Headlines

Germany has become so dependent on Deutsche Bank to grease the wheels of its export driven economy that it looks willing to gloss over scandals involving its largest bank, Reuters reported in an insight. Deutsche is one of several European banks under investigation by regulators in Europe and the United States for its suspected role in rigging benchmark interest rates. It is cooperating with German authorities in a separate inquiry into alleged tax fraud. Deutsche has denied allegations it misvalued derivatives and mis-sold mortgage-backed securities.

U.K. banks must come up with £25 billion ($38 billion) in fresh capital this year, the Bank of England warned Wednesday, piling pressure on partly state-owned banks Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC to step up the pace of asset sales, The Wall Street Journal reported. The Bank of England's Financial Policy Committee said banks' capital buffers need to be higher to withstand the effects of the weak domestic economy and euro-zone crisis. Gov.

Argentina is hoping an offer it must make to a US appeals court by Good Friday spelling out exactly what it is prepared to pay its “holdout” creditors will be enough to avoid crucifixion in its high-stakes sovereign debt drama, the Financial Times reported. The saga – which centres on interpretation of two little words in Latin: pari passu , or equal treatment – has gripped the international financial industry for months. It has pushed Argentina almost to the brink of a new default and raised fears that the case could set a precedent making sovereign restructurings harder in future.

Blunt remarks by a leading minister saying European support for troubled banks is a last resort laid bare what has long been an open secret in Brussels: promises to create a euro zone backstop for banks may never be fulfilled. Designed to secure a level playing field in the euro zone and prevent vulnerable countries having to contain financial problems alone, a European banking union was one of the biggest political commitments made to underpin the euro.

Cypriot officials gave the first indications of the steep losses facing large deposit holders at the island's two biggest lenders, as hundreds of angry bank workers staged a demonstration outside the central bank and demanded the resignation of its governor, The Wall Street Journal reported. Cyprus's central bank chief said Tuesday that large depositors at the island's biggest lender, Bank of Cyprus Pcl, could lose as much as 40% on their deposits.

China’s largest banks posted a decline in bad-loan ratios for 2012 amid the slowest economic expansion in 13 years, signaling policy makers may have averted a surge in defaults. The gauge shrank to 1.33 percent at Agricultural Bank of China Ltd., the nation’s third-largest by market value, from 1.55 percent in 2011, while net income increased by 19 percent, the Beijing-based lender said yesterday. At Bank of China Ltd., the fourth-largest, non-performing loans dropped to 0.95 percent of the total from 1 percent, while profit climbed 12 percent.

A pickup in temporary hiring through recruitment consultants can be an early sign of an economic rebound on the horizon, The Wall Street Journal Real Time Economics blog reported. In the crisis-hit euro zone, where the economy has been shrinking for 15 months, policymakers hope growth will resume later this year. Consequently, they might expect companies to be taking on temporary staff via employment agencies now, in an attempt to build up production without overloading on risk. That hope may be misplaced.

Britain's banks discover on Wednesday how much extra capital they need to keep regulators happy when the outcome of an inquiry into their financial health is revealed, Reuters reported. The Bank of England will release the capital requirements on Wednesday morning. The BOE's Financial Policy Committee, tasked with spotting system-wide risks, said in November that the shortfall could be anywhere between 24 billion and 60 billion pounds. Analysts expect the final number to be around the middle of that range.

The Spanish economy will shrink by 1.5 per cent this year and unemployment is set to rise above 27 per cent, the Bank of Spain has predicted, the Financial Times reported. The central bank’s latest annual forecast leaves little doubt that 2013 will be an even tougher year for Spaniards than last year, with housing prices also heading for yet another sharp fall. The economy will again be marked by weak domestic demand, a fragile labour market and tight financial conditions, the bank said.

Opposition from foreign bondholders is unlikely to stop the takeover of Brazilian power holding company Grupo Rede Energia SA by two rivals, several sources with direct knowledge of the situation told Reuters. The process should be concluded ahead of a court-mandated deadline in July, and the buyout plan by Equatorial Energia SA and CPFL Energia SA may help limit losses for bondholders, the sources said. But bondholders are fighting a proposal that would restructure Grupo Rede's debt and cut the value of their holdings by 85 percent.