Headlines

Central, Eastern and Southeastern Europe’s banks are facing one of their worst years since the global financial crisis a study on Friday showed, with many expecting to cut back lending and see a jump in loan defaults, Reuters reported. The survey carried out by the European Union’s lending arm, the European Investment Bank during March, showed nearly 65% of banks polled expected non-performing loans (NPLs) to increase in the coming months, and for “visibly” fewer new loans to be approved.

Investors holding debt protection for Argentina are set to share compensation of some $1.5 billion after the South American nation defaulted on its foreign debt for a ninth time last month, Bloomberg News reported. Firms holding the country’s credit-default swaps will receive about 68.5% of the amount covered by the instruments, according to the final results of an auction to settle the contracts on Friday. They get triggered when a borrower fails to pay its debt. Investors use the instruments to make negative bets on borrowers or as hedges for bond investments.

State Bank of India is seeking to recover two guarantees furnished by the former billionaire Anil Ambani, which according to a news report are worth more than $158 million, Bloomberg News reported. The state-run lender filed an application with the National Company Law Tribunal to appoint a resolution professional, according to an update on the court’s website. The tycoon, who had offered personal guarantee on the bank’s loans to his Reliance Communications Ltd. and Reliance Infratel Ltd., was given a week to reply on Thursday, according to the Press Trust of India.

The UK economy has shrunk by a quarter as a result of the coronavirus pandemic, with output falling at the fastest monthly rate on record in April following a steep decline in March, the Financial Times reported. Output in the UK plunged 20.4 per cent in April, compared with the previous month, according to data from the Office for National Statistics. This is by far the largest contraction since monthly records began in 1997 and follows a 5.8 per cent contraction in March, the previous record fall. By the end of April the economy was about 25 per cent smaller than in February.

Deutsche Lufthansa AG’s Austrian Airlines division will shrink to 80% of the size it was before the coronavirus crisis, Chief Executive Officer Alexis von Hoensbroech said in an interview with the newspaper Der Standard, Bloomberg News reported. “From today’s perspective that would mean that we have 1,100 employees too many,” he said. “We are planning two years of short-hours work, so there can be no layoffs for that long,” but a large part of the planned reduction by 2022 will be through staff turnover, he added.

Emerging economies have raised more than $83bn through the international bond market since the beginning of April, just weeks after a push by the G20 to offer many poorer nations debt relief, the Financial Times reported. Data collated by the Institute of International Finance, an industry association, show that developing economies are financing their coronavirus-driven deficits by accessing the global financial markets, rather than by attempting to restructure their existing borrowings.

The UK pensions industry has warned that emergency measures aimed at helping struggling businesses during the coronavirus pandemic could leave millions of pensioners worse off, the Financial Times reported. In recent weeks the Pensions Regulator, the Pension Protection Fund and trade bodies representing retirement schemes have raised concerns with the government that the Corporate and Governance Insolvency Bill could have serious unintended consequences for retirement plans and their members.

Mothercare’s Irish franchise owner placed its 14 baby products stores into liquidation on Friday, becoming one of the first major retail outlets in Ireland to blame the coronavirus lockdown for its demise, Reuters reported. Mothercare Plc still operates around 1,000 overseas franchise stores following the collapse of its UK business, where it fell victim to stiff competition from online retailers and rising costs across the retail industry.

Babcock International is deferring its dividend amid uncertainty over the impact of Covid-19 on its defence business, and after a £503m exceptional charge pushed it into a headline pre-tax loss last year, the Financial Times reported. Archie Bethel, the outgoing chief executive of the UK defence contractor, warned the group would this year miss profit margin targets set last June, as it wrestled with the consequences of the virus on productivity. In particular, business with a short-term cycle — roughly 20 per cent of revenues — would be hit this year by a drop in demand.

Lebanon’s tax revenues dropped 12.5% during the first quarter of 2020 compared to a year earlier, ministry of finance data showed on Thursday, as a bruising financial crisis took its toll, Reuters reported. Lebanon has seen its currency plunge in value and unemployment soar since anti-government protests erupted last October. It defaulted on its sovereign debt before entering talks with the International Monetary Fund last month. The finance ministry data is the first to capture a full quarter since the protests started.