Headlines

The founding family behind German drugstore chain Schlecker, whose 2,800 stores closed in 2012, were sentenced over the company’s collapse by a German court on Monday, Reuters reported. The founder, 73-year-old former billionaire Anton Schlecker, received a suspended prison term of two years and a 54,000 euro ($64,487) fine for intentional bankruptcy, a milder sentence than the prosecution had demanded.

The European Central Bank does not have the mandate for its plan to ask euro area banks to set aside more cash to cover bad loans, the European Union Council said in a legal opinion, in a further blow to the ECB proposal, Reuters reported. To prevent a pile-up of new bad debt on top of an existing stock of sour loans worth nearly 850 billion euros ($1 trillion), the ECB wants to introduce new guidelines including a two-year deadline for lenders to raise provisions from January for any newly classified non-performing unsecured debt.

Noble Group, the commodity trader wrestling with a $3.5bn debt pile, has continued its fire sale of assets, offloading an ethanol plant in Indiana for a loss, the Financial Times reported. The Singapore-listed company on Monday announced a deal to sell North Americas South Bend Ethanol (NASBE) business to Zeeland, a privately-owned US group, for just $12.5m – or $17m including inventories and working capital. At the end of September, NASBE was carried in Noble’s books at a valuation of just over $80m.

Chinese banks have been lending more to corporations and households and less to borrowers in the interbank market as the regulatory screws have tightened. But this back-to-basics push may prove unsustainable. Even if much of the new lending were not for speculative purposes, restrictions are growing on the wholesale funding market that allows the banks to keep the credit flowing, the Financial Times reported. As this drives market rates higher, the People’s Bank of China (PBoC) is under pressure to contain default risks in the industrial base.

It has been called the Schrödinger’s cat of the debt world — the country that simultaneously both is and is not in default. This month, Venezuela announced it would restructure all its foreign debts, the Financial Times reported. Soon after, it began missing deadlines for bond payments and was declared to be in default by rating agencies and others. Nevertheless — apparently — it continues to make payments on its bonds.

The chief executive of Oi SA has resigned, its largest shareholder said on Friday, as the Brazilian telecommunications firm enters a crucial phase in Latin America’s biggest-ever bankruptcy proceedings, Reuters reported. A spokeswoman for Portugal’s Pharol SGPS SA, which owns about 27.5 percent of Oi’s voting shares and is part of a controlling shareholder bloc, said it had been informed of Marco Schroeder’s resignation. The move reflects deepening fissures between Oi’s management and board, run by shareholders aligned with distressed debt tycoon Nelson Tanure.

Travel firm Thomas Cook has bid for failed rival Monarch Airlines’ landing and take-off slots at London Gatwick airport, two sources close to discussions said, after Monarch’s administrator secured rights to sell the slots, Reuters reported. Earlier this week the administrator won an appeal against a previous London High Court court ruling that Monarch had lost any rights over the potentially valuable slots since it was no longer capable of operating any flights.

Crystallex International Corp. and Venezuela agreed to settle a $1.2 billion dispute over the 2011 nationalization of a gold deposit in the South American nation, Bloomberg News reported. Ontario Superior Court Justice Glenn Hainey in Toronto approved the settlement on Friday after it was announced two days earlier through filings in Canada. Parts of the agreement remain sealed, including the amount to be paid.

It’s been the worst month for China’s local corporate notes in two years. And it might just be the start, as the nation’s top bond fund manager says yield premiums could rise further in 2018, Bloomberg News reported. President Xi Jinping is stepping up efforts to trim the world’s largest corporate debt burden, after emerging even more powerful from the Communist Party’s twice-a-decade congress in October. Financial institutions are hoarding cash amid expectations the government will announce more measures to curb leverage, and that is pushing up borrowing costs in the money market.

Before talking about Germany’s role in Europe we must first determine the pillars on which a strong and lasting leadership is built. Economic strength is essential, but alone it is not enough for a state to extend its sphere of influence, the Financial Times reported in a commentary. Germany may be Europe’s economic engine, but the country lacks both hard and soft power, the cornerstones of true leadership. The 20th century would not have been the American Century if the US hadn’t increased its military presence and exported its way of life worldwide.