Headlines

More than 1,000 creditors of the European operations of failed U.S. investment bank Lehman Brothers will share a 3.5 billion pound ($5.5 billion) payout next week, its administrators said on Thursday, Reuters reported. The payout means the recovery so far for creditors from one of the banking collapses at the heart of the 2008 financial crisis is 68.5 cents in the dollar. PricewaterhouseCoopers, joint administrators for Lehman Brothers International (Europe), said a dividend of 43.3 percent of what creditors were owed - the second so far - would be paid on June 28.

Ulster Bank remained silent yesterday on reports that the UK government will consider hiving off some of its problem assets as part of a wider solution to the financial difficulties of its parent group, Royal Bank of Scotland. “We will have to see the proposals before making comment on them,” a spokeswoman told The Irish Times.

Austrian construction group Porr has abandoned for now a 150 million euro ($201 million) bond issue planned for the start of July after peer Alpine filed for insolvency, Chief Executive Karl-Heinz Strauss said on Thursday. The move by Alpine Bau, the Austrian construction unit of Spanish group FCC, meant Porr would not now be able to sell the bond at the interest rate it wanted, he told Reuters in an interview. "We have postponed our bond plan indefinitely," he said.

Alpine Holding GmbH, the Austrian builder owned by Fomento de Construcciones & Contratas SA, started a 2.56 billion-euro ($3.4 billion) insolvency today, the country’s biggest failure since World War II, Bloomberg reported. Alpine Bau, the company’s operating unit with businesses in Austria, Germany and eastern Europe, filed for insolvency at Vienna’s commercial court today, credit protection association Kreditschutzverband von 1870 said in a statement. Alpine Holding’s insolvency filing is expected to follow in the next few days, KSV said.

Europe is crafting new rules for winding down struggling banks that are meant to avoid any more expensive, taxpayer-funded bailouts as well as the financial panics triggered by surprise losses, such as those suffered by savers over the past year in Spain and Cyprus, The Wall Street Journal Brussels Beat blog reported. But with several countries demanding the right to shield entire classes of bank creditors from getting burned during a failure, the new rules may keep the European Union close to its status quo: The haves bail out, while the have-nots bail in.

Slovenia’s recently formed Bad Asset Management Company, or DUTB, will receive its first batch of non-performing loans from the country’s state-owned lenders by end-June, clearing the way for the privatizations slated to help this small euro-zone member avoid an international bailout, The Wall Street Journal Emerging Europe blog reported. “The first transfer will total about 2 billion euros ($2.67 billion),” Simona Rodez, a DUTB spokeswoman told The Wall Street Journal.

Half-way towards a lost decade for Europe's economy, pessimism persists about the political will to halt a worrying slide in the region's potential growth, Reuters reported. Without sweeping reforms to boost productivity, Europe's output will remain sub-par, making it harder for governments to reduce debt burdens that are unsustainable financially and unemployment rates that are unsustainable socially. Leaders of the 27-nation bloc will have another chance to cut this Gordian knot at a summit in Brussels next week.

Spain's La Caixa has postponed the planned sale of a portfolio of 12,000 homes, two sources familiar with the deal said, in a sign Spanish banks are still reluctant to cut prices on property assets even after big writedowns, Reuters reported. The Caixa sale fell down on price, the sources said. The bank had hoped to fetch around 1.5 billion euros ($2 billion) for the portfolio. A 2008 real estate crash left Spanish lenders saddled with billions of euros in property and in soured loans to developers. The government last year forced banks to take huge provisions against losses on the assets.

Less than a year before European leaders hope to chalk up success for their handling of the sovereign debt crises in Ireland and Portugal, rising bond yields and long-term interest rates are causing concern over how the two countries will exit their bailout programmes, the Financial Times reported. Amid expectations that central banks in the US, Japan and elsewhere will tighten monetary policy, yields on Portugal’s benchmark 10-year bonds surged to 6.6 per cent last week from a low of 5.2 per cent in late May.

Cyprus’ president has asked eurozone leaders for a complete revamp of his country’s €10bn bailout, warning Nicosia may not be able to meet the rescue’s current terms because it has harmed the country’s economy and banking system even more than expected.