Daily Insolvency News Headlines

Thu., October 16, 2014

Thu., October 16, 2014

The trickle of toxic debt being sold by Italian banks is turning into a torrent as UniCredit prepares to announce the disposal of more than €5 billion in bad loans to private equity investors, the Irish Times reported. UK group AnaCap Financial Partners has bought a €1.9 billion portfolio of non-performing loans to Italian small- and medium-sized companies for a significant discount to their face value. The deal comes ahead of an even bigger transaction that UniCredit is close to agreeing for the disposal of its bad loans management business and a €3.4 billion portfolio of toxic debt. The moves by Italy’s biggest lender represent the country’s largest distressed debt sales by gross value for several years. They show that bad loan disposals are picking up in Italy, boosted by the arrival of several distressed debt investors in the country. While Irish, UK and Spanish banks have been big sellers of bad debts in recent years, Italian banks have been slower to do so. Experts predict that is starting to change. Italian banks have recently taken big writedowns on their bad debt portfolios and put large chunks of them into non-core divisions ahead of this year’s stress tests by the European Central Bank, making it less painful for them to agree disposals. Read more.

Thu., October 16, 2014

Some top banks are making special payments to top executives, circumventing European Union rules capping bonuses, and the practice should stop, the bloc’s banking watchdog said, The Wall Street Journal reported. The payments aren’t in line with new EU regulations, intended to remove the temptation for financial executives to boost profits—and their bonuses—by taking risks that could damage the banks over the long term, the European Banking Authority said. National supervisors should address the practice by year end, it said. The bonus rules, which EU legislators approved in 2013, apply to bonuses to be paid for 2014. They bar banks from routinely paying bonuses that are higher than a banker’s base salary. With shareholders’ approval, bonuses can be double the fixed salary. In a report, the EBA said that 39 large banks across the EU had said they had introduced so-called role-based or market-value allowances for top executives, which are paid as fixed amounts on top of a banker’s base salary and as a result aren’t subject to bonus caps. These allowances, which were based on the role, responsibility and seniority of the bankers, were considered by the banks to be fixed, rather than performance-related, like bonuses. But the EBA said that they were in most cases discretionary, revocable and not permanent, meaning they should be classified as variable pay. Read more.

Thu., October 16, 2014

The main subsidiary of Brazilian tycoon Eike Batista's iron ore mining company MMX Mineracao e Metalicos SA filed a bankruptcy protection petition before a Brazilian court on Wednesday, Reuters reported. MMX Sudeste Mineracao SA, the unit that holds MMX's main mining assets, made the request after negotiations with creditors and efforts to seek new investors failed, MMX said in a filing. MMX Sudeste is the main operating unit of MMX and is developing iron ore mines in Minas Gerais state on its own and in partnership with Usiminas, one of the largest steelmakers in the Americas. The bankruptcy is likely to determine whether MMX can continue as a viable company because the mines managed by the unit represent nearly all of its potential future income. Read more.

Thu., October 16, 2014

China is lowering down payment requirements and discounting mortgages as declining housing sales put a drag on the economy, Bloomberg News reported. After four years of government restrictions to cool housing prices that had tripled since 2000, the central bank is reversing course, making it easier for homeowners to buy second properties. They are not likely to get back into the market, several analysts said, until prices become more affordable. “The property downturn will continue as buyers stay on the sidelines in anticipation of further price declines,” said Bei Fu, a Hong Kong-based credit analyst at Standard & Poor’s. “Longer term, the central bank’s latest move is a big step forward. It will allow more buyers to qualify for preferential mortgage rules and should help to release pent-up demand.” Premier Li Keqiang is trying to prevent economic growth this year from drifting too far below the government’s 7.5 percent target, already the slowest pace since 1990. UBS AG estimates that real-estate, including goods such as electric machinery, chemicals and metals used in construction, accounts for more than a quarter of final demand in the economy. Read more.

Thu., October 16, 2014

Kazakhstan's Alliance Bank, majority owned by the country's sovereign wealth fund, is close to completing a $1.2 billion debt restructuring and a merger with two other banks, its chief executive said on Wednesday. Timur Issatayev, who has been meeting creditors in London and New York, told Reuters he was confident of getting the go-ahead at creditor and shareholder meetings due in coming weeks. The proposals, put forward in August, are seen halving the nominal value of existing bond holdings to $300 million. Bondholders have been angered by the restructuring plan, Alliance's second in four years, but the bank says the step is key to restoring profitability. "The meetings went very well, I believe we received the full green light for restructuring ... we are confident this will be approved," Issatayev said, estimating the recovery rate for all classes of creditors at 55.1 percent. Read more.

Thu., October 16, 2014

Slaughter and May, Clifford Chance (CC) and Hogan Lovells have won advisory roles on pubs giant Punch Taverns’ £2.3bn debt refinancing, LegalWeek reported. Punch, which began talks on its restructuring nearly two years ago, received the approval needed for its restructuring proposals from the Royal Bank of Scotland (RBS) and Lloyds Bank last week. The deal, which has reduced net debt by £600m to £1.5bn, included a debt-for-equity swap that has given bondholders 85% of the company’s equity. Slaughters corporate partner David Johnson, who is also the client relationship partner, led the team advising Punch Taverns on the deal alongside financing partner Guy O’Keefe, restructuring partner Ian Johnson and financing partner Ed Fife. Johnson said: “It marks one of the most complex financial restructurings the market has seen in recent years. It was a complicated capital structure to work on – we have been trying to reach a consensual agreement for the past two years, as there were a large number of parts to it.” Read more.

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