Headlines

Greece should have a precautionary credit line to help it regain normal access to bond markets, the head of the IMF said Thursday, The Wall Street Journal reported. “The country would be, in our view, in a better position if it had precautionary support,” International Monetary Fund Managing Director Christine Lagarde said in a news conference. The IMF’s precautionary facilities give countries access to a credit line that can assure investors the country can pay its obligations, keeping borrowing costs down.

Shanghai Chaori Solar Energy Science & Technology Co., which earlier this year became the first Chinese company to default on its domestic corporate bonds, plans to bring in a new controlling shareholder and two bond guarantors, The Wall Street Journal reported. The bond guarantors will likely honor the bond’s full payments, both in principal and interest. Developments at Shanghai Chaori—which failed to pay most of its bond interest in March—are being closely watched.

Eurozone banks need a fundamental overhaul of their business models, the International Monetary Fund warned on Wednesday, saying lenders were still not in a position to be “athletes” supporting economic recovery six years after the financial crisis, the Financial Times reported. In its twice-yearly Global Financial Stability Report, the fund said banks in the single currency area needed to increase the cost of some of their lending and might have to retrench further than they had already to be in the position to support business investment.

Stakeholders have approved a controversial but essential step in U.S. Steel Canada Inc.’s bankruptcy protection process, allowing the company to move ahead with a restructuring that could result in the sale of its Canadian operations, the Financial Post reported. After several days of intensive behind-the-scenes negotiations — “virtually 24 hours a day,” according to U.S. Steel Canada lawyer Paul Steep — an agreement was reached Wednesday on a $185-million loan that will allow the company to continue operations during the restructuring process. The loan will come from U.S.

Trade-only bed bank Transhotel has entered a three-month voluntary administration period as it seeks a buyer to resolve cash-flow issues, Travel Weekly reported. The bed bank, based in Spain, is continuing to trade and will honour bookings. It is in the process of contacting all travel agent and supplier partners to reassure them bookings are safe and to avoid any “knee-jerk reaction” in the trade. Under Spanish law, a company can put itself into voluntary administration for three months to get its finances back in order or prior to closing down.

A year after the epic collapse of his industrial empire, Brazilian tycoon Eike Batista's financial and legal troubles appear far from over, Reuters reported. Once worth more than $30 billion and listed as the world's eighth-richest man by Forbes Magazine, Batista says his debts now exceed his assets by $1 billion and the value of his remaining stakes in the oil, shipbuilding, mining and transportation companies he founded continues to shrink. Batista also faces criminal and regulatory investigations into suspected insider trading and fraud.

The House of Representatives on Tuesday passed the new Insolvency Bill, repealing the current Bankruptcy Act and creating a legal environment for the use of insolvency laws, the Jamaica Observer reported. Jamaican law on bankruptcy and insolvency is currently contained in two pieces of legislation: the Bankruptcy Act, which covers personal and individual insolvency (inability to pay debt); and the Companies Act, which contains provisions to deal with the winding up of insolvent corporate bodies. The new act consolidates those provisions.

The European Central Bank has raised concerns over legal changes in several countries that allow banks to continue using tax assets to boost their capital buffers, a practice that was meant to be phased out under new European Union rules, The Wall Street Journal reported. The ECB worries that the changes in Italy, Spain, Portugal and Greece expose taxpayers in those countries to risks in case the banks run into trouble in coming years.

Two independent directors on the board that oversees HSBC’s British business may leave the bank over stricter rules aimed at holding bankers more accountable for reckless actions that may lead to the failure of a lender, according to a person with direct knowledge of the matter, the International New York Times DealBook blog reported. Alan Thomson, a member of the audit and risk committees at HSBC Bank, has tendered his resignation and will leave the bank later this month, said the person, who was not authorized to discuss the matter publicly.

The largest global banks will have to hold more capital and liabilities than previously reported that can automatically be written off in a crisis -- as much as a quarter of risk-weighted assets -- as regulators take on lenders deemed too big to fail. The Financial Stability Board is developing minimum standards that will limit the double-counting of capital banks use to meet existing international rules, according to an FSB working document sent for comment to Group of 20 governments and obtained by Bloomberg News.