Daily Insolvency News Headlines

Wed., June 24, 2015

Wed., June 24, 2015

Greece’s lenders on Tuesday were scrutinizing a proposal seen as a potential breakthrough on a last-minute bailout deal, but significant concerns by more demanding creditors suggest that further days of tough negotiations lie ahead before an agreement can be clinched, The Wall Street Journal reported. After months of virtual deadlock, officials emerged from a string of meetings in Brussels on Monday optimistic over a Greek concession on pensions. European officials hope that eurozone finance ministers can sign off on a policy package agreed to between Greece and the institutions overseeing its bailout program—the IMF, European Commission and European Central Bank—on Wednesday. “I am convinced we will find an agreement, as an agreement is now possible this week,” European Economic Commissioner Pierre Moscovici said in an interview with French radio France Inter on Tuesday. But the IMF is still unhappy with key aspects of Greece’s new economic proposals and German officials were irritated by the speed with which the commission welcomed them, warning that much work needs to be done. Read more. (Subscription required.)

Wed., June 24, 2015

In the eyes of international lenders, Portugal is a shining example of what Greece should have been: a bailed-out country that co-operates with its creditors, stoically enduring years of austerity to bring about reforms that gradually improve an ailing economy, the Financial Times reported. But Lisbon’s status as eurozone posterchild — cited as “proof” that adjustment programmes work by Germany’s hawkish finance minister Wolfgang Schäuble — would not be enough to shield it from the full blast of market turbulence if Greece exits the currency bloc. “Portugal, after Greece, is the weakest link in the eurozone,” said Antonio Roldán of the Eurasia Group, a risk consultancy. After falling to record lows in recent months, Lisbon’s borrowing costs last week hit their highest point this year as tensions between Athens and its creditors increased. Swiss bank UBS forecasts that borrowing costs could double if Greece leaves the euro, putting renewed pressure on Portugal’s still fragile public finances. Read more. (Subscription required.)

Wed., June 24, 2015

Banks will be able to claw back bonuses from their most senior managers for up to a decade under rules published on Tuesday by UK regulators, the Financial Times reported. The Prudential Regulation Authority and Financial Conduct Authority said in a joint statement on Tuesday that they were pushing ahead with rules for a wider seven-year clawback period, but that a further three years is being considered for the top tier of banks’ management where regulators find problems, to run concurrently with a seven-year bonus-deferral period. Andrew Bailey, chief executive of the PRA said: “Our intention is that people in positions of responsibility are rewarded for behaviour which fosters a culture of effective risk management and thus promotes the safety and soundness of individual institutions.” The rules give the UK one of the most stringent regimes governing bonuses and pay. As well as pushing up the clawback period, bonuses can be deferred for as long as seven years for senior managers and five for all other staff who take “material risks”. This is far above the European Union minimum, which dictates that 40 per cent of variable pay be deferred for at least three years. Read more. (Subscription required.)

Wed., June 24, 2015

Russia’s sufficient reserves and flexible monetary policy ensures the country’s financial stability for now, but a possible interest-rate increase in the U.S. and unpredictable oil prices keep the central bank ready to intervene, the Bank of Russia said Tuesday. Facing soaring inflation and a contracting economy, the Bank of Russia has been increasingly active in adjusting its monetary policy over the past months in an attempt to preserve financial stability, The Wall Street Journal reported. The latest report reckons that Russia’s financial system is shielded from existing risks but its future looks uncertain. In a semiannual report on financial stability, the central bank noted Tuesday that, in the fourth quarter of 2014 and the first three months of 2015, Russia endured a number of risks to stability. They ranged from the more expected causes, such as Russia’s rating downgrade and a lack of foreign currency due to repayment of foreign debt, to such unexpected reasons as a rapid drop in global oil prices. Read more. (Subscription required.)

Wed., June 24, 2015

The scandal which enveloped the Co-operative Bank was reawakened on Tuesday when the bank revealed it was facing fines from City regulators over the events that led to its near collapse two years ago, The Guardian reported. The bank is now just 20% owned by the Co-operative Group of supermarkets and funeral homes after an emergency fundraising was required to plug a £1.5bn shortfall uncovered in 2013. Control passed to hedge funds and other private investors after the rescue. On Tuesday, the bank said it would begin settlement talks next month with the Financial Conduct Authority and the Bank of England concerning events between 2008 and 2013. “The outcome of any settlement discussions is currently uncertain both in the details of any findings and any potential financial penalty,” the bank said. Read more.

Wed., June 24, 2015

Bulgaria’s central bank governor resigned on Tuesday, as the poorest country in the European Union slowly recovers from a banking crisis and remains vulnerable to developments in neighboring Greece, The Wall Street Journal reported. Ivan Iskrov, who spent 12 years at the helm of the Bulgarian National Bank, said in a letter to Parliament that he will step down on July 10, three months before his term expires in October. Mr. Iskrov has been under pressure from political forces to resign in the wake of what turned out to be the worst banking crisis since the 1990s. In June last year the country’s fourth largest bank was closed after reports that its main shareholder was embezzling funds from the lender prompted a bank run, which later spread to a second lender. The central bank was widely blamed for mishandling the crisis and Mr. Iskrov offered to resign in July last year but later backtracked. The $4 billion Corporate Commercial Bank, known by its Bulgarian initials KTB, was declared insolvent in April this year. Read more.

Syndicate content