Europe

Companies struggling with tight credit conditions can now apply for liquidity guarantees and loans from the German government's €100 billion ($126 billion) fund, a spokesman for the Economy Ministry said Wednesday. The fund will offer €75 billion in liquidity guarantees and €25 billion in direct loans, The Wall Street Journal reported. General Motors Corp.'s German unit Opel could be one of the first companies to tap the fund, after GM Europe warned it needs €3.3 billion in aid.
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The European Central Bank is struggling to keep up with the region’s plunging economy, Bloomberg reported. Even as President Jean-Claude Trichet and his colleagues prepare to cut interest rates to a record low today, the 16 nations that share the euro are mired in a recession deeper than envisioned in their worst-case scenario just three months ago. The pain is building as companies including chemical-maker BASF SE cut investment and jobs, Spain and Ireland run an increasing risk of default and trade partners to the east crumble.
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German men's clothing retailer Pohland has filed for insolvency after its banks cancelled outstanding credit lines, the company said on Tuesday. The company added four outlets last year, adding costs just as the global economic crisis deepened. The business will continue operating while its management works on a restructuring plan. The company, founded in 1958, generated sales of €44.5 million ($56.28 million) last year. It has 12 outlets with 343 employees. Last month, owner Aurelius said Pohland's financing was no longer secured after sales had dropped in recent months.
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General Motors' German unit Opel could slash 3,500 jobs as part of a plan to cut costs and relaunch as an independent company, GM Europe head Carl-Peter Forster told Bild newspaper. Staff reductions would hopefully not exceed that figure at Opel, which employs around 25,000 workers in Germany, he told the daily on Wednesday. To survive, Opel needs around €3.3 billion ($4.17 billion) in state aid from European governments to save jobs and keep plants open, the company has said.
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Beleaguered US insurance giant American International Group (AIG) has begun to lay off staff at a number of its Irish divisions as part of a restructuring, the Irish Independent reported. And some of the businesses will be rebranded as American International Underwriters--the company which manages a number of AIG’s overseas units. Staff were informed of the restructuring plan yesterday and were told it could be completed within six weeks.
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Tritec Manufacturing’s UK subsidiary Mountain Buggy UK has had all its European assets frozen by a Dutch bank after Denmark-based company DK Intertrade alleged the pushchair manufacturer had breached a contract, The National Business Review reported. The Danish distribution company was in court in New Zealand last week in a bid to get compensation as it believes Mountain Buggy breached a distribution contract. The company had already asked the Dutch court to freeze the assets of the UK subsidiary.
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A judge has squashed the hopes of Deloitte Touche Tohmatsu and its U.S. subsidiary for an interlocutory appeal in a securities fraud class action against bankrupt Italian dairy giant Parmalat SpA and its financial and accounting advisers, Bankruptcy Law360 reported. Judge Lewis Kaplan of the U.S.
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Ireland's largest bank, Allied Irish Banks PLC, reported a 61% drop in 2008 net profit as its written-off debts soared amid crumbling property markets in Ireland and the U.K. Allied Irish--which has subsidiaries or stakes in banks in 12 further countries, including the U.K., the U.S., and Poland--said its 2008 net profit fell to €767 million ($972 million) from €1.95 billion in 2007. The Dublin-based bank said €15.5 billion of its loans, or 12% of its total book, faced a risk of future payment failures, with 80% of that in Ireland.
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European Union leaders, led by German Chancellor Angela Merkel, rejected a call by Hungary for a sweeping bailout of Eastern Europe, as the bloc struggled to find consensus on an approach to the spiraling financial crisis at a summit Sunday, The Wall Street Journal reported. The global recession has greatly strained the bonds holding together the 27 nations that now make up the European Union, formed in the wake of World War II, and poses the most significant challenge in decades to its ideals of solidarity and common interest. Ms.
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Ukraine, once considered a worldwide symbol of an emerging, free-market democracy that had cast off authoritarianism, is teetering, The New York Times reported. And its predicament poses a real threat for other European economies and former Soviet republics. The sudden, violent protests that have erupted elsewhere in Eastern Europe seem imminent here now, too. World leaders are increasingly worried about the discontent and the financial crisis in Ukraine, which has 46 million people and a highly strategic location.
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