Daily Insolvency News Headlines

Thu., May 14, 2015

Thu., May 14, 2015

An Iranian-owned bank based in Bahrain has appealed a decision by local authorities to place it in administration, in a case showing the vulnerability of Iran's business interests in the Gulf as political tensions rise, Reuters reported. In a letter to the Central Bank of Bahrain (CBB), the chairman of Future Bank, Abdolnaser Hemmati, said his company had fully complied with regulatory requirements and saw no reason to be treated as a risk to the banking system. "We were seriously disturbed and shocked to learn about the CBB's decision," Hemmati wrote, according to a report by Iran's state-owned Press TV seen on Wednesday. Future Bank, whose stated purpose is to expand business between Gulf Arab economies and Iran, and the CBB did not respond to telephone calls and emails seeking comment. Two weeks ago, the CBB placed Future Bank and Iran Insurance Co -- the Bahrain branch of an Iranian insurer -- under administration to "protect the rights of depositors and policyholders". It did not elaborate on its reasons. Bahraini and U.S. authorities have moved against Future Bank in the past because of its ties to Iran, and the latest action may be part of that trend. The bank was founded in 2004 as a venture between Iran's Bank Saderat and Bank Melli as well as Bahrain's Ahli United Bank, the kingdom's largest lender. Read more.

Thu., May 14, 2015

Europe’s top banking supervisor said Greek lenders have never been better equipped to deal with the country’s financial crisis, in a show of confidence in the debt-laden state’s banks, which have been stressed by fleeing deposits and political uncertainty in recent months. In an interview with The Wall Street Journal, Daniele Nouy, the chairwoman of the Single Supervisory Mechanism—the European Central Bank’s bank-supervisory arm—said Greek banks are demonstrating significant resilience. She said the SSM is monitoring their liquidity and solvency positions very closely. “These banks have gone through important restructuring, important recapitalizations and a redefinition of their business models,” Ms. Nouy said. She added that, even though the lenders are going through a difficult period, “they have never been better equipped to go through this kind of stressful situation.” Faced with dwindling reserves, Greece’s leftist-led government is currently locked in negotiations with the European Union and the International Monetary Fund over its next slice of financial aid as part of a €245 billion ($274 billion) rescue package. The lack of an agreement has given rise to prolonged uncertainty over the country’s economic future, spooking investors and depositors. A deteriorating economy is also likely to boost the percentage of nonperforming loans—those for which debtors have failed to make payments for more than 90 days. Read more. (Subscription required.)

Thu., May 14, 2015

The Chinese economy continued to slow in April, prompting predictions of more fiscal and monetary stimulus from Beijing, much of which is likely to end up in the booming domestic stock market, the Financial Times reported. Fixed asset investment, a key driver of the economy, expanded by 12 per cent in the first four months of the year from a year earlier, the slowest pace since 2000 and down from 13.5 per cent in the first quarter. That slowdown was driven largely by sliding investment and construction in the crucial real estate sector, which is suffering from massive oversupply and tepid demand. Overall property investment in the country grew 6 per cent in the first four months from a year earlier, a sharp deceleration from 8.5 per cent growth in the first quarter and the slowest pace since May 2009. Growth in retail sales came in at 10 per cent in April from a year earlier, down slightly from 10.2 per cent in March but the weakest monthly reading in nine years. China is almost certain to grow at its slowest pace in 25 years this year and the government will struggle to meet its already lowered target of “around 7 per cent” expansion. Read more. (Subscription required.)

Thu., May 14, 2015

Assets at the Dublin banking arm of Bank of America Merrill Lynch plunged in 2014, as the bank’s retrenchment in Ireland continued and headcount shrunk by a third. The bank, which was once Ireland’s largest bank by asset size, according to The Irish Times’ business database, Top1000.ie, has now slipped back to 14th in a ranking of Ireland’s largest financial institutions. Total assets at the bank, which was established in Dublin in 1995, fell from $406bn in 2013 to just $23bn (€20.5bn) at year-end 2014, principally due to a decrease in trading assets, including derivative contracts and trading loans, to $12bn, down from $369bn in the prior year. Since 2012, the bank has shifted about $169bn of its derivatives business to London, and, according to accounts just filed with the Companies Registration Office (CRO), the bank said it continued to transfer its market risk on global markets derivatives to an affiliate during the year, as well as most of its loan portfolio. The Dublin branch is no longer actively originating new business. Read more.

Thu., May 14, 2015

The Bank of England has cut the amount that it expects the UK economy to grow this year to 2.4 per cent, down from a previous forecast of 2.9 per cent, The Independent reported. In its quarterly inflation report, the central bank trimmed its forecast for UK economic growth over the next three years and reinforced expectations for an first interest rate rise in around a year's time. The fresh projections follow official data showing that growth slowed sharply to just 0.3% in the first quarter of the year, though many expect the reading to be revised once more data is available. Still David Cameron's new government will be under pressure to keep the UK's economy on track. The administration received some good news on that front earlier on Wednesday as separate data released earlier by the Office for National Statistics showed the unemployment rate fell to 5.5% between January and March, while wages rose 2.2% - their highest growth for nearly four years. Read more.

Thu., May 14, 2015

Thirteen Brazilian and international banks filed a lawsuit in New York on Tuesday against two units of ailing engineering and oil conglomerate Grupo Schahin to recover $371 million in overdue principal and interest on loans, Reuters reported. The lawsuit comes weeks after Schahin sought for protection from creditors in Brazil and the United States, and fired 2,500 workers as a corruption scandal at key client Petróleo Brasileiro SA hampered its efforts to refinance up to 6.5 billion reais ($2.1 billion) in debt. The banks, led by the Cayman Island-based branch of Itaú Unibanco Holding SA, are seeking to recover guarantees pledged as collateral on loans made in 2009 to rig leasing company Deep Black Drilling LLP and guaranteed by Schahin Engenharia SA. The lawsuit also involves Schahin Holding SA, court documents obtained by Reuters showed. Read more.

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