Daily Insolvency News Headlines

Mon., April 27, 2015

Mon., April 27, 2015

Vietnam's central bank will acquire all shares in a small, loss-making bank in Hanoi, a unit of Ocean Group Co, to ensure the banking system's safety, the second move in less than two months as it seeks to clean up the fragmented sector. "The State Bank has announced its compulsory purchase of all the shares owned by existing shareholders in Dai Duong (Ocean) Commercial Bank," the State Bank of Vietnam said in a statement on Saturday. The takeover came after serious financial losses at Dai Duong bank and is aimed at "preventing Dai Duong's weakness from spreading to other banks", the statement said. Commercial banks in Vietnam reported bad debts at 3.49 percent of their outstanding loans in January 2015, up from 3.25 percent the previous month, a state-run newspaper quoted a central banker on Saturday as saying. VietinBank, Vietnam's biggest partly private lender, has been appointed to join the management of Dai Duong Bank, the central bank said. In January the central bank said it expected six to eight mergers and acquisitions in 2015 to strengthen the industry, laden with bad debts from real estate slump, unrestrained lending and costly investments by state-run firms. The central bank has also said VietinBank may join Dai Duong Bank as part of the restructuring plan. Read more.

Mon., April 27, 2015

Several Chinese provincial governments have been forced to postpone bond auctions as banks balk at the low yields on offer, state media reported on Friday, highlighting the challenges of carrying out a Rmb1tn ($161bn) plan to lower financing costs for cash-strapped localities, the Financial Times reported. China’s local debt has surged since the 2008 financial crisis as regional governments borrowed to finance infrastructure projects in an effort to stimulate the economy. Economists have warned that the debt poses a risk to the banking system. China’s finance ministry last month revealed a plan for provincial governments to refinance Rmb1tn in debt due to mature this year. The goal is to lower debt-servicing costs and extend maturities by converting short-term, high-interest bank loans to low-interest, long-term municipal bonds. Much local borrowing has been channelled through arm’s-length financing vehicles (LGFVs) that local governments established to circumvent a legal ban on direct borrowing. China’s legislature formally rescinded that ban last year, in a bid to “open the front door and close the back door” to local borrowing. Read more. (Subscription required.)

Mon., April 27, 2015

The Bulgarian central bank said it will challenge a court decision setting the date of insolvency of Corporate Commercial Bank (Corpbank) which could be important to recovering assets, Reuters reported. Corpbank collapsed in June, after a bank run triggering the biggest banking crisis in the Bulgaria since the 1990s. An independent audit of its books showed serious failings in the way it was run that prompted central bank administrators at the lender to write off two thirds of its assets. The Balkan country is preparing to collect the bank's assets and pay back its creditors. The state is Corpbank's biggest creditor as it paid more than 3.5 billion levs ($1.9 billion) of guaranteed deposits to the lender's clients. The date of insolvency is important because of deals that were done after June and which allowed creditors to recover some of their money when large unsecured depositors sold their deposits to them at a discount. Those deals could have hurt the rights of creditors that will be first in line in bankruptcy proceedings. A Bulgarian court declared Corpbank bankrupt earlier last week and said the lender was insolvent since Nov. 6, when the central bank revoked its licence. The central bank however said the insolvency of the bank became obvious with the financial reports of the lender at the end of September. Read more.

Mon., April 27, 2015

Credit unions cannot become complacent despite having avoided the worst case scenario envisaged at the time of the financial crisis, according to the Irish League of Credit Unions registrar. In a speech due to be given at the league’s AGM, Anne Marie McKiernan was to say that while the feared failure of a significant number of credit unions had not occurred, the sector could have false sense of security and should not undo the “hard-won financial improvements” of recent years. She said high arrears rates, falling loan and investment income, regulatory compliance and business model challenges as “significant vulnerabilities” in the sector. Ms McKiernan said the scale of restructuring of the sector had fallen well short of what was necessary to tackle the viability challenges facing it and said there had been very limited transformation of the credit union business model. Read more.

Mon., April 27, 2015

UBS's chairman said a default by Greece is seen by the International Monetary Fund as "systemically controllable" and he believed it would have a negligible impact on the Swiss bank itself, according to a newspaper interview published on Saturday. Athens is lurching closer to bankruptcy, with its next big test on May 12, when it is due to pay 750 million euros to the IMF. Euro zone finance ministers told Greece on Friday that its leftist government would get no more aid until it agreed a complete economic reform plan. In an interview with Neue Zuercher Zeitung, the chairman of Zurich-based UBS, Axel Weber, addressed the alternative if euro zone and Greek officials fail to reach an agreement. "I've just come from a meeting of the International Monetary Fund. There, the consensus is increasingly that a Greek default would be systemically controllable," Weber said in the interview, without elaborating. Weber is the former head of Germany's central bank, during which time he also served as the German governor of the IMF. He has been chairman of UBS since 2012. Read more.

Mon., April 27, 2015

A “stark” divide between the north and south of England has opened up since the recession in rates of personal insolvency, highlighting the uneven nature of the economic recovery, the Financial Times reported. In London and the home counties, insolvency rates fell 18 per cent and 16 per cent respectively in the five years from 2008 as the services industries staged a concerted recovery, according to research by the accountancy firm Moore Stephens. But in the northeast and northwest of England, personal insolvency rates rose by 5 and 4 per cent respectively. Read more. (Subscription required.)

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