Bank of England Governor Mark Carney on Wednesday likened the $2 trillion (£1.55 trillion) leveraged loan market to subprime mortgages that defaulted 10 years ago and triggered a global financial crisis, in a warning to MPs, the International New York Times reported on a Reuters story. Leveraged loans are made to companies that are highly indebted, and growth has been driven by investment funds and collateralised loan obligations (CLOs) linked to the loans. "We are concerned just because the pace of growth has been quite rapid for some time," Carney told the MPs.

Should a country embrace buyout groups with a growing appetite for its assets or repel them as rapacious capitalism on fears of job cuts and short financial gains? That’s the question facing Spain — which for the greater part of the past decade has suffered a steep economic crisis — as it finds itself luring a growing number of buyout funds looking to snap up assets, according to DD’s Javier Espinoza, the Financial Times reported.

A prominent South African fund manager stands to become one of the biggest losers on a batch of New Look’s bonds that were in effect rendered worthless when the UK retailer launched a debt restructuring this week, the Financial Times reported. New Look set out terms of a debt-for-equity swap on Monday that will hand one-fifth of the company to so-called senior secured bondholders — owners of debt linked to specific assets. Meanwhile, holders of £176m of unsecured bonds have been offered just 2 per cent of the equity in the struggling fashion retailer.

Britain’s financial watchdog has dropped a criminal probe into Credit Suisse related to an alleged fraud in Mozambique, but is still checking the bank and individuals for any breaches of conduct rules, the watchdog said on Tuesday. In 2016, the Financial Conduct Authority (FCA) launched an investigation into the Swiss bank’s activities in Mozambique, where around $2 billion of loans to state-owned companies pushed the country into a debt crisis, Reuters reported.

Banco Santander said it will no longer hire Andrea Orcel, the outgoing boss of UBS’s investment bank, as its chief executive in a big U-turn just four months after Spain’s largest lender announced his appointment. Santander said the reversal was triggered by the amount that the bank would have had to pay Mr Orcel to compensate him for deferred stock awards that he earned during his seven-year career at UBS, the Financial Times reported.

Investors are asking fresh questions over whether the $8tn market in credit derivatives offers any true protection against debt default, after an obscure quirk threatened to render contracts relating to telecoms company VodafoneZiggo completely worthless, the Financial Times reported. The price of about $600m worth of credit-default swaps on the Dutch company has tanked over the past four days, nearly a year after problems first occurred with the contracts, which are designed to pay out if a borrower defaults.

The European Central Bank has warned banks that it expects them to hit stringent targets for cleaning their balance sheets of bad loans. The central bank’s regulatory arm, the Single Supervisory Mechanism, has started to write to banks to tell them how much capital they should hold against old loans that have turned sour, the Financial Times reported. Each of the eurozone’s big lenders will be told how long it has to cover loans that have been more than seven years in default.

Provident Financial, the London-listed subprime lender, shed a fifth of its market value on Tuesday after warning that full-year pre-tax profits would be towards the lower range of expectations because of an increase in bad debt, the Financial Times reported. The subprime lender, which also issued two profit warnings in 2017, reported a rise in impairments and bad debt at its Vanquis credit card division, which accounts for almost 60 per cent of revenues, and tighter underwriting conditions.

The pound declined in Asia trading as investors start to weigh a worst-case Brexit after Prime Minister Theresa May’s bill was roundly defeated by lawmakers. Sterling slipped 0.3 percent to $1.2829, while also dropping against every Group-of-10 peer, with traders saying flows were thin as most investors stayed on the sideline, Bloomberg News reported. While May is expected to survive a vote of no confidence called by the opposition party later Wednesday, uncertainty over how she will pull together a new deal has spurred risk aversion.

A gauge of financial health is flashing a warning sign on European growth. Investors are demanding higher premiums for the region’s riskiest bank bonds than those for Latin American lenders -- the first time that’s happened since the throes of the eurozone crisis in 2012, Bloomberg News reported. As headwinds gather from the weakest German economy in five years, Brexit chaos and Deutsche Bank AG’s troubles, spreads on subordinated financial paper are breaking out. To Alberto Gallo, a partner at London hedge fund Algebris Investments, it’s a buying opportunity.