Europe

Italy plans to widen an existing guarantee scheme for bank loans in a move that will help the country’s lenders cope with any future defaults sparked by the pandemic, a draft of the 2021 budget showed, Reuters reported. Italian banks have raised alarm about the combined effect an obligation to write down problem loans in full over a set number of years could have when coupled with a stricter definition of default kicking in soon and the troubles virus-hit businesses will face once weaned off emergency support schemes.

One morning, after years of financial prudence and solid creditworthiness, you wake up and it’s all gone. You’re no longer worthy. You’re a risk. In fact, you’re sub-prime. That is the fate facing thousands of Britons who, often for no fault of their own, could begin 2021 as “subprime” borrowers if they have had more than six months’ of relief from COVID-19 debt woes, Reuters reported. This could have dire consequences for people who have historically struggled to access credit, especially those on low incomes.

Creditors of the collapsed German payments company Wirecard have made claims for at least 12.5 billion euros ($14.85 billion), a German court said on Wednesday, Reuters reported. Wirecard, in a dramatic fall from grace and blow to Germany’s reputation, filed for insolvency earlier this year after disclosing that 1.9 billion euros it claimed to hold in accounts was missing. The firm’s assets are in the process of being sold off around the globe. The claims were made against Wirecard’s holding company at a meeting of creditors and the company’s insolvency administrator in a Munich beer hall.

Norwegian Air has asked an Irish court to oversee a restructuring of its massive debt as it seeks to stave off collapse amid the coronavirus pandemic, the carrier said on Wednesday, Reuters reported. Norway’s government on Nov. 9 rejected the airline’s plea for another injection of state funds, and the company said the following day it was at risk of having to halt operations in early 2021 unless it got access to more cash. Growing rapidly to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S.

Spain on Tuesday ordered banks to comply with a six-month extension of a state-backed loan scheme to June next year, designed to help companies struggling with the impact of the coronavirus pandemic, Reuters reported. Economy minister Nadia Calvino told a news conference bank clients who have no overdue payments can request these loans. Banks should also provide these loans with longer maturities and grace periods if customers ask for them, the minister said.

German carmaker BMW said on Tuesday there was no indication that its deal to increase its stake in its joint venture with Brilliance China Automotive would be affected by debt issues at Brilliance's parent, Reuters reported. BMW said in 2018 that it would pay 3.6 billion euros ($4.2 billion) in 2022 for a further 25% stake in the venture with Brilliance - its main joint venture in China - adding to its existing 50% holding and giving it control of BMW Brilliance Automotive (BBA).

Petra Diamonds on Tuesday reported a 36% fall in revenue and a net loss of $223 million (168.7 million pounds) as the pandemic hit production, sales and prices, Reuters reported. Petra, which operates three diamond mines in South Africa and one in Tanzania, kept production guidance for 2021 on hold due to ongoing uncertainty, noting the risks to production if further COVID-19 restrictions are required. CEO Richard Duffy said Petra had “unprecedented challenges” to contend with in 2020.

As employers shed and furlough staff in an effort to stay afloat during the COVID-19 pandemic, one employer in Switzerland has launched a recruitment drive - the Zurich liquidation service, Reuters reported. In an ominous sign of what could lie ahead, the service has quadrupled the number of staff who visit shuttered companies, take inventory and collect assets which can be sold to pay creditors. The Ascot Hotel and Swissotel in Zurich are among businesses which have already permanently closed after bookings evaporated.

Wirecard's insolvency administrator Michael Jaffe on Monday said the payment system provider's technology platform had been sold to Spain's Banco Santander, Reuters reported. “Banco Santander will acquire the technology platform of the payment service provider in Europe as well as all highly specialized technological assets,” Jaffe said in a statement. In a separate statement, Banco Santander said it had agreed to acquire several highly specialised technological assets from the merchant payments business of Wirecard in Europe, to accelerate its growth plans in Europe.

New rules affecting bank capital reserves could hurt lenders’ ability to “be part of the solution” to the coronavirus crisis and should be delayed or amended, the head of the European Banking Federation (EBF) said on Monday, Reuters reported. EBF head Jean Pierre Mustier, who is CEO of Italian bank UniCredit CRDI.MI, also called for a more unified European banking market. “We need to minimise fragmentation to allow cross-border groups to work on an even more optimised basis in terms of free flows of liquidity and capital,” he told the Euro Finance Week conference, which was held virtually.