Headlines

Mario Draghi has hit back against German criticism of the European Central Bank’s interest rate policy, saying low borrowing costs were symptomatic of a glut in global savings for which Germany was partly to blame, the Irish Times reported. The ECB president’s argument on Monday is a new line of defence against strong objections from German politicians, bankers and the media over the ECB’s decision to lower its benchmark main refinancing rate to zero. The ECB also has a deposit rate of minus 0.4 per cent, which works as a tax on lenders’ reserves held at the central bank.

New World Resources' (NWR) loss-making coal mining division OKD will have to file for insolvency unless the government can agree a deal with its owners to take the company over at a lower price, Czech Industry Minister Jan Mladek said on Monday. NWR has already said the coal mining group will run out of money by the middle of May and will need to file for insolvency before that unless the government and creditors agree a deal soon. The coal miner, which employs around 13,000 people, has been hit by low prices and weak demand.

China’s banking regulator is cracking down on financial engineering that Chinese banks have used to disguise trillions of dollars in risky loans as investment products, the Financial Times reported. The clampdown, which will force banks to make provisions they previously avoided by disguising loans as investments, is designed to deflate one of the fastest-growing areas of the vast shadow banking apparatus, where bad debts are increasing.

More Brazilian companies will face increasing liquidity risk through next year as rising borrowing costs and the harshest recession in decades hamper their ability to service debt, Moody's Investors Service said on Monday, Reuters reported. A Moody's team of analysts led by Erick Rodrigues said in a report that the number of companies facing high funding risks rose to 33 percent last year, from 28 percent in 2014. More debt is maturing than companies can generate cash to make payments, while banks are refinancing fewer loans, the analysts said.

Paymill, a one-stop solution which enables merchants to easily accept credit and debit cards, announced it made the decision to go for a preliminary insolvency in self-administration. With this decision, the German online payment provider hopes to bring the merger and acquisition negotiations to a successful result, Ecommerce News reported. There were already some rumors about Paymill filing for bankruptcy in the German media, but the online payment provider chose to share the news itself on the company’s blog.

The world’s biggest sovereign wealth fund is launching a crackdown on executive pay, targeting high salaries at companies around the globe in an attempt to exert its influence in a debate that has been gathering pace in recent months. Norway’s $870bn oil fund, which has previously refused to interfere in how much chief executives are paid, has decided that its position is untenable and is looking for a first company to target publicly on pay in the coming months, the Financial Times reported.

Until recently, Mozambique appeared to be riding a natural gas-fuelled wave, with predictions of vast riches filling the coffers of the impoverished southern African nation. Today, the country is facing what analysts describe as its worst crisis since a civil war raged more than 20 years ago, triggered by revelations that state entities borrowed $1.4bn — equivalent to 10 per cent of gross domestic product — in previously undisclosed loans. The saga is being described by observers as one of Africa’s worst cases of hidden borrowing in recent years.

Alberta’s remorseless economic pain has the province leading the nation in increased insolvency, with an 18.1 per cent jump in 2015 over the previous year, The Calgary Herald reported. Among major cities, consumers in a Calgary broadsided by slumping oil prices were the hardest-hit, with a 19.2 per cent hike in bankruptcy and those renegotiating their debts, says Statistics Canada. In contrast, there was a six per cent decrease in insolvency among consumers in Toronto, highlighting a dramatic west to east shift in economic fortunes.

When British Prime Minister David Cameron decided to call a referendum on the U.K.’s membership in the European Union, he did so in the belief that it would settle the question once and for all. Deep divisions over the issue in Britain and within Mr. Cameron’s own party were undermining not only the U.K.’s relationship with the EU, but the stability of the EU itself. Confident he would win, Mr. Cameron believed the referendum would heal the division in the Conservative Party and allow the U.K.

Argentina could issue $30bn in debt this year, as other issuers seek to mimic the government's success in returning to international capital markets with a blockbuster bond sale last month. First out of the gates will be Argentina’s provincial governments, expected to issue at least $4bn this year, the Financial Times reported. They hope to take advantage of rekindled investor interest in a country isolated from bond markets by a protracted creditor dispute, which was triggered by a 2001 default on almost $100bn of debt. “Argentine debt represents an extraordinary opportunity.