Headlines

Germany’s highest court ruled on Tuesday that the country’s government may participate in a fund set up to help financially stricken countries in the euro zone, the International New York Times reported. The decision is a defeat for skeptics of the euro and removes lingering doubts about whether Germany will contribute resources to a rescue fund that has been crucial to the survival of the euro zone.

Greece has reached a deal with international lenders on a range of structural reforms that will allow it to unlock a much-needed €10bn tranche of bailout aid, the Financial Times reported. The agreement was reached after an all-night bargaining session and brought an end to more than six months of gruelling negotiations that were slowed by resistance from local interest groups ranging from fresh milk producers to pharmacists.

The looming bankruptcy of a Chinese developer owing billions of yuan to domestic banks has raised worries that a softening property market is heightening risks for the financial system, Reuters reported. But the localised focus of the firm, and the nuanced reaction of investors, shows that financial markets are not pricing in the bursting of a real-estate bubble just yet. Government officials told Reuters on Tuesday that Zhejiang Xingrun Real Estate Co, based in the coastal city of Ningbo in Zhejiang province, is on the brink of bankruptcy.

With a little over a year to go until the next general election, the U.K. government's austerity program was supposed to be entering its final year around now. Instead, U.K. Finance Minister George Osborne on Wednesday is expected in his twice-yearly budget speech to confirm that spending cuts will be needed until well beyond the next election, The Wall Street Journal reported. When he became Chancellor of the Exchequer in mid-June 2010, Mr.

Struggling Colombian banana marketer Banacol announced a financial restructuring plan last week in a bid to deal with mounting financial pressures, FruitNet.com reported. According to a report in Elcolombiano.com, the company is facing debts of US$184m resulting from high production costs, low banana pricing and a poor exchange rate. The company’s assets are valued at US$209m. The Colombian government has appointed a supervisory body to oversee the reorganisation of Banacol’s finances.

The board of OSX Brasil SA, the shipbuilder controlled by former Brazilian billionaire Eike Batista, approved key terms of the restructuring plan for its leasing unit, according to a filing on Tuesday, Reuters reported. Last week the unit, OSX 3 Leasing BV, reached a preliminary agreement to pay creditors more interest on $500 million of defaulted bonds, and said it would retroactively raise the coupon to 13 percent from 9.25 percent. The plan still needs formal approval from creditors.

A Chinese property developer owing 3.5 billion yuan ($566.52 million) to banks and individuals is teetering at the edge of insolvency, and its owner has been detained for illegal fund-raising, domestic media reported, citing local officials, Reuters reported. Zhejiang Xingrun Real Estate Co, based in Fenghua in eastern Zhejiang province, owes 15 domestic banks 2.4 billion yuan, state-owned China News Services reported. The company illegally raised most of the remaining funds from 98 individual investors, according to the report on Monday. Private fundraising is common but illegal in China.

France and Germany are squabbling over who should foot the bill for Europe’s banking union, with Paris fearing its banks will pay the biggest share towards a €55bn rescue fund, the Financial Times reported. As the EU enters a potentially decisive week in talks on a central system for handling bank crises, France is fighting plans to make its sector of big universal banks the leading contributors to the common insurance plan.

Pet supply store Petcetera said Monday it plans to file for creditor protection in hopes of restructuring its operations, The Calgary Herald reported. The retailer, which has 18 stores across the country, also said it will cut the price on everything in its stores to help generate cash while it files its notice of intention to make a proposal under the Bankruptcy and Insolvency Act. Petcetera has more than 300 employees in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia.

Hungary’s top court Monday ruled that lawmakers can adopt legislation allowing retroactive changes to foreign-currency loan contracts, but the changes must take into account the interests of both the borrowers and lenders, The Wall Street Journal Emerging Europe Real Time blog reported. Foreign-currency loans–mainly mortgages tied to the Swiss franc–were hugely popular before the financial crisis because they were much cheaper to service than local-currency loans.