Headlines

Unease about how far below zero the European Central Bank can cut interest rates without ravaging the region’s lenders is set to play an important role in policymakers’ discussions on further monetary loosening, with top officials mooting a change to the way they set borrowing costs, the Financial Times reported. The topsy-turvy world beyond the zero bound became apparent in recent weeks when European bank stocks plunged on fears negative rates have eaten into their profitability.

Rajah & Tann Singapore LLP, Southeast Asia’s largest law firm, reckons the region’s rising bond defaults will inflict as much pain on creditors as the financial crises of 2008 and 1998, Bloomberg News reported. As distress spreads from shipping to mining and retail to construction industries, the law firm said in an interview that recovery rates will be similar to those seen in the global credit meltdown and Asian financial crisis.

Brazil’s real weakened after inflation surprisingly accelerated and as Goldman Sachs said the currency is poised to drop another 11 percent this year while the government struggles to contain consumer-price increases and shore up its budget, Bloomberg News reported.

After winning a victory in its decade-long battle with a group of US hedge funds in a New York court, attention now switches to Argentina’s congress. Judge Thomas Griesa said on Friday that he would lift a controversial financial blockade preventing Argentina’s access to the international capital markets, the Financial Times reported.

Sete Brasil Participações SA plans to file for bankruptcy protection if state-controlled oil producer Petróleo Brasileiro SA, the rig builder's sole client, fails to present a final lease contract proposal in a week's time, three sources with direct knowledge of the matter said on Friday, Reuters reported. Both Sete Brasil and Petrobras declined to comment.

Moody’s has given troubled Spanish renewable energy group Abengoa a small but much needed vote of confidence at a crucial stage in its fight for survival, saying its underlying operating business is still “viable” although the ratings agency also acknowledges that the company could still end up insolvent, fastFT reported. Abengoa spelled out earlier this week that it needs €826m of cash this year to stay on its feet, plus a further €304m in 2017. These sums don’t include contributions from sales of assets.

The new insolvency law, which entered into force in mid-2014, has reduced the number of businesses that entered insolvency, Romania-Insider reported. Just over 9,100 companies became insolvent last year, compared to over 19,000 in 2014, and 23,000 in 2013. In the first half of 2014, when the old insolvency law still applied, over 17,000 companies entered insolvency. The number dropped to 2,200 insolvency procedures in the second part of 2014 after the new law was introduced, reports local Profit.ro. The law limits the possibility to declare insolvency under any conditions.

The pay deals handed to the bosses of Britain’s biggest banks will be in focus this week when they report their results for 2015, at a time when bank shares have been hit by fears of renewed financial crisis, The Guardian reported. Investors will be scrutinising the bonuses handed out staff - it has already been calculated the major high street banks could hand out £5bn between them - and the dividends paid out to shareholders.

Google moved €10.7 billion through the Netherlands to Bermuda in 2014, as part of a structure which allows it to earn most of its foreign income tax free, the Irish Times reported. Accounts for Google Netherlands Holdings published on Thursday show the unit transferred almost all its revenue, mainly royalties from an Irish affiliate through which most non-US. revenue is channelled, to a Bermuda-based, Irish-registered affiliate called Google Ireland Holdings. The tax strategy is known to accountants as the “double Irish, Dutch Sandwich’.

India’s place as an emerging market bright spot is under threat from simmering troubles in a banking system weighed down by bad loans, the Financial Times reported. The signs of distress are clear. Last week, Reserve Bank of India governor Raghuram Rajan warned Indian lenders to brace for a year of “deep surgery” as a balance sheet clean-up began. Shares in state-backed banks, which control roughly three quarters of assets, have plunged. Financial results have been brutal too.