Europe’s biggest financial rulemaking spree since the creation of its single market more than 20 years ago reached its finale on Tuesday with the adoption of a slew of landmark reforms designed to make banks safer and financial markets more transparent, the Financial Times reported. It marks the climax of a fraught four-year drive to end the era of taxpayer bailouts and fuse together control of eurozone banks under a banking union. The votes in the European parliament cap the bloc’s lawmaking response to a crisis that spread from the financial turmoil of 2008 to leave at one stage the very existence of the euro in doubt. Michel Barnier, the EU commissioner responsible for the reforms, said: “We may have managed to avoid the worst – a complete collapse of our financial system, even the eurozone – but Europe continues to pay the economic and social price for this crisis. Let us avoid complacency.” Read more. (Subscription required.)
Daily Insolvency News Headlines
Wed., April 16, 2014
Minister for Finance Michael Noonan has pledged to do “something” for struggling middle-income earners in the budget despite indications yesterday from his own department that a further €2 billion adjustment would be required to hit deficit targets next year, the Irish Times reported. Speaking at the Oireachtas Finance Committee after the publication of the Department of Finance’s latest Stability Pact Update (SPU), Mr Noonan said he intended to widen income tax bands to take more people out of the higher tax bracket as soon as the State could afford it. He insisted easing the tax burden on hard-pressed workers was not incompatible with the planned €2 billion adjustment required to achieve the troika-agreed deficit target of 3 per cent in 2015. Read more.
Portugal plans to implement budget measures worth 1.4 billion euros ($1.94 billion) to narrow its budget deficit and meet a target set for 2015, Bloomberg News reported. The measures represent about 0.8 percent of gross domestic product and include cutting costs at government ministries and reducing the number of public sector workers through retirement and agreements to end employment contracts, Finance Minister Maria Luis Albuquerque said in Lisbon today. The government will continue to charge an extraordinary contribution on energy companies in 2015. Portugal emerged from its longest recession in at least 25 years in the second quarter of 2013 and Prime Minister Pedro Passos Coelho is trying to regain full access to debt markets with the end of the country’s 78 billion-euro bailout approaching on May 17. Coelho is cutting spending to meet goals set in the European Union-led aid plan after relying mostly on tax increases in 2013. Read more.
China's biggest airline by revenue warned it expects to report a first-quarter net loss, the first sign that the recent weakening of the nation's currency is impacting a major industry, The Wall Street Journal reported. China Southern Airlines Co. said late Tuesday it will likely post a net loss of between 300 million yuan ($48.2 million) and 350 million yuan for the quarter through March due to foreign exchange losses. In the same quarter last year, it posted a net profit of 57 million yuan. A strong Chinese currency benefited Chinese airlines because they have a lot of non-yuan debt, particularly U.S. dollars, to finance the purchase of aircraft. But the weaker yuan is having a significant impact on their bottom lines. China Southern had net debt of 104.35 billion yuan at the end of last year. Read more. (Subscription required.)
Japan’s population slid for a third year with the proportion of people over the age of 65 rising to a record, underscoring the challenge the world’s most-indebted economy faces in financing its aging society, Bloomberg News reported. The population declined by 0.17 percent to 127.3 million as of Oct. 1, as the country maintains one of the world’s lowest birth rate. People age 65 or older made up one fourth of the total, the highest-ever percentage, as postwar baby boomers head into retirement, the Internal Affairs Ministry said on its website yesterday. Japan’s debt has swelled to more than twice the size of the country’s economic output, due partly to expanding health and social security costs associated with its aging population. As well as increasing the sales tax to 8 percent from 5 percent this month, Prime Minister Shinzo Abe is seeking to encourage more women into the workforce to bolster the economy and government coffers and has also considered loosening restrictions on immigration. Read more.
British pawnbroker Albemarle & Bond will be bought out of administration by investment fund Promethean Investments in a deal which will save the majority of its stores and 628 jobs, administrators said on Tuesday, Reuters reported. The acquisition comes a day after Britain's biggest pawnbroker H&T said it was ending talks regarding the possible acquisition of some of A&B's assets. Administrator PwC said in a statement that the deal with Promethean involved it taking on 128 A&B stores out of 187, and 628 staff out of a workforce of 809. A&B was in 2011 hit by the fall of gold after it expanded heavily, having reached a market capitalisation of over 220 million pounds during that year. It put itself up for sale in December, but was unable to find a buyer and its shares were suspended in March before administrators were appointed. Read more.