Headlines

A Mexican judge said on Monday he had approved the debt restructing plan for Mexican homebuilder Geo, which entered into bankruptcy protection in April 2014, Reuters reported. The judge said bankruptcy protection for Geo and four of its units was over, according to a court statement. A ruling has not yet been issued for Geo's 11 other subsidiaries. The company's shares have been suspended since 2013 because it was not reporting financial statements.

Since Iceland's banking system collapsed in late 2008, the small island state has served as a pioneering counter example to Europe's way of handling a debt crisis. When Icelandic banks, which had grown to 10 times the country's annual income, could no longer refinance their debt, Reykjavik did three things. It restructured the banks, letting creditors fight for the scraps while new banks continued to serve the local economy; it let the currency plummet; and it imposed foreign exchange controls, preventing foreigners from repatriating their investments en masse.

For years, central bankers have treated the fabled interest rate known as the “zero lower bound” as if it were a physical barrier. Like the notion that temperatures cannot fall below absolute zero, policy makers thought they could not impose negative borrowing costs, as depositors would simply withdraw their money and hoard the cash. However, as the risk of deflation has pushed central banks in the eurozone, Denmark, Sweden and Switzerland to venture below zero, the question has shifted from whether negative rates are possible to how low they can go, the Financial Times reported.

Uchumi Supermarkets Ltd., Kenya’s only publicly traded retailer, fired two top executives amid a forensic audit and announced plans to hire a management consultancy to review its business strategy. The stock slumped. Chief Executive Officer Jonathan Ciano and Chief Financial Officer Chadwick Okumu were relieved of their duties, while Human Resources Manager Michael Kibe was suspended, Chairwoman Khadija Mire told reporters Monday in the capital, Nairobi.

Talks aimed at reaching an 11th-hour deal between Greek ministers and their bailout creditors collapsed on Sunday evening after a new economic reform proposal submitted by Athens was deemed inadequate to continue negotiations, the Financial Times reported. The breakdown is the clearest sign yet that differences between the two sides may be too wide to breach, increasing the possibility that Athens will not secure the €7.2bn in bailout aid it needs to avoid defaulting on its debts — including a €1.5bn loan repayment due to the International Monetary Fund in just two weeks.

Germany's finance ministry denied a report on Saturday that its officials were working on a plan to allow an orderly debt restructuring for any country that becomes insolvent, Reuters reported. German magazine Der Spiegel had reported that Finance Minister Wolfgang Schaeuble asked officials to draft plans for a system of debt restructuring for any insolvent country so that it could stay in the euro. Greece is negotiating for loans in exchange for reforms so that it can repay debts due in the coming weeks and avoid default.

Leading German industrialists have sounded the alarm over the European Central Bank’s move to drive down interest rates, warning that cheap money is causing volatility and could create “another bubble”, the Financial Times reported. Wolfgang Buechele, chief executive of Linde, the industrial gas and plant engineering group, told the Financial Times: “You hear from national bankers and the ECB that we have to focus in the future on managing bubbles.

The Chinese government risks “real damage” to the economy if it does not hasten reform of China’s state-owned enterprises and overhaul a debt-fuelled growth model, Hank Paulson has warned, the Financial Times reported. For more than two decades the former US Treasury secretary and Goldman Sachs chief has worked closely with pivotal Chinese political figures such as Wang Qishan, currently head of the Chinese Communist party’s anti-graft bureau, and visits Beijing frequently.

Alberta's online university is facing a financial crisis, but the president is reassuring students that the institution will not be closing down, CBC News reported. According to an internal report, Athabasca University (AU) will be insolvent in two years. The report was prepared by a task force struck by Peter MacKinnon, the interim president of the university. Enrolment demographics are behind the university's troubles, MacKinnon said. Provincial funding has dropped from covering 80 per cent of operating expenses at Athabasca to closer to 30 per cent. The rest comes from student tuition.

The State Savings Bank of Ukraine reached an agreement with a creditor group to restructure $1.3 billion of debt even as talks over the nation’s sovereign debt remain deadlocked, Bloomberg News reported. AT Oschadbank, as the lender is known, agreed with creditors holding about half the debt to extend maturities on its 2016 and 2018 dollar-denominated bonds and a 2017 subordinated loan by seven years and to raise coupons on all three securities, the bank said in a statement on its website. Principal will be repaid in installments starting 2019, according to the statement.