Asia Pacific

A cash crunch in China pushed short-term interest rates to a new recent high today and highlighted the difficulties faced by the central bank in managing an increasingly complex and stressed financial system, the Wall Street Journal reported today. Rates rose again despite cash injections last week by the People's Bank of China, which has tried to rein in lending but is facing crosscurrents ranging from government budget tightening to quirks in bank accounting rules to distrust among banks to rising losses on loans that haven't yet been disclosed.

Both the Reserve Bank of India, the central bank, and State Bank of India, the largest of the big, state-owned banks, are voicing determination to go after recalcitrant borrowers as the volume of problem debts, whether acknowledged or not, continues to grow, the Financial Times reported in a commentary. It is not clear whether this time is different and the banks are really serious about putting pressure on borrowers who are unable or (in many cases) unwilling to repay the banks. But they should be.

The liquidators for the Ross Asset Management group of companies found to be a Ponzi scheme are in talks with three former investors over about $3.8 million of payments they received in the two years leading up to the group's eventual collapse last year, The New Zealand Herald reported. PwC's John Fisk and David Bridgman are looking at transactions they might be able to reverse as they seek to claw back as much of the $100 million to $115 million that was lost in the fraudulent scheme for some 1,200 investors.

Around 60 staff have lost their jobs at the Australian Ksubi fashion label, which has been placed under receivership, The Australian reported. The trendy street brand was founded by George Garrow and Dan Single in 1999 and worn by the likes of supermodel Miranda Kerr and celebrity Nicole Richie. On Tuesday, it was placed under the receivership of advisory firm Jirsch Sutherland. In a statement, Jirsch Sutherland said it was assessing the label's financial position, including "necessary rationalisation of overheads including staff at head office".

Iconic Victorian discount retailer Dimmeys is close to administration, as yesterday it copped a $3 million penalty for breaching product safety laws. Dimmeys and distribution company Starite Distributors were penalised $3 million and $600,000 respectively for breaching product safety laws on girls’ padded swimwear, baby bath toys, cosmetic sets and basketball rings. The Federal Court also ruled the director of both companies, Douglas Zappelli, be fined $120,000 and banned from managing corporations for six years.

With Christmas just weeks away 76 people have lost their jobs as another Mackay business has been forced to close its doors. MACS Engineering went into voluntary administration yesterday with Derrick Vickers and Darryl Kirk, of PwC, appointed as administrators. The decision has come as a shock to many. Director Simon Mortess only spoke with the Daily Mercury in August about the company's expectation of riding out the mining downturn. At the time, Mr Mortess said they had decided to diversify their business into coal seam gas, which was part of a strategy that started two years ago.

Regional NSW carrier Brindabella Airlines is in the hands of receivers KordaMentha after it failed to recover from the grounding of eight of its 10 aircraft because of overdue maintenance checks, The Sydney Morning Herald reported. Commonwealth Bank had a fixed and floating charge over the Canberra airline's assets. Brindabella said on Saturday it had "temporarily" suspended operations even though the Civil Aviation Safety Authority was allowing two of its Jetstream aircraft to remain in service.

Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014, The Telegraph reported. Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

China Citic Bank Corp. plans to ask shareholders for permission to write off close to $900 million of nonperforming loans, an unusual move as China's bad-debt levels start to tick upward, the Wall Street Journal reported yesterday. The bank, China's seventh-largest by assets, said in statements on the Hong Kong Stock Exchange this week that it wants to more than double the amount of loans it can write off in 2013 to 5.2 billion yuan ($852 million), up from a previously planned 2 billion-yuan write-off.

Kazakhstan's Alliance Bank, controlled by the oil-rich nation's sovereign wealth fund, will discuss the restructuring of its debt at a creditor meeting in London this week, a source at the bank said on Tuesday, Reuters reported. Alliance, the ninth-largest lender by assets among the Central Asian nation's 38 banks, defaulted on its debt in the aftermath of the 2008 crisis. Its dollar bonds fell to record lows earlier this year on fears that it was heading towards a second debt restructuring.