Daily Insolvency News Headlines

Thu., August 21, 2014

Thu., August 21, 2014

Necessair Consulting, the company controlled by Ten Airways director Catalin Butu that could supply tickets to Fly Romania flights, has asked for its insolvency in the Bucharest Tribunal, Business Review reported. The trial term has been set for September 3rf 2014. Tickets for Fly Romania can no longer be purchased on the website. Two months ago, Fly Romania flights were being cancelled left and right. The number of tickets bought did not match the number of flights according to Fly Romania representatives. Initial plans of transporting over 100,000 passengers this year for revenues of EUR 15 million collapsed, and Fly Romania only carried 1,300 of passengers in its couple of months of activities, given that the air company had a capacity of 6,000 passengers per day. On August 5, Romanian businessman Ovidiu Tender announced his airline Ten Airways has ceased its collaboration with airline Fly Romania over unpaid debts amounting to EUR 400,000. Read more.

Thu., August 21, 2014

The Brazilian government on Wednesday announced measures aimed at increasing bank lending, including granting banks permission to issue home-equity loans, The Wall Street Journal reported. The measures also include reducing documentation for mortgages and streamlining the process to seize loan collateral. "Credit supply is running very low. The new measures will create conditions for the banks to offer more loans," Finance Minister Guido Mantega told reporters after the announcement. Earlier in the day, Brazil's central bank said that it will allow banks to use up to 60% of reserve requirements on term deposits they have with the central bank to expand loans for clients. The change should free up some 10 billion Brazilian reais, the bank said. Mr. Mantega declined to say how much more credit could be made available with the other measures. Economist are forecasting that Brazil will grow less than 1% this year, while inflation is running at 6.5%, the maximum allowed under the country's inflation-targeting policy. The central bank, between April of 2013 and April 0f 2014, had increased interest rates by 3.5 percentage points to tame inflation. Read more. (Subscription required.)

Thu., August 21, 2014

The Cabinet will this week likely ask parliament to issue a binding resolution stating that an insolvency framework will be passed and take effect as of January 1, Cyprus Mail reported. The resolution will be binding on both the government and the legislature, sources said. Opposition parties want, in writing, additional and concurrent safeguards for homeowners who have trouble servicing their mortgage, otherwise threatening to vote down the government’s foreclosures bill. That ‘safety net’ is an updated insolvency law, which the government has pledged to bring but says will take weeks or months to hammer out due to its complexity. Meantime however the foreclosures bill must be enacted before the next meeting of euro area finance ministers, in September, as per the demands of Cyprus’ international lenders. The stakes are high: failure to pass the bill within that deadline will put at risk the disbursement of the next bailout tranche for the state, but could also wreak havoc on banks’ books, the value of their property-tied assets (loans) discounted as EU-wide bank stress tests loom in October. The foreclosures legislation is designed to help banks deleverage by loosening the shackles on collecting non-performing loans, which currently account for almost 50 per cent of private debt. Read more.

Thu., August 21, 2014

The European Banking Authority will for the first time publish details of banks’ losses from fines and litigation when it releases the results of European Union- wide stress tests later this year. As many as 12,000 data points per bank will be disclosed, including on their risk weighting of assets, sovereign debt holdings and the structure of capital holdings, the London-based regulator said in a statement on its website today, the Irish Times reported. The EBA will include misconduct-related costs in its assessment of how much capital banks have raised or lost in 2014. “By disclosing data in a consistent and comparable way across the single market, the EBA will bring greater transparency to EU banks, contributing to enhanced market discipline of the entire EU banking sector,” the agency said. Fines and litigation have eaten in to banks’ provisions since regulators toughened their stance on conduct following the 2008 financial crisis. Barclays, the UK’s second biggest lender, could face as much as £7 billion of litigation costs in the next four years, according to a report by Nomura International last month. Read more.

Thu., August 21, 2014

European banks already have enough information to forge ahead with capital-raising exercises, rather than waiting for the formal publication of the health checks later this year, a leading accountancy said. KPMG said the publication of methodologies for the comprehensive assessment, combined with disclosures from regulators, should be enough to “infer” the impact the exercise will have on banks’ capital levels, the Financial Times reported. Final templates for the balance sheets of 124 lenders subject to probes this year were released on Wednesday by the European Banking Authority, which is conducting the assessment alongside the European Central Bank. Banks across Europe will see details of their capital strength, risky assets and how well they will fare in stressful scenarios published in a simple 10-page document as part of eurozone stress tests being conducted on the region’s largest lenders. Read more. (Subscription required.)

Thu., August 21, 2014

Irish SMEs that borrowed money to invest in property are almost twice as likely to default as similar-sized businesses without property debt, according to new research from the Central Bank. In its report, the bank calculates that 20 per cent of SMEs in the Republic have an exposure of some kind or other to property, the Irish Times reported. These borrowings, many of which stem from loans taken out during the height of the property boom, account for one third of the outstanding bank borrowings of the SME sector. Economist Morgan Kelly has warned that upcoming stress-testing of Irish banks will further tighten lending conditions here, potentially wiping out many SMEs who are burdened with debts from the property boom era. The Central Bank’s research indicates the sectors with the highest level of property borrowing are those in business and administrative services, hotels and restaurants, and the wholesale and retail sectors, where 30-40 per cent outstanding loans are linked to property. It also highlights that larger SME borrowers had a “higher propensity” to borrow for property purchases and mainly for buy-to-let investments. Read more. (Subscription required.)

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