Headlines

The Spanish government may remove a clause from its bailout fund for cash-strapped regions that gives it first claim on their revenue, according to two people familiar with the matter, Bloomberg reported. The move is intended to placate creditors who have told officials that the introduction of the regional bailout fund in July 2012 changed the terms of their bond holdings and gave them the right to call in the debts, one of the people said. Legislation may be approved as early as this month to clarify seniority, said the two people who asked not to be named because the talks are private.

The European Central Bank hailed a “normalisation” in financial market conditions on Thursday as its governing council voted unanimously to keep rates on hold, signalling confidence that the eurozone would stage a gradual recovery from recession later in the year, the Financial Times reported. The euro rallied against the US dollar, gaining 1 per cent on the day to touch $1.3195 as Mario Draghi, ECB president, spoke at a regular monthly press conference after its decision to leave its main refinancing rate unchanged at 0.75 per cent.

Japan's new government will likely soon follow the U.S. and France in raising taxes on its wealthiest citizens, amid continued concerns about the country's massive government debt, The Wall Street Journal reported. Prime Minister Shinzo Abe has attracted global attention—and turbocharged the Nikkei Stock Average—with pledges of bold new economic stimulus, including a big spending plan to be unveiled Friday, and pressure on the Bank of Japan to ease monetary policy.

Daewoo Electronics Corp. is finally getting a new owner – more than a decade after the collapse of its mother conglomerate that was the most storied business failure in the country’s history, The Wall Street Journal Korea Real Time blog reported. Dongbu Group, considered a mid-sized chaebol because it operates in seven businesses and has about 40,000 employees, picked up a 51% stake in Daewoo Electronics for 276 billion won, or about $256 million. It beat out another Korean firm, Samla Midas Group, and Sweden’s Electrolux AB for the stake.

Investors in 262 billion euros ($347 billion) of Dutch residential mortgage-backed securities risk being penalized by new bank liquidity rules, even as the securities prove among the safest home-loan bonds globally, Bloomberg reported. The notes won’t be categorized as liquid assets under regulations approved last week by the Basel Committee on Banking Supervision because the underlying mortgages have an average loan-to-value ratio of 95 percent, a quirk of the Dutch housing finance system, where borrowers take on more debt because they can use tax deductions in place since the 19th century.

European Commission president José Manuel Barroso has said he is supportive of Ireland finding a solution to the promissory notes issue, echoing comments by European Council president Herman Van Rompuy yesterday. In an interview with The Irish Times on the eve of today’s European Commission visit to Dublin, Mr Barroso said the commission was generally in favour of a deal, though he declined to comment on specific proposals, stressing it was in the remit of the European Central Bank.

Bankers have become too arrogant and the industry must change, the chief executive of UBS’s investment bank told British lawmakers on Wednesday, the Financial Times reported. Addressing the Parliamentary Commission on Banking Standards, Andrea Orcel said the bank, which in December was fined $1.5bn for its involvement in rigging the Libor benchmark borrowing rate, was overhauling its culture and was “serious about putting integrity over profit”.

The National Pension Fund is to invest in small businesses, announcing three new funds which will provide equity, credit and restructuring investment to Irish SMEs, the Irish Times reported. The NPRF will invest up to €500 million across new the funds which include an SME equity fund, an SME credit fund and an SME turnaround fund. The turnaround fund will invest in underperforming businesses which are at or close to the point of insolvency but have the potential for financial and operational restructuring, while the credit fund will lend to larger SMEs and mid-size corporates.

Cyprus's hopes of agreeing a eurozone bailout were thrown into fresh confusion on Wednesday as German politicians from across the spectrum warned that the aid package could be vetoed by the Bundestag, The Guardian reported. Angela Merkel, the German chancellor, is taking a hard line on Cyprus, saying the country must agree to wideranging economic reforms and privatisations before she would support a bailout. Negotiations between the Cyprus government and international lenders have stalled, with the Communist president, Dimitris Christofias, refusing to accept asset sales.

Camera specialist Jessops called in administrators PwC on Wednesday, becoming Britain's first high street casualty following a tough Christmas for retailers, Reuters reported. The group, which operates from 192 stores and has around 2,000 employees, has seen demand for its digital products come under pressure from the rising use of camera phones and online rivals. Many British retailers have struggled recently as inflation, muted wages growth and government austerity measures squeeze household budgets.