Daily Insolvency News Headlines

Thu., June 25, 2015

Thu., June 25, 2015

Retirement funds and life assurers are in danger of being unable to keep their promises to pensioners and policyholders because of rock-bottom interest rates, the Organisation for Economic Co-operation and Development has warned, the Financial Times reported. Ultraloose monetary policy poses “serious problems to the solvency” of pension schemes and insurers as they struggle to produce enough income to fund their obligations, the group of rich nations said on Wednesday. The warning from the Paris-based body is among the starkest yet about how institutions from Germany to the US can generate sufficient returns to meet their obligations without taking on extra risks. In its inaugural annual business and finance outlook, the OECD identified the impact of cheap money from central banks on insurers and pension schemes as one of the biggest challenges facing economic policy makers. Read more. (Subscription required.)

Thu., June 25, 2015

International creditors demanded politically sensitive changes to Greek prime minister Alexis Tsipras’ tax and reform proposals on Wednesday, adding fresh uncertainty to talks aimed at unlocking aid to avert a debt default next week, the Irish Times reported. Mr Tsipras spent all afternoon in a meeting with the heads of the European Commission, the International Monetary Fund, the European Central Bank and euro zone finance ministers, but officials said there was no breakthrough. “They are still stuck at the same red lines,” a euro zone official said just before the meeting at EU headquarters ended after more than four hours. Euro zone finance ministers, arriving for an emergency meeting called to try to approve an agreement, said there was no deal yet ready to endorse and forecast an overnight marathon. “It’s likely we’re going to have a long night,” said Valdis Dombrovskis, European Commission vice president for the euro. The Slovak finance minister arrived with a book to read. Among key unresolved disputes were Greek demands for debt restructuring, which several euro zone ministers rejected, and differences over reforming Greece’s costly pensions system. Read more.

Thu., June 25, 2015

Businesses avoid paying $200 billion annually in taxes by channeling their overseas’ investments through offshore financial hubs, a United Nations agency said Wednesday, The Wall Street Journal reported. The estimate by the United Nations Conference on Trade and Development is one of the first attempts by an international governmental organization to put a figure on tax avoidance by companies that record their profits in countries with low tax rates, regardless of where those profits are actually earned. Government debt has surged since the global financial crisis, and in recent years governments have intensified their efforts to increase their tax revenues, and focused their attention on clamping down on tax avoidance by wealthy individuals and businesses. At the end of this year, leaders of the Group of 20 largest economies are expected to endorse a set of international rule changes developed by the Organization for Economic Cooperation and Development that are intended to clamp down on tax avoidance. Read more. (Subscription required.)

Thu., June 25, 2015

In its latest proposal to creditors, Greece calls for new corporate taxes and other revenue-raising measures. A deal would help unlock fresh aid for the strapped country, just days before it faces a crucial debt payment, the International New York Times DealBook blog reported. Although the Greek proposal drew initial support from European officials, some of the details are prompting pushback. Creditors want further pension cuts and additional changes to the value-added tax system, including better collection efforts. From the beginning, officials at the International Monetary Fund, one of the country’s creditors, have criticized the proposal’s reliance on raising corporate tax, arguing that such increases will only hurt the country’s already fragile economy. Many companies in Greece agree. “This is going to be tough for us — it is really going to increase our operating costs,” Mr. Tziritis said as he led a tour of his plant, which is just outside this bustling port city in northern Greece. “Instead of the government making reductions in the public sector, it expects the private sector to pick up the bill. Companies will move overseas, more people will be laid off and, of course, there will be no growth in the Greek economy.” Read more. (Subscription required.)

Thu., June 25, 2015

Ukraine's sixteenth largest lender, Financial Initiative Bank, has been declared insolvent, the central bank said on Wednesday, as it pushed ahead with a drive to clean-up the country's financial system. Under pressure from the International Monetary Fund, which has agreed a $17.5 billion bailout for Ukraine in exchange for reforms to the over-populated and corrupt system, Kiev has closed more than 50 banks over the past 18 months. That cut the number of active banks by around 25 percent. Last year, a 6.8 percent contraction in the economy and 50 percent slump in the value of the national hryvnia currency piled additional pressure on banks, increasing the frequency of insolvencies in 2015. Financial Initiative had been asked to boost its capital in February as well as take steps to halt deposit outflow, the central bank said in a statement. "Despite all efforts to stabilise, ... they failed to return to solvency at a time of financial crisis," it said. Read more.

Thu., June 25, 2015

Some of the best-paid people in this country—its lawmakers—are proposing an unusual measure: docking their own salaries, The Wall Street Journal reported. The volunteered pay cut is part of a new austerity descending on Africa’s top economy. Nigeria’s government makes most of its money from oil revenue, which has shrunk along with global energy prices. President Muhammadu Buhari came to office in May pledging to root out extravagant spending by a government that has grown accustomed to unchecked oil wealth. Some members of Nigeria’s national assembly say they are ready to go along, at a personal sacrifice. While a senator’s base pay as of 2013, the latest for which comprehensive data were available, was less than $13,000, allowances for items that include housing, furniture and newspapers pumped it up to more than $115,000 a year. Read more.

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