Headlines

Southern European banks are facing the loss of more than 40bn of capital, after the European Commission launched an informal investigation into the deferred tax assets that many have been using to bolster their capital ratios. The EU legislator is requesting information from Greece, Italy, Portugal and Spain on the guarantees they provide on banks' DTAs to determine whether they represent state aid, which is illegal under European law. Most other countries do not provide such guarantees.

China’s new development bank will strive to be corruption free, maintain environmentally sound policies and work with a streamlined bureaucracy, the interim head of the institution, Jin Liqun, said on Saturday, the International New York Times reported. “We are committed to building a lean, clean and green bank,” Mr. Jin told the Singapore Forum, a gathering of Asian business and political leaders.

Creditors of Brazil's OGX Petroleo e Gas, the bankrupt oil company created by tycoon Eike Batista, agreed not to execute payments or guarantees stipulated in a debtor-in-possession (DIP) financing secured in 2014 by the company, Reuters reported. In a filing published on Friday, the company said creditors agreed to convert DIP financing into common shares of OGX as stipulated in the financial agreement. Creditors would refrain from any new judicial demands or ask for early repayment, the filing said.

Greece’s new government may not have achieved much in its first two months, but it did succeed last week in establishing a parliamentary inquiry into the circumstances surrounding the country’s bankruptcy, The Wall Street Journal reported. Oddly, this inquiry will only be allowed to investigate decisions taken since October 2009 following the election that brought George Papandreou’s Pasok government to office.

Greece repaid €450m it owed the International Monetary Fund on Thursday, sending bond yields sliding as investors’ showed relief that it had met its latest debt deadline, the Financial Times reported. Yields on the country’s shortest dated notes declined, with three-year bonds declining 54 basis points to 20.08 per cent and five-year bonds falling 30 bps to 14.98 per cent. The 10-year yield, which moves inversely to its price, slipped 18 basis points to 11.03 per cent. A central bank official confirmed that the payment to the IMF had been made.

Property developer Martinsa Fadesa said on Thursday a court had begun its liquidation, seven years after it became one of the most notable casualties of Spain's real estate crash and filed for bankruptcy, Reuters reported. The liquidation, after a struggle with creditors over a debt pile of close to 7 billion euros ($7.52 billion), is one of the country's biggest ever bankruptcies.

A long-running investigation into Wall Street’s manipulation of interest rates is heading into a stark final chapter as authorities around the globe push Deutsche Bank to pay a record penalty and accept a criminal guilty plea for the unit at the center of the case, the International New York Times DealBook blog reported. Deutsche Bank, Germany’s largest financial institution and one of several banks linked to the gaming of interest rates, is in talks to resolve the case as soon as this month, according to people briefed on the matter.

Investors holding $10 billion of Ukrainian debt have joined forces to develop a restructuring plan for the country’s debt that won’t involve a reduction in the principal value of the bonds, according to financial and legal advisers of the group, The Wall Street Journal reported.

The British bank HSBC said on Thursday that it had been placed under formal criminal investigation by French magistrates examining whether its Swiss private bank assisted wealthy clients to avoid taxes, the International New York Times reported. Investigating magistrates in France have been conducting an inquiry into whether HSBC Private Bank (Suisse) helped individuals avoid their tax-reporting requirements from 2006 to 2007. In November, the Swiss private banking unit was separately placed under formal investigation.

Canadian oil and gas producer Calvalley Petroleum Inc said on Thursday it will liquidate and restructure due to the political crisis in Yemen, where it has almost all of its operations, Reuters reported. The Calgary-based junior has a 50 percent working interest in a block in Yemen's Sayun-Masila Basin, producing 3,700 barrels per day gross, but was forced to shut down production on Tuesday as conflict in the Middle Eastern country escalated. The block is owned by the Yemeni government.