Headlines

The world’s most-profitable banks have never been so unloved by stock investors, Bloomberg News reported. China’s four-biggest lenders, which reported $126 billion of earnings in the 12 months through September, sank to the lowest valuations on record in Hong Kong trading yesterday. The MSCI China Financials Index dropped to an almost decade low versus the global industry benchmark while the market value of Industrial & Commercial Bank of China Ltd., the nation’s largest lender, fell below net assets for the first time on March 12.

The European Union published plans for tougher policing of securities used to pay banker bonuses in a bid to ensure that employees share the pain if a lenders’ performance dips, Bloomberg News reported. Proposals approved today by the European Commission would require debt used in employee bonus payments to convert into ordinary shares or be written down when a bank gets into difficulties. The measures also include safeguards to prevent bank staff from benefiting from better terms than other investors, the Brussels-based institution said in a statement.

The Hungarian central bank Thursday fined 35 banks in an effort it said was to protect consumers after most banks managed to pass on to clients a large share of the extra tax burden the Fidesz-party government levied on the banking sector in 2013, The Wall Street Journal Emerging Europe Real Time blog reported. The National Bank of Hungary imposed a total of 1.2 billion forints ($5.3 million) on the banks for unilaterally changing their services fees, which–the central bank claimed– increased costs for customers.

Home builder Corporación Geo SAB is preparing to file for bankruptcy protection in Mexico as early as Thursday to restructure a roughly $1.5 billion debt load that has brought its output to a near-standstill, people familiar with the company's plans said, The Wall Street Journal reported. Geo, hurt by problems in Mexico's low-income housing sector, is preparing to file a streamlined bankruptcy in a Mexican court. The company is in talks with a creditor group on a $200 million to $300 million loan to fund its restructuring, some of these people said.

A disproportionate number of ACT companies, including those in construction, are going broke because they are under-capitalised, according to liquidator Eddie Senatore, who has more than 25 years' experience in insolvency, The Canberra Times reported. This occurs when a company cannot afford operational expenses because of a lack of capital. For the ACT, the problem accounts for 16 per cent of insolvencies, almost twice the national average at 9 per cent.

Applying English legal solutions to the debt problems of a continental European company became a regular feature of the financial crisis, the Financial Times reported in an analysis. Since 2009, lawyers have often opted to move a company’s “centre of main interest” (COMI) to England, enabling a scheme of arrangement to be applied. This allows a company to restructure its debt with only 75 per cent of each class of lender agreeing, carrying recalcitrant minority lenders along with the deal.

Codere SA creditors said changes to Spain’s insolvency laws support its offer to restructure 1.1 billion euros ($1.5 billion) of debt that was rejected by the Spanish gaming company, Bloomberg News reported. New bankruptcy rules came into effect on March 7, making it easier for troubled companies to avoid liquidation. The legislation encourages debt-for-equity swaps by threatening to make shareholders liable if they “unreasonably withhold” consent, Codere’s bondholders wrote in a letter to the company’s board of directors today.

Two months before Mt. Gox filed for bankruptcy it was sued by a customer seeking the return of funds in a case that highlights some of the red flags raised in the run-up to the collapse of what was once the world's biggest bitcoin exchange, Reuters reported. New York resident Marko Simovic filed a civil action at the Tokyo District Court on Dec. 24, seeking to recover $105,000 he had on deposit at Mt. Gox and about $14,000 in interest, court filings show. Simovic, who described himself as a software developer who previously managed the bitcoin operations for a hedge fund, said Mt.

Italian Prime Minister Matteo Renzi unveiled plans to make €10 billion ($13.9 billion) in cuts to payroll taxes and a further €2.4 billion in business-tax cuts, his first effort to deliver on promises to overhaul Italy's sclerotic economy, The Wall Street Journal reported. Mr. Renzi also pledged on Wednesday to pay €68 billion in overdue bills by the state by the summer, a move that has helped lift the economy in other Southern European countries such as Spain. Mr. Renzi, however, didn't immediately provide details on how the arrears payments would be financed.

France is proposing to overhaul bankruptcy rules for the second time in four years to speed up restructuring procedures and give creditors greater powers, Bloomberg Businessweek reported. The measures make it simpler for companies to negotiate with lenders using a court-appointed mediator under a process known as ‘conciliation,’ according to an e-mailed statement from the Ministry of Justice. Under the proposals, businesses will also have to consider alternative restructuring plans put forward by lenders and there will be greater protection for rescue financing offered by investors.