Asia Pacific

Cypriot lawmakers must make it easier for banks to seize property when borrowers default to tackle the issue of bad loans, the country’s most pressing issue, central bank governor Panicos Demetriades said, Bloomberg News reported. Borrowers who intentionally fail to repay loans need to be reined in, Demetriades said in an interview yesterday in Athens. A possible political fight may delay planned legislation to tackle the Mediterranean nation’s stock of bad debt, he said. The law is required under the country’s 10 billion-euro ($13.8 billion) international rescue put together a year ago.

China's rating agencies are likely to keep a long-held assumption of government bailouts built into most ratings despite the country's first domestic bond defaults and warnings from Beijing that there is no blanket guarantee of support, Reuters reported. Last month, Shanghai Chaori Solar Energy Science and Technology (Chaori), defaulted when it missed an interest payment on a bond, and this week a newspaper reported a small construction materials company had also defaulted on an interest payment.

A tough retail environment has claimed another victim, with the collapse of an 80-year-old family-owned jewellery store chain, The Sydney Morning Herald reported. Bevilles, which employs about 477 people across 27 stores, has entered voluntary administration.More than half its staff reportedly face redundancy. The retail sector has been hit with a wave of collapses since the financial crisis, especially in fashion, including stores such as Brown Sugar, Bettina Liano, Ed Harry, Ojay, Colorado, Snowgum and Fletcher Jones.

Is China different? Or must its borrowing binge, like most others, end in tears? This is now a hotly debated topic, the Financial Times reported in a commentary. On one side are those who predict a Chinese “Minsky moment” – a point in the credit cycle at which, as Hyman Minsky foretold, panic grips the financial system. On the other side are those who insist that China’s debt mountain poses no threat to the planned growth of the economy: the authorities say it will be above 7 per cent and above 7 per cent it will be. Which side is right? “Neither” is my answer.

The Securities and Futures Commission has obtained a Hong Kong court order to appoint interim receivers to take over the management of decorative paper maker Qunxing Paper after its major subsidiary secretly started a bankruptcy proceeding on the mainland, the South China Morning Post reported. The regulator said yesterday that it got an order from the Court of First Instance, for which it urgently applied last Friday, to appoint Roderick Sutton, Fok Hei-yu and John Batchelor of FTI Consulting to act as interim receivers to investigate Qunxing's affairs.

The specter of default in China’s trust loans market is deepening the distress of property developers that also borrowed in dollars, Bloomberg News reported. Eighteen companies owing $15.2 billion, from behemoth China Vanke Co. to junk-rated Glorious Property Holdings Ltd., have “material exposure” in excess of 10 percent to trust financing, a form of non-bank lending that’s helped homebuilders proliferate in China, Moody’s Investors Service said. This year alone, the number of Chinese junk developer bonds whose yields have increased to distressed levels has almost doubled to 19.

The world’s largest banks still receive implicit public subsidies worth as much as $590bn because of their status as “too big to fail” and the assumption of a government bailout if they get into trouble, the International Monetary Fund warned on Monday, the Financial Times reported. The warning, to be included in the fund’s twice-yearly Global Financial Stability Report, highlights the failure of post-financial crisis reforms to solve the problem of too-big-to-fail despite a vigorous lobbying campaign by the largest banks claiming it is no longer an issue.

China’s biggest banks more than doubled the level of bad loans they wrote off last year, in a sign that financial strains are mounting as growth in the world’s second-largest economy slows, the Financial Times reported. The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade.

Two years before Mt. Gox filed for bankruptcy, a half dozen employees at the Tokyo-based bitcoin exchange challenged CEO Mark Karpeles over whether client money was being used to cover costs, according to three people who participated in the discussion, Reuters reported. The question of how Mt. Gox handled other people's money - the issue raised by staff in the showdown with Karpeles in early 2012 - remains crucial to unraveling a multi-million dollar mystery under examination by authorities in Japan.

Chinese investment conglomerate Citic Group, whose businesses span property, mining, energy, banking and a soccer team, plans a massive restructuring that will allow it to tap more overseas capital for its sprawling empire, the Financial Times reported. Citic’s announcement follows on the heels of plans from a number of other Chinese state-owned enterprises (SOEs) – including oil giant Sinopec – to raise money from the sale of a profitable business without giving up control.