Headlines

China’s biggest banks are resisting government pressure to lower borrowing costs amid an economic slowdown as they seek to maintain the profitability of their lending operations, officials at the top four lenders said, Bloomberg reported. The banks are limiting discounts for their best corporate clients to 10 percent of the benchmark lending rate, the officials said, asking not to be identified as they’re not authorized to speak publicly. The central bank in July began allowing lenders to offer credit at 30 percent less than the benchmark rates.

The huge and rising government bond holdings of Japanese banks leave them vulnerable to a spike in interest rates, the International Monetary Fund has warned, the Financial Times reported. Sounding an alarm over the stability of Japan’s banking system, IMF officials said domestic bank holdings of government bonds in the country could rise to a third of their total assets within five years, from a quarter now.

Prime Minister Mario Monti announced a tax cut for low-income earners, a surprise move to reward Italians after months of austerity measures that have damped recovery prospects in the euro-zone's third-largest economy, The Wall Street Journal reported. Though the measures also include a billions of euros of cuts in public spending, Italy's technocratic government billed the income-tax reduction as proof that a year of sacrifices aimed at staving off the prospect of default for the country's indebted state is paying off.

Countries that stay outside a European banking union should be given safeguards against being sidelined, one of Europe's top bank regulators said on Wednesday, in remarks that will add to the momentum from Sweden and others pushing to alter the scheme, Reuters reported. Last month the European Commission proposed that the European Central Bank take charge of supervising all banks in the euro zone in a gradual process starting in January, as a first step towards creating a banking union under which euro zone countries would eventually jointly back their banks.

Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited mounting economic and political risks as the government considers a second bailout, Bloomberg reported. The negative outlook on the long-term rating reflects our view of the significant risks to Spain’s economic growth and budgetary performance, and the lack of a clear direction in euro-zone policy,” S&P said.

Europe's car market will not really recover without EU-led coordination of capacity cuts, Fiat and Chrysler Chief Executive Sergio Marchionne said, in an apparent back-track on comments he made at the Paris auto show last month, Reuters reported. Marchionne, who also heads European automakers association ACEA, has repeatedly called for Europe-wide action on closing plants and cutting jobs, but has faced stiff opposition from rival carmakers that are also members of the industry group.

Deiulemar Shipping, a major Italian dry freight group, has been declared bankrupt owing more than 500 million euros, an Italian court and the company said on Wednesday, the latest casualty of a worsening freight market crisis. The slump, one of the worst ever faced by the sector, has sunk a number of dry bulk firms including Britain's oldest, Stephenson Clarke Shipping Ltd. "Deiulemar Shipping was declared bankrupt by the court of Torre Annunziata this week," said Astolfo Di Amato, the lawyer representing Deiulemar Shipping.

The IMF has warned that unless the eurozone resolves its capital crisis, European banks’ balance sheets will contract severely, further damaging growth and pushing unemployment beyond already record highs in the region, the Financial Times reported. In its global financial stability report, the IMF concluded that capital flight from the eurozone’s periphery to the bloc’s core, driven by fears of a break-up of the currency union, had sparked “extreme fragmentation” of the euro area’s funding markets.

German Chancellor Angela Merkel, making her first visit to Athens since Europe's debt crisis began in late 2009, on Tuesday said she saw "light at the end of the tunnel" for Greece as the debt-stricken country battles through a painful austerity program aimed at restoring its fiscal health, The Wall Street Journal reported. Ms.

India’s Kingfisher Airlines Ltd. (KAIR) escaped collapse in 2010 by restructuring 77.2 billion rupees ($1.4 billion) of debt it had run up buying airlines and adding routes amid the nation’s economic boom, Bloomberg Businessweek reported. Less than two years later, the carrier controlled by billionaire Vijay Mallya was back in talks with creditors, while its net debt had increased by 9 billion rupees. The airline this month grounded its entire fleet after pilots and engineers went on strike to demand seven months of unpaid salaries.