Headlines

A new approach to managing China’s corporate debt burden may offer temporary relief for banks but spell further difficulties for the country’s economy: having deeply troubled companies use stock to pay overdue loans, the International New York Times reported. Early evidence of the strategy emerged late Thursday, when a heavily indebted Chinese shipbuilder disclosed that it would issue equity to its creditors, instead of repaying $2.17 billion in bank loans.

The ECB has cut its main interest rate to zero, taking the financial markets by surprise as it unveils a major efforts to boost the euro zone economy, the Irish Times reported. As well as cutting its main refinancing rate to zero, it has cut the rate it pays banks to deposit money with it and announced an aggressive expansion of its quantitative easing programme. The ECB also announced that more corporate bonds from the non-financial sector would qualify for the programme and also the provision of additional long-term finance to banks at low cost.

Worldview Capital, the dissident shareholder in Petroceltic International that has battled its board for more than a year, has emerged in prime position to gain control of the troubled exploration company after doing a deal with its banks to buy a majority of its $232 million debts, the Irish Times reported. The Cayman Islands-registered fund, run by former investment banker Angelo Moskov, has told the stock market it bought has 69.44 per cent of the senior debt at at “a significant discount to face value”.

Iran’s central bank is preparing to set up a “bad bank” to cleanse its financial system of a vast pile of toxic loans after studying the models used by other countries, such as Sweden, Japan and South Korea. The plans were part of an array of reform measures designed to bolster the country’s economy presented by a senior central bank official at the Financial Times’ inaugural Iran summit in London on Wednesday.

Chinese officials are trying anew to slow a money exodus from the country, clamping down on individuals seeking to flee the yuan and making life tougher for companies that need to trade the currency for dollars to do business, The Wall Street Journal reported. China’s foreign-exchange regulator in recent months has deployed a new system to monitor individual purchases of foreign funds and has asked banks to reduce foreign-currency transactions.

EON, Germany’s largest utility, reported its biggest annual loss after writing down the value of its coal and gas-fired power plants by billions of euro. Its net loss more than doubled to €7 billion in 2015 from a year earlier, the company said. That was worse than the consensus figure among analysts for a €6.4 billion loss. Germany’s shift to renewable energy is hurting utilities as solar and wind plants get priority access to the grid, squeezing margins at traditional coal and gas-fired stations.

European Union authorities on Wednesday warned six countries including Spain and Italy that their budget plans for the coming years risk breaking the European Union’s spending rules and called on them to take measures to reduce their deficits, The Wall Street Journal reported. The warnings, which are part of a process aiming to ensure eurozone economies keep their public finances in order, come at a time when several European countries such as Italy have called for more flexibility within the rules, arguing that they can hold back the bloc’s flagging economies.

Migrant workers are the unsung heroes of China’s economic miracle. Numbering more than 270 million, they abandon their impoverished farms and villages to move to the cities, where they run the factories and build the highways and high-rises that have made China’s growth the envy of the world, the International New York Times reported. Now, as China’s economy slows, the country’s leaders have a new mission for them: Buy homes. China is looking for ways to get migrant workers to help buy up a huge glut of unsold homes that is dragging down the country’s economic growth.

Poland's prime minister has dismissed Deputy Finance Minister Konrad Raczkowski, the finance ministry said on Wednesday, over his comments that a few small lenders were destined to fail, Reuters reported. "We can confirm that Raczkowski has been dismissed by the prime minister," the ministry's press office said. Earlier this month, Raczkowski said that a few small Polish lenders were "toxic" and would go bankrupt later this year. In response, the financial regulator KNF said the banking sector was stable and effective.

Two of Greece’s biggest lenders are being probed by the eurozone’s banking watchdog in connection with last year’s €14.4bn recapitalisation of the sector, which was as a condition of Greece’s latest international bailout, the Financial Times reported. Piraeus Bank, the country’s largest lender, and Attica Bank, its fifth-largest, are under scrutiny by the European Central Bank’s single supervisory mechanism in its first audit of Greek financial institutions since it was set up in 2013.