Asia Pacific

A multicolored stack of shipping containers stuffed with goods intended for Cypriot stores towered over this island nation's largest seaport—a monument to the country's financial paralysis, The Wall Street Journal reported. In normal times, thousands of tons of cargo speed through the sprawling complex here every week, feeding Cyprus's import-hungry economy. But with the country's banking system on life support, the cargo network has shuddered to a halt.

The head of South Korea's recently-launched debt restructuring fund said Sunday that it will buy debts held by financial companies just one time, shrugging off worries that repeated help could lead to moral hazards among delinquent borrowers, the Global Post reported on a Yonhap News Agency story. On Friday, the government launched the National Happiness Fund in order to buy debts held by local financial companies, a move aimed at pushing for debt write-offs or debt rescheduling for delinquent borrowers.

Cyprus’s banks reopened from a nearly two-week hiatus on Thursday with no sign of disorder among depositors, while the country’s politicians pointed fingers over who was to blame for the financial sector’s meltdown, The Wall Street Journal reported. Small groups of account-holders—typically numbering two dozen or less, and mostly retirees—pressed to enter the banks as they formally reopened at noon local time.

Russia's largest banks said Thursday their clients' exposure to losses in Cyprus so far appears modest, while there were few other signs of immediate fallout for Russian business, executives and analysts said, The Wall Street Journal reported. The Kremlin's angry public attacks last week on a planned tax on bank deposits in a tax haven long favored by Russians led many observers to suspect Russians' exposure to Cyprus's troubled banks was substantial. Estimates ran as high as €20 billion ($26 billion) in Russian money said to be at risk.

Japan’s central bank governor has told parliament that the government’s vast and growing debt is “not sustainable,” and that a loss of confidence in state finances could “have a very negative impact” on the entire economy, the Financial Times reported. The warning comes as Shinzo Abe’s administration attempts to drag Japan out of more than a decade of deflation with aggressive monetary and fiscal stimulus.

Cyprus's plan to impose capital controls threatens to test the ties that bind Europe's monetary union and could see euros on the Mediterranean island valued differently to those in the rest of the bloc, Reuters reported in an insight. The capital controls, being imposed to avert a run on banks after an EU bailout, will limit foreign transactions and capital outflows but not movements of money within the country itself, the head of the Cyprus chamber of commerce said on Wednesday after meeting government officials.

Cypriot officials gave the first indications of the steep losses facing large deposit holders at the island's two biggest lenders, as hundreds of angry bank workers staged a demonstration outside the central bank and demanded the resignation of its governor, The Wall Street Journal reported. Cyprus's central bank chief said Tuesday that large depositors at the island's biggest lender, Bank of Cyprus Pcl, could lose as much as 40% on their deposits.

China’s largest banks posted a decline in bad-loan ratios for 2012 amid the slowest economic expansion in 13 years, signaling policy makers may have averted a surge in defaults. The gauge shrank to 1.33 percent at Agricultural Bank of China Ltd., the nation’s third-largest by market value, from 1.55 percent in 2011, while net income increased by 19 percent, the Beijing-based lender said yesterday. At Bank of China Ltd., the fourth-largest, non-performing loans dropped to 0.95 percent of the total from 1 percent, while profit climbed 12 percent.

Big depositors in Cyprus's two main banks could be separated from their money for a long time, The Wall Street Journal reported. After rejecting a proposal to tax bank depositors to pay for a bailout, Cyprus—with a sharp push from its euro-zone peers and the International Monetary Fund—will instead put one bank through a kind of liquidation and radically restructure the other. As a consequence, even if Cypriot banks reopen from an extended holiday this week, big depositors will likely find they are still stuck.

Reason prevails but the damage is done. With their 11th-hour agreement with Cyprus for a €10bn bailout, eurozone policy makers avoided the worst: a catastrophic implosion of the island’s banking system and a hasty exit from the eurozone, the Financial Times reported. The deal reverses some initial errors. It targets depositors in troubled banks rather than indiscriminately across the sector. Insured deposits under €100,000 are safe. There will be restrictions on deposit withdrawals and transfers tailored to each bank rather than across-the-board capital controls.