Headlines

Sluggish economic growth in South Africa is starting to increase risks arising from high levels of debt in the country, the central bank warned on Wednesday, with defaults growing in both consumer and corporate debts, Reuters reported. In its semi-annual review of financial stability, the South African Reserve Bank said some areas of lending, including unsecured lending, car finance and lending to sectors like construction and manufacturing, were showing particular strain.

Brussels has sent a letter warning Italy’s populist government over its rising debt levels, setting up a fresh clash between the EU and Rome less than week after European elections, the Financial Times reported. The European Commission on Wednesday wrote to Italy’s finance ministry asking for an explanation on the country’s deteriorating debt situation.

Germany’s jobless rate this month rose for the first time in more than five years in the latest sign of the struggles facing Europe’s biggest economy, the Financial Times reported. The unemployment rate climbed to 5 per cent in May from April’s 4.9 per cent — the lowest since at least 1991, according to data from the country’s central bank. It marked the first monthly increase since November 2013. The tick higher in the jobless rate came as 60,000 more people were considered unemployed in May from the previous month, the largest such increase in a decade.

ArcelorMittal, the world’s biggest steelmaker, said it would cut European production for the second time in a month as weak demand and high quantities of imports continued to take their toll, the Financial Times reported. The company announced on Wednesday that it would lower output at its plants in Dunkirk, France, and Eisenhüttenstadt, Germany. It will also extend planned stoppages at its facilities in Bremen, Germany, and Asturias, Spain.

When Baoshang Bank published its most recent annual financial statement in mid-2017, it claimed to have a non-performing loan ratio of just 1.68 per cent. Two years later, Baoshang, which has Rmb576bn ($83bn) in assets, has been taken over by the government because of its “serious credit risk”, the first such move in 18 years and a reminder of the hidden perils lurking within China’s financial system, the Financial Times reported. The need for a state rescue has raised questions about financial contagion.

Anil Agarwal, the Indian billionaire owner of Vedanta Resources Ltd., said mining companies are likely to stop operating in Zambia as a result of a state-owned firm seeking to liquidate his copper-mining business there, Bloomberg News reported. Agarwal’s warning, published in a government newspaper on Wednesday as a “personal message” to citizens of Africa’s second-biggest copper producer, comes as his company is trying to meet with President Edgar Lungu over state-owned ZCCM Investments Holdings Plc’s move this month to wind up Konkola Copper Mines Plc.

Skilled workers are in short supply for the eurozone’s smaller businesses, which spells good news for wages and domestic demand as the single-currency region enjoys record low unemployment, the Financial Times reported. One in four small and medium-sized businesses in the eurozone said that the biggest challenge they face is a lack of skilled labour. This is the highest proportion across all the issues they face and is up from 15 per cent three years ago, a survey by the European Central Bank found on Wednesday.

British property lending business BondMason told investors it is pulling out of its core peer-to-peer business ahead of an expected downturn in performance, days after another property specialist collapsed in the sector’s largest failure to date, the Financial Times reported. In an email to customers on Wednesday the company said it would stop offering new investments and wind down its service after collecting on its existing loans.

India’s largest lender is hoping to capitalize on the country’s shadow banking crisis by building its mortgage and small business loan book as the non-banks are forced to pull back, Bloomberg News reported. State Bank of India, which is slowly emerging from a period of massive provisioning on loans to large corporates like Essar Steel India Ltd., sees opportunities in taking business from the shadow banks without creating new asset quality problems, according to Chairman Rajnish Kumar.

Heavily indebted Lebanon has unveiled an unprecedented plan to bring its public finances under control but faces an uphill struggle to restore investor confidence that is needed to stave off crisis, Reuters reported. After years of backsliding on reform, fear of economic catastrophe has forced action on Lebanese leaders who have overseen the post-civil war policies that landed the country with one of the world’s heaviest public debt burdens. Minds in Beirut have been focused by years of low economic growth and a slowdown in deposit growth in the banking sector.