Headlines

Primož Kozmus is a Slovenian national hero lionised for tossing a hammer to double Olympic gold. Soon he might be forced to honour his Alpine homeland another way: sacrificing his personal fortune to help avert a eurozone bailout, the Financial Times reported. Slovenia’s banks are in such a dire state that Mr Kozmus is almost certain to face a so-called haircut, which will slice through the more than €100,000 of junior bank bonds he bought during Slovenia’s heady credit boom. “The money was safe and then they changed the rules,” said Mr Kozmus.

The main banks have agreed a protocol to deal with legacy small and medium enterprise (SME) debt that they are planning to implement from January 2nd. Agreed under the auspices of the Irish Banking Federation, the protocol will deal with SMEs who are multi-banked – have loans with a number of lenders – and in arrears with their debts, the Irish Times reported. Details of the protocol emerged at the IBF’s annual conference yesterday. IBF president John Reynolds said Irish banks were “committed” to tackling legacy SME debt to help these companies become viable again.

Britain faces a timebomb as the cost of living crisis forces more people into crippling debt they will not be able to repay, according to a major study published today. The Centre for Social Justice (CSJ) think tank, founded by Iain Duncan Smith in 2004, warned that two of the flagship policies he is implementing as Work and Pensions Secretary - the “bedroom tax” and universal credit - could plunge more people into debt. It revealed that more than 5,000 people are already being made homeless each year because they cannot pay their mortgage or rent, The Independent reported.

Dutch telecoms group KPN said on Tuesday that it had reached a tentative agreement to pay 50 million euros ($67.6 million) to settle litigation related to the bankruptcy of its former joint venture KPNQwest, Reuters reported. KPNQwest, a wholesale fibre-optic telecoms venture between U.S. phone carrier Qwest, since acquired by CenturyLink, and KPN for corporate customers, was listed in 1999 but went bankrupt in 2002 after the telecoms and technology bubble burst. The trustees accused KPNQwest of mismanagement and held its shareholders liable for damages. It had been seeking 2.2 billion euros.

When liquidators closed the books on the Bank of Credit and Commerce International case in May, a 21-year-old scandal that shook the global financial system and ensnared arms dealers, dictators and even the CIA appeared to be over. Earlier this month, however, creditors of the failed bank got the go-ahead from a judge in Luxembourg to partially reopen the case and make one last attempt to collect $326 million from Saudi Arabia, The Wall Street Journal Middle East Real Time blog reported.

Italian banks are preparing to sell nearly a quarter of their problem loans by 2017 thanks to a balance sheet clean-up spearheaded by the Bank of Italy that is tempting specialist investors back into the market, Reuters reported. Bad debts held by Italian banks have doubled since 2010 to 145 billion euros ($196 billion), a product of the country's longest recession in 60 years. But this has also exacerbated the country's economic plight as banks have had to set aside more cash for bad loans rather than lend to companies and consumers.

The OECD, the international body that ranked Canada’s housing market as among the world’s frothiest, warned today of the threat of a “disorderly correction” in prices given the record debt burden among Canadian families, The Globe and Mail reported. In its semi-annual economic outlook, the 34-country group said the market will probably weaken “since the housing stock seems greater than underlying demand,” but that the federal government may be forced to intervene again should price pressures emerge.

The research churned out by the Bank of England’s financial-stability wing usually focuses on where strange new risks might lurk in the financial system, or how to safely dismantle stricken banks, The Wall Street Journal Brussels Beat blog reported. A new paper, published Tuesday, instead takes aim at how authorities deal with stricken countries, and suggests that repayment terms of government bonds should be linked to a country’s economic performance.

The taxpayer will step in to cover half of a private pension fund if both the pension fund and the employer become insolvent, the Irish Examiner reported. New pensions rules being brought forward by the government will see the State cover half of the deficit in a pension fund if the employer is closing down. The rules are an attempt to avoid a repeat of the Waterford Crystal case where workers had to go to the European Court of Justice to secure their pensions.

The staggering tax burden is a big part of the reason Italy's output has grown the least over the last decade of any of the 34 countries in the Organization for Economic Development and Cooperation, The Wall Street Journal reported. Now with the economy still sputtering and jobless rates at their highest since the 1970s, there is growing apprehension at home and abroad that Italy's tax model is crushing the country's prospects for recovery.