of inheritance tax rules, the Financial Times reported. The federal constitutional court in Karlsruhe is set to decide on Wednesday whether it is fair that beneficiaries of inherited corporate wealth in Germany enjoy sweeping tax exemptions. Around 90 per cent of businesses in Germany are family-owned, providing about 60 per cent of jobs with social insurance. In hearings last summer, the Karlsruhe judges expressed scepticism over the near blanket exemptions granted to corporate inheritance in Germany, prompting expectations that at least parts of the law will be overturned. “The level of exemptions for companies is excessive and I would be very surprised if the court did not share this view,” said Lars Feld, director of the Walter Eucken Institute in Freiburg and a member of chancellor Angela Merkel's panel of economic advisers. Following a 2009 reform, recipients of business assets are exempt from 85 per cent of inheritance taxes if the owners do not cut jobs and wages for five years. If after seven years there are still no lay-offs then the new company owners are not liable for any inheritance tax at all. Read more. (Subscription required.)

Mon., December 15, 2014

London house prices plunged in December and may barely increase next year after the “froth” came off the market, according to Rightmove Plc, Bloomberg Businessweek reported. Asking prices in the capital fell 5.1 percent from November, it said in the last of its monthly property reports for 2014. It forecast a 2015 gain of 1 percent to 3 percent after an 11 percent surge this year. The weakness in December wasn’t confined to London, with a record 3.3 percent monthly drop recorded nationally. Sellers usually lower asking prices in December, and the government’s reform of a tax on property purchases may give a lift to the market in 2015, Rightmove said. Record-low interest rates will also help, with the Bank of England pledging to maintain the current 0.5 percent until pay growth recovers. Read more.

Mon., December 15, 2014

China has set up a fund to bail out trust firms that run into trouble, putting a safety net under a major portion of the country’s fast-growing shadow-banking sector, which has played a big role in financing riskier areas of the economy, The Wall Street Journal reported. The creation of the fund was announced by the China Banking Regulatory Commission and the Ministry of Finance on Friday, on the heels of an insurance program that will soon provide protection for bank deposits. The regulators didn’t say how big the trust fund would be but they said that all trust firms would be assessed a fee, and that rules governing the fund were now in effect. An independent company would be formed to collect the fees and manage the fund. “Risks in the trust sector have emerged and they have been rising since the second half of 2013,” the banking regulator said in a separate statement on its website. It also said that slower economic growth, coupled with overcapacity problems in several key industries and a property slump, have contributed to the rising risk. China’s trust firms have expanded rapidly in recent years by taking money from investors and lending it out to small, private firms that typically have limited access to bank credit. The loans have become a key source of funding for such firms, albeit at higher interest rates than on bank loans. Read more. (Subscription required.)

Mon., December 15, 2014

The ruble’s plunge against the euro and the dollar is upending the lives of many in Russia’s middle class, which in recent years has gotten used to vacations abroad and Western products from gadgets to food, The Wall Street Journal reported. Booming oil prices helped Russia’s middle class grow to 60% of the population in 2010 from 30% a decade earlier, according to the World Bank. Now, the plunging oil price and sanctions imposed on Russia by the West because of its intervention in Ukraine have sent the ruble plummeting, leaving many of those who at one time could afford the latest smartphones, furniture from IKEA and cheese from France facing a new reality. A mid-November survey by the FOM pollster found 45% of Russians say the weak ruble has had a significant impact on their lives. The ruble has slipped further since the survey, touching record lows of nearly 58 to the dollar on Friday compared with just over 32 at the start of the year. Still, President Vladimir Putin ’s approval rating remains sky-high at 74%, according to Levada-Center. His popularity spiked this spring amid an outpouring of patriotism when Russia annexed Ukraine’s Crimea. Read more. (Subscription required.)

Mon., December 15, 2014

The results of the Bank of England’s stress tests on banks could make this a decidedly stressful week for executives at some of the more vulnerable institutions, The Scotsman reported. Regulators are keen that all the stress arrives at the same time, and it has been leaked that the central bank has stressed that leaks will not be tolerated. The officially designated stress point is Tuesday morning, and that will make for a frenzied few hours as analysts and investors rush to interpret the results. Economists won’t have an easy time of it either, with a raft of announcements due on inflation, unemployment and wage growth that all have a bearing on the hot topic of interest rates. The latest deliberations from the Bank of England rate-setters themselves are also due to be published this week. Read more.

Syndicate content