Headlines

Doomsayers have plenty to work with in China. The country’s rapid buildup of debt -- reaching approximately 260 percent of GDP, from 160 percent less than a decade ago -- seems almost guaranteed to herald a financial crash or at least a major correction, quite likely followed by years of stagnation, a Bloomberg View reported. If the world’s second-biggest economy ultimately defies the doubters, though, this may well be seen as the year things turned around. Consider this: China is on track to see its best nominal GDP performance since 2011, even as credit growth remains moderate.

Deutsche Bank more than doubled pre-tax profits for the second quarter, but revenues fell short of analysts’ expectations in key divisions and chief executive John Cryan admitted the bank is still not living up to its long-term potential. Germany’s biggest bank reported pre-tax profits of €822m versus €408m a year earlier and the €199m expected by analysts, the Financial Times reported. The outperformance was driven by a big fall in costs, which came in at €5.715bn, down 15 per cent year-on-year and far better than the €6.417bn analysts predicted.

A number of creditors and others involved in Toshiba Corp.’s restructuring are pushing for a Toshiba bankruptcy filing as the best path to rebirth after its effort to raise money through a chip-unit sale stalled, The Wall Street Journal reported. People involved in talks over Toshiba’s workout, including business partners, lawyers and people with ties to the company’s main bankers, said bankruptcy is worth serious study. Some of them said it is the best available option and that they are advocating it in discussions with Toshiba or creditors.

Noble Group Ltd. abandoned its global commodity-trading ambitions and set out a plan to fall back on its Asian roots as a second-quarter loss of as much as $1.8 billion challenges its survival, Bloomberg News reported. The trading house’s bonds slumped after it warned of a quarterly loss triple its market value and said it would sell almost all of its businesses outside Asia. The announcement all but ends hopes Noble could survive as a major force in global commodities trading by attracting a “white knight” investor to inject fresh capital.

Greece is back as the litmus test of investor faith in the future of the eurozone. But this time, the news is positive, the Financial Times reported. Having been shut out of markets for the past three years, Greece has dipped its toe back into the debt waters on Tuesday with a five-year bond and investors dived in. The yield, or return on the bond, came in at 4.625 per cent — Greece paid 4.95 per cent the last time it issued a bond under the centre-right government of Antonis Samaras in 2014 (yields fall when a bond’s price rises).

Offshore drilling contractor Seadrill again delayed restructuring its $14 billion in debt and liabilities on Wednesday and reiterated that Chapter 11 bankruptcy was likely. Once the biggest offshore rig firm by market value and the crown jewel in the business empire of Norwegian billionaire John Fredriksen, Seadrill shares have fallen 99 percent from a September 2013 peak, Reuters reported. The company's business has struggled as energy firms have slashed investment due to a more than 50 percent fall in the price of crude oil since 2014.

U.K. economic growth remained subdued in the second quarter, as a modest revival in consumer spending offset shrinking industrial production, a sign that a hoped-for shift toward export-led growth remains elusive, The Wall Street Journal reported. Economists say that businesses—particularly exporters—will need to take the baton from consumers squeezed by rising prices if the U.K. economy is to avoid stuttering just as Britain’s exit talks with the European Union get under way.

Germany’s biggest banks have found an unlikely ally in their battle to shake up their sector’s chronic low profitability — the low interest rates that most eurozone banks will lament when they report second-quarter earnings over the coming days. Their long struggle to compete with the higher deposit rates and lower cost services offered by Germany’s army of public sector banks has left the country’s top five banks with low margins and a collective market share of just 30 per cent, the Financial Times reported.

Permanent TSB shares plunged as much as 16 per cent on Wednesday as investors worried about the bank’s plan to resort to loan sales and repossessions to resolve its worst €2.68 billion of mortgages, which will also delay a return to dividends. The 75 per cent State-owned lender reported that its net profit shrank 55 per cent to €36 million in the first half from the year-earlier period, as it took a €6 million charge against bad loans, the Irish Times reported.

The European Central Bank should maintain a "firmly accommodative" monetary policy for an "extended period", the International Monetary Fund said on Tuesday, as it forecast inflation remaining below target. As the ECB prepares for a decision in autumn on whether to claw back its stimulus program, the IMF said calls for an exit from easy-money policy were "premature" because consumer prices were not increasing enough, Reuters reported.