Headlines

The Austria government wants to ensure taxpayers do not end up footing the entire bill for winding down state lender Hypo Alpe Adria and could use special legislation to go after some creditors, government ministers said on Sunday. Austria, which nationalised Hypo in 2009 to avoid a failure that would have sent shockwaves across the region, finally ruled out on Friday letting it go bust. Instead it will wind it down via an expensive "bad bank".

Serbia's likely new prime minister said he plans "several painful" steps to narrow the nation's budget deficit after his party won parliamentary elections on Sunday, an outcome he expects will accelerate Serbia's accession to the European Union, The Wall Street Journal reported. Aleksandar Vučić's center-right Serbian Progressive Party won 49% of votes at the general election Sunday and, under the country's rules, will get 155 seats in the 250-seat legislature. Since 2012, Mr. Vučić has been the first deputy prime minister in a coalition government. With an absolute majority, Mr.

Austria's finance minister Friday said debt-ridden bank Hypo-Alpe-Adria Bank AG will be wound down and not allowed to become insolvent, ending months of speculation on how to close the financial black hole, The Wall Street Journal reported. After years of repeated bailouts, a separate entity will be set up to wind the bank down, Michael Spindelegger said, with some creditors sharing the burden. "There were many reasons to seriously consider an insolvency, but in the end the risks weren't predictable," Mr. Spindelegger said.

Dubai has received a financial boost thanks to an agreement to refinance at preferential rates $20bn of bonds and loans owed to the central bank of the United Arab Emirates and its capital, Abu Dhabi, the Financial Times reported. The Gulf’s commercial hub, which has an overall debt load of about $130bn, said it extended the maturities for five years at interest rates of one per cent, below the four per cent agreed in 2009 when the UAE came to Dubai’s rescue.

Mizuho Financial Group is set to bring Japan's first overseas new-style bank capital instrument, testing investors' stance on the country's unique interpretation of loss-absorption rules, Reuters reported. Unlike other jurisdictions, where regulators prioritise investor bail-ins before injecting public money into a bank, Japan has legal provisions that could reduce the possibility of bondholder losses in the event an institution gets into trouble.

The Chartered Accountants Regulatory Board has been asked to formally investigate the conduct of KPMG as auditors of Irish Nationwide Building Society, whose collapse cost the State €5.4 billion, the Irish Times reported. Sinn Féin finance spokesman Pearse Doherty has written to Carb to ask it to examine audit reports, prepared for the failed building society by KPMG in the financial years 2006 until 2009, under seven different headings.

A 22-member lenders' consortium led by ICICI Bank has failed to agree on a proposal from ABG Shipyard to recast its Rs 11,500-crore loan, a majority of which turned into dud assets on their books, sources said here today, the Economic Times reported. "There was no consensus on the terms of the loan restructuring proposal from ABG Shipyard at the corporate debt restructuring cell meeting held last Friday," a senior official of a state-run bank told PTI today, adding that banks are not sure about the promoter's ability to bring in fresh equity contribution of around Rs 300 crore.

A former Treasury official commissioned by the Co-op Group to examine how it incurred a £1.5bn financial black hole is being paid £2,000 a day by the debt-laden mutual, The Guardian reported. Sir Christopher Kelly was handed the lucrative deal by Euan Sutherland, the Co-op chief executive who walked out last week when his pay arrangements were leaked to this newspaper. Kelly was hired nine months ago to examine decisions made by the Co-op in the period leading to its discovery of a deep capital shortfall. He is expected to report in May.

Óleo e Gás Participações SA, the Brazilian oil producer currently under bankruptcy protection, received the first portion of a debt-in-possession financing package, according to a statement on Thursday. The company received $125 million in the so-called DIP loan, of a total $215 million that were pledged by creditors, the company added, Reuters reported. The company was formerly known as OGX Petróleo e Gás Participações SA.

Last week a failure by Shanghai Chaori Solar Energy to meet interest payments on its debt became China’s first onshore corporate bond default, prompting some alarmed and alarming talk about a wave of defaults across China, Forbes reported. The phrase ‘Bear Stearns moment’ was used (by Bank of America Merrill Lynch among others), suggesting, presumably, that one default would cause investors to take flight from the entire Chinese corporate debt market and so cause a run on the whole sector, leading to a major crash.