Europe

Croydon council has become the first to seek emergency financial assistance from the government in the wake of the coronavirus lockdown, ahead of what is expected to be a flurry of local authorities requesting bailouts, the Financial Times reoprted. The UK’s cash-strapped local authorities are among the most stretched in Europe, according to a new report by Moody's Investors Service, leaving them vulnerable to the economic contraction caused by the pandemic.

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Norway’s gross domestic product contracted in the second quarter at the fastest pace ever recorded as efforts to contain the coronavirus plunged the economy into a deep recession, data from the national statistics office (SSB) showed on Tuesday, Reuters reported. The mainland economy, which excludes oil and gas production, shrank by 6.3% in the April-June period from the preceding three months, lagging a forecast of minus 6.1% in a Reuters poll of economists. “The decline in the Norwegian economy in the second quarter was the deepest ever recorded,” SSB said in a statement.

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The German economy contracted by a record 9.7% in the second quarter as consumer spending, company investments and exports all collapsed at the height of the COVID-19 pandemic, the statistics office said on Tuesday, Reuters reported. The economic slump was much stronger than during the financial crisis more than a decade ago, and it represented the sharpest decline since Germany began to record quarterly GDP calculations in 1970, the office said.

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The collapsed payments company Wirecard has let go more than half of its remaining staff in Germany and terminated the contracts of its management board members, its insolvency administrator said, Reuters reported. News of the layoffs came as Wirecard’s demise amid an accounting scandal entered a new phase, with the official opening of insolvency proceedings on Tuesday. Michael Jaffe, the insolvency administrator, said “far-reaching” cuts were needed to keep Wirecard’s core business operational.

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European investor and asset manager Arrow Global on Tuesday posted a loss for the first half of the year, mainly due to a non-cash charge of 133.6 million pounds as it revalued its balance sheet in the face of the coronavirus crisis, Reuters reported. The company, which buys defaulted customer accounts from retail banks and credit card companies, posted an after-tax loss of 110.4 million pounds ($144.51 million) for the six months ended June 30, compared with a profit of 24.3 million pounds a year earlier.

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Standard Chartered is suing South Africa’s Land Bank to recover debts, Land Bank said on Tuesday, after the state-owned agricultural lender defaulted on repayments for debt worth 50 billion rand (2.26 billion pounds) in April, Reuters reported. South Africa’s Treasury said in June it would inject 3 billion rand into The Land and Agricultural Bank of South Africa, the country’s largest agricultural focused-lender, which had been in talks with creditors on a restructuring plan following the default.

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German coalition parties have agreed to extend a freeze on insolvency rules put in place to avoid a wave of corporate bankruptcies due to the coronavirus crisis, Finance Minister Olaf Scholz said on Tuesday, Reuters reported. Speaking to reporters in Vienna, Scholz said his centre-left Social Democratic Party (SPD) and Chancellor Angela Merkel’s conservative bloc sealed a compromise deal ahead of a coalition meeting scheduled later on Tuesday.

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UK insolvency and restructuring experts have been bombarded for months, as industries hardest hit in the pandemic have suffered an onslaught of company failures and emergency refinancings, the Financial Times reported. But specialists across accountancy, investment banking and law are now preparing for a fresh wave of corporate distress in the autumn, when government furlough and loan schemes that have kept thousands of businesses afloat and millions employed come to an end.

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Mike Ashley’s Frasers Group has bought parts of rival DW Whelan Sports out of administration for £37m, but almost half of the 1,800 jobs at the retail and gym group will be lost, the Financial Times reported. Frasers, which owns Sports Direct, on Monday said the deal would focus on DW’s gym business — the second largest in the UK — as well as “certain stock” but that it would not buy the brand. The value of the transaction may rise by up to £6.9m depending on the number of associated lease holdings that Frasers acquires.

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Travel agent STA Travel Group has gone into voluntary administration. It comes after the collapse of the travel group’s Swiss-based parent company STA Travel Holding AG, which filed for insolvency, Business Insider Australia reported. STA operates online travel agent services and 27 outlets in Australia, with Deloitte’s Jason Tracy and Timothy Norman appointed as administrators on August 21.

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