Iceland's government unveiled a 150 billion Icelandic kronur ($1.25 billion) household-debt relief program Saturday, with the plan calling for increased taxes on the financial-services industry to help fund mortgage write-downs for Icelanders equivalent to several thousand dollars per mortgage holder, The Wall Street Journal reported. The program, unveiled by Prime Minister Sigmundur Davíð Gunnlaugsson about six months after taking office, comes after a 2013 election where promises to address high levels of household debt in the small island nation was a central issue. While the economy has rebounded following a financial meltdown five years ago, people still struggle to pay mortgages. Mr. Gunnlaugsson's four-year relief plan comes, however, as Iceland's government is running a relatively large deficit. The initiative is slated to take effect in 2014. Raising taxes on financial-services providers is expected to fund ISK37.5 billion of the plan, Finance Minister Bjarni Benediktsson said in an interview. Iceland will also remove previous tax exemptions that are currently offered to banks that fell in a 2008 financial crisis, but Mr. Benediktsson didn't say how much the treasury will receive from that part of the revenue-raising plan. The government said in a statement that household debt is equivalent to 108% of gross domestic product. This plan, the statement said, aims to "boost household disposable income and encourage savings." Read more. (Subscription required.)
Daily Insolvency News Headlines
Mon., December 2, 2013
The threat of emergency intervention by the Bank of England into the Co-operative Bank receded on Friday night after thousands of retail investors gave their backing to a £1.5bn lifeline for the troubled high street bank, The Guardian reported. The support of the bondholders is a major step towards avoiding Threadneedle Street having to step in to wind up the bank but is part of a process that will force the Co-op Group – which owns supermarkets, funeral homes and pharmacies – to cede control of its banking business to bondholders, who have been led by aggressive US hedge funds. The complex restructuring is still far from complete – a number of other bondholders still need to approve the deal – but the support of the retail investors was regarded as the biggest hurdle because they needed to be convinced to vote. Some 13,000 bondholders had invested £370m in the bank using financial instruments that paid high returns and were relied on by pensioners for income. Other groups of bondholders also have to vote and a number of court hearings are necessary before the fresh injection of capital into the bank will be formally agreed. Once it is, the Co-op Group will own just 30% of the bank – which is expected to be floated on the stock market late next year – and the bondholders will own the remaining 70% of the shares. Read more.
The new owners of Swedish car maker Saab, National Electric Vehicle Sweden AB, will restart production of the 9-3 sedan on Monday at the Trollhattan factory in Sweden, a NEVS spokesman said on Friday, Reuters reported. The 9-3 sedan will be powered by a turbocharged gasoline engine and built in "small and humble numbers" for China and Sweden, NEVS spokesman Mikael Ostlund said. The move comes almost two years after Saab, which had made cars since 1947, filed for bankruptcy at the end of 2011. Saab was previously owned by General Motors Co, which sold it to Dutch sports car group Spyker in 2010. NEVS, which is 22 percent owned by the Chinese city of Qingdao through the city's investment company, bought most of the assets of Saab last year. Ostlund reiterated that an electric 9-3 sedan is expected to launch in China next year. Since NEVS acquired the assets, it has reached new agreements with the 400 suppliers for the 9-3, Ostlund said. Read more.
Kookmin Bank, South Korea’s largest lender by assets, said it will close 55 branches in January as the country’s lenders struggle with the lowest lending margins in four years, Bloomberg reported. The closures will cut costs and help the Seoul-based bank, a unit of KB Financial Group Inc., better serve Korean customers who are using Internet banking more frequently, Kookmin Bank said in an e-mailed statement today. The lender has 1,205 branches across South Korea, company data show. Kookmin Bank is joining Standard Chartered Plc and Citigroup Inc. in trimming outlets in South Korea as profits decline and lending margins narrow amid central bank interest-rate cuts to stimulate economic growth. Combined net income at 18 lenders in the nation dropped to 1.8 trillion won ($1.7 billion) in the third quarter from 2.4 trillion won a year earlier, according to Financial Supervisory Service data. Average net interest margins stood at 1.81 percent, the narrowest level since the second quarter of 2009, the data show. Read more.
Austria will not let nationalised lender Hypo Alpe Adria go bust, Austrian National Bank Governor Ewald Nowotny said on Friday after a newspaper reported that a top government adviser favoured the idea, Reuters reported. "Austria reached a clear agreement with the European Commission this summer on restructuring Hypo Alpe Adria. We are now proceeding according to this concept. A Hypo bankruptcy is out of the question," Nowotny told the Austria Press Agency. Der Standard had reported that Wolfgang Peschorn, chief adviser in legal matters, prefers a "dead bank" model - sending the bank into insolvency so that creditors including former owner BayernLB would have to absorb some of the blow. This approach would save the state 5.3 billion euros ($7.2 billion) compared with alternatives under consideration to set up a new wind-down unit for parts of the bank that Austria had to take over in 2009, the paper said. Peschorn was not immediately available for comment. What to do with Hypo has been left hanging as the country's two big parties try to negotiate a new coalition accord after Sept. 29 elections that chopped their combined majority and strengthened the eurosceptic right. Estimates of how much it could cost to wind down the bank have been as high as 17 billion euros, a figure the Austrian central bank has denied. Hypo Chairman and task force head Klaus Liebscher has said liquidation was not an option. Read more.
NZAX-listed tourism marketing company Jasons Travel Media has suspended trading after being placed in receivership and breaching stock exchange listing rules, The Dominion Post reported. The company, which distributes travel information in print and online, said that given the company's rapidly deteriorating financial position, the unlikely prospects of a recovery in the short term, and the consequential need to protect creditors and preserve the assets of the company, the board had asked ANZ to appoint a receiver. According to the Companies Office, Craig Crosbie, of business advisory and insolvency company PPB Advisory, had been appointed as receiver. PPB Advisory New Zealand managing partner David Webb said that the receivers were conducting an urgent review of the business. The business would continue to operate as normal, and all staff would be paid their wages throughout the review process, he said. Receivers were also in discussions with several unnamed parties which had expressed an interest in purchasing Jasons, he said. Read more.