Spain launched the privatization of its largest bailed-out lender, Bankia SA, marking a turning point in the country's revamp of its banking industry, The Wall Street Journal reported. The Spanish government is to sell 7.5% of its stake in Bankia by Friday, according to a regulatory filing posted after the close of trading Thursday in Madrid. The sale is a first step as the government seeks to whittle down its 68% holding in the bank. Deutsche Bank AG, UBS AG and Morgan Stanley are leading the sale and seeking only qualified—not retail—investors to buy 864 million shares in Bankia, the filing said. By assigning that role to international investment banks rather than Spanish banks, the government is seeking investors abroad, some bankers said. International investors nearly tripled their stake in Bankia stock during the past year, to 10.4% as of January, Bankia said this month. Bankia was formed in 2010 by the merger of seven troubled savings banks that had helped finance a property boom that went bust in 2008. Bankia and its parent company received €22.4 billion ($31 billion) in European Union bailout funds in 2012 after snowballing losses on real-estate loans triggered the biggest loss in Spanish corporate history and raised questions about the solvency of Spain itself. Read more. (Subscription required.)
Daily Insolvency News Headlines
Fri., February 28, 2014
Ukrainian officials today notified the International Monetary Fund of the country’s request for financial support, IMF managing director Christine Lagarde said in a statement, the Irish Times reported. “We are ready to respond and, in the coming days, will send an IMF fact-finding team to Kiev to undertake a preliminary dialogue with the authorities,” Ms Lagarde said in a statement. “This will enable the IMF to make its usual technical, independent assessment of the economic situation in Ukraine and, at the same time, begin to discuss with the authorities the policy reforms that could form the basis of a Fund-supported programme.” Arseniy Yatsenyuk won the support of Ukrainian protesters in Kiev to lead an interim cabinet after the nation’s bloodiest unrest since World War II. Lawmakers were set to approve Mr Yatsenyuk as prime minister today ahead of a parliamentary ballot in four months, acting president Oleksandr Turchynov told thousands gathered yesterday on Independence Square, the site of a three-month uprising that culminated in last week’s ouster of Viktor Yanukovich. With Mr Yanukovich on the run and facing murder charges, Mr Yatsenyuk must seal a $35 billion financial lifeline to avert a default as investors pull money out of Ukraine. Read more.
Cypriot President Nicos Anastasiades said all capital controls on the island would be lifted by the end of the year, a step that would remove a symbol of his country's isolation from the rest of the euro area. The controls have been in place almost a year, since Cyprus agreed to a €10-billion bailout from its European partners and the International Monetary Fund in March 2013. "The timeline is that we'll lift internal restrictions very soon, and for all other banking activities—including with abroad—by the end of the year," Mr. Anastasiades said this week in an interview with The Wall Street Journal. In a separate interview, Finance Minister Harris Georgiades said that restrictions on internal transactions would be lifted in April. Cypriot banks underwent an unprecedented overhaul as part of the bailout process: the second-largest was closed and the largest radically restructured. To pay for the fallout, big depositors were "bailed in," meaning part of their deposits were converted into bank shares. The country's once-dominant financial sector is still threatened. Read more. (Subscription required.)
A Brazilian court has suspended the deadline for shipbuilder OSX Brasil SA to present its restructuring plan under bankruptcy legislation until a new judge is appointed to the case, the company said in a statement on Thursday. The 60-day deadline to file the plan was already suspended in January while another court reviewed a challenge to OSX's Nov. 11 bankruptcy protection filing. The new deadline will be set once the case is formally transferred to a new judge. Spanish construction company Acciona asked a court to prevent OSX's bankruptcy from being handled by the same judge responsible for the bankruptcy of sister oil company Oleo e Gas Participações SA. Oleo e Gas, formerly known as OGX, filed Latin America's largest ever bankruptcy on Oct. 30. OSX gets nearly all of its revenue from Oleo e Gas and its a principal creditor of the company. Both OSX and Oleo e Gas are controlled by Brazilian tycoon Eike Batista. Read more.
Lehman Brothers Holdings Inc's bankruptcy estate has struck a deal to resolve a five-year-long dispute involving its Swiss affiliate, clearing the way to distribute $1.8 billion to creditors, Reuters reported. The deal would enable the estate of Lehman to resolve one of its largest outstanding claims since the investment bank's September 2008 collapse, a major spark in the global financial crisis, and close a settlement from last year with Lehman Brothers Finance AG, the Swiss affiliate that specialized in equities derivatives. The settlement with the Swiss unit was approved by the U.S. Bankruptcy Court in Manhattan in April. But entities controlled by Klaus Tschira, who founded German software giant SAP, appealed to Swiss regulators and courts, preventing the settlement from closing while he was engaged in his own dispute with Lehman's Swiss unit. Under the deal disclosed in U.S. Bankruptcy Court papers on Wednesday, the Tschira entities will drop their Swiss appeal, in return for an unspecified claim against the U.S. Lehman estate. In addition, the U.S. estate dropped a lawsuit it filed in August that sought 100 million euros ($136.7 million) from the Tschira entities. Lehman said Tschira received the amount from the investment bank the day before its Sept. 15, 2008 bankruptcy. Lehman said if Judge Shelley Chapman approves the deal by March 5, $1.8 billion could be distributed to Lehman creditors at the next distribution, which is expected at the end of March. Read more.
Honduras’s credit rating was cut by Moody’s Investors Service after the Central American nation’s deficit surged last year and the government boosted sales of short-term domestic debt, Bloomberg News reported. Moody’s lowered Honduras’s credit rating to B3 from B2 today, putting the $18.4 billion economy in the same category as the Democratic Republic of Congo and Argentina. The move comes about one month after President Juan Orlando Hernandez took office vowing to tackle the deficit and as his finance minister seeks an accord with the International Monetary Fund. Hernandez’s efforts have helped make the country’s dollar bonds the best performing in emerging markets this year after Belize, according to JPMorgan Chase & Co.’s EMBIG index. “Despite the government’s original plans to consolidate public finances in 2013, the fiscal deficit widened to 7.7% of GDP in 2013 from 5.9% in 2012,” Moody’s said in a statement. “Since 2009, the government has issued significantly more debt in the domestic market, and this debt has an average maturity of just 2.6 years.” Read more.