Headlines

Sounding warnings that could have been made 20 or even 30 years ago, one of China’s most renowned economists said the country’s economy faces a “very difficult” year as it continues confronting a host of problems that have intensified over the past decade, the International New York Times Sinosphere blog reported.

British and Dutch authorities have reignited the controversial dispute over the collapse of online lender Icesave at the height of the financial crisis in 2008 by filing a lawsuit for up to IKr1,000bn (£5.6bn) against Iceland’s bank guarantee fund, the Financial Times reported. Iceland’s guarantee scheme, TIF, said on Monday that the UK was seeking IKr452bn while the Netherlands wanted IKr104bn. Both countries are also seeking interest and costs in the five-year-old dispute.

Austria scrapped its plan to have healthy commercial lenders back a "bad bank" for toxic assets at nationalised Hypo Alpe Adria and will look now at creating its own wind-down vehicle, which would increase state debt, officials said, Reuters reported. Resistance from other banks and problems with setting up a bad bank in a way that would keep its debt off state books under European rules scuppered the plan, Finance Minister Michael Spindelegger said after a high-level meeting at the chancellery on Monday.

An English subsidiary of troubled building group, Siac, is seeking court protection from its creditors, according to reports, the Irish Times reported. West Sussex-based Graham Wood Structural, owned by the Irish building group, has filed notice of its intention to appoint administrators. Such a move means that it will get protection from any legal action by creditors seeking to recover their debts from the company. Graham Wood specialises in complex structural steel projects. The business lost £1.5 million in 2011 and £1.2 million in 2012.

OSX Brasil SA, the shipbuilding and ship-leasing company controlled by businessman Eike Batista, said in a regulatory filing on Monday that it was in talks with bondholders over the lease terms of an oil production ship, Reuters reported. The ship, OSX-3, is a floating production, storage and offloading vessel that is handling oil and gas output from the Tubarão Martelo offshore oil field east of Rio de Janeiro owned by Batista's Óleo e Gás Participações SA. Oleo e Gas filed for Latin America's largest-ever bankruptcy protection on Oct. 30.

The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability, RT.com reported. “Intensification of political and economic stress is such that default on government debt becomes probable,” Fitch said in an e-mail. On the brink of default, the Ukrainian economy has taken a further beating as protests drag on in the capital Kiev. Foreign debt is $140 billion, nearly 80 percent of the country’s gross domestic product.

Julius Malema, the leader of a party that advocates nationalizing South Africa’s mines and banks, was provisionally declared insolvent, a ruling that may prevent him from being elected to Parliament, Bloomberg News reported. The North Gauteng High Court issued the ruling today, Adrian Lackay, a spokesman for the South African Revenue Service, said by phone from Pretoria, the capital. “He has the opportunity to contest the sequestration order before it is made final on May 26,” he said.

Creditors agreed to the terms of $215 million in funding for Eike Batista’s Oleo & Gas Participacoes SA that will strip control from the former billionaire, the oil company said in a statement, Bloomberg News reported. The arrangement with the company’s bondholders entails subsidiary OGX’s issuance of debentures in two tranches, with the first $125 million expected in mid-February.

Eurozone banks are facing a new capital black hole of as much as €50bn (£42bn), according to one of the UK’s most respected financial analysts, The Telegraph reported. Davide Serra, the chief executive of Algebris, who advises the Government on banking, said that this year’s stress tests by the European Banking Authority and the European Central Bank were likely to find fresh problems in the eurozone banks. He said that Germany had one of “the worst banking systems in the world” and that three or four regional Landesbanken were likely to be wound up.

Austria's finance minister no longer rules out letting nationalised lender Hypo Alpe Adria go bust, he told a newspaper, softening his earlier position, Reuters reported. Michael Spindelegger said he would still prefer to get commercial banks to support a "bad bank" that would absorb toxic assets from Hypo, which Austria had to nationalise in 2009, but said he would now consider other options. "If no solution is found with the banks, nothing is ruled out. For me, it's about finding the most favourable solution for taxpayers.