Headlines

Global Investment House, the Kuwaiti investment firm undergoing its second debt restructuring in three years, will seek shareholders approval for a debt-for-equity swap which if approved will see creditors own 70 percent of the company, Reuters reported. The proposed plan, which will see the remaining debt met by assets transferred to the creditors, would be a rare example of debt-for-equity being used in a Gulf Arab restructuring.

Some Italian banks are prodding the Bank of Italy to let them revalue at current prices the stakes they have owned in the central bank for nearly 80 years, The Wall Street Journal reported. The move is aimed at bolstering the balance sheets of Italy's banks and was proposed in recent weeks by individual banks and an industry group. So far, the Bank of Italy has given no indication that it will agree to the revaluation, but proponents gained some optimism when the central bank said it is open to discussions on how to change its unusual ownership structure.

Middle East trader FAL Oil, in talks with creditors on $700 million in debt, is on the cusp of hiring a chief restructuring officer to keep the faltering discussions on track, sources familiar with the matter said on Sunday. United Arab Emirates-based FAL, once one of the biggest regional fuel oil traders, has been forced to cut its fuel oil and bunkering operations in the UAE by as much as 60 percent and shut its trading operations in Singapore and London.

In 2009, a flood of loans saved the day for China's economy. Now, there is barely a trickle, The Wall Street Journal Heard on the Street blog reported. New loans in July slid 41% month on month to 540.1 billion yuan ($84.9 billion). One reason: a new dynamic in China's banking system from wealth-management products, which offer a higher return than bank deposits. Fitch Ratings estimates about 10.4 trillion yuan was in WMPs at the end of June, equal to 11.5% of bank-sector deposits.

Greece's unemployment rate rose to a record 23.1% in May, complicating Athens' efforts to complete deep cuts demanded by international creditors that may involve laying off thousands of public employees, The Wall Street Journal reported. The youngest workers were hardest hit, with more than one in two Greeks, or 54.9%, between 15 and 24 years old looking for work, national statistics agency Elstat said. The jobless rate climbed from 22.6% overall and 51.5% for youths in April. A year earlier, the national average stood at 16.8% overall and 41.7% for 15-24 year olds.

Five years into the great financial crisis, central banks are still pushing back the boundaries of monetary policy only to encounter constant reminders of the limits of their power to revive growth, Reuters reported. The Bank of England's provision of cheap loans to fund new bank lending and Denmark's adoption of a negative deposit rate are the most recent evidence that central banks are far from running out of firepower.

The Korean corporate sector has gone into restructuring mode to cope with the worsening global economic downturn, selling assets to secure much-needed cash, and slimming down organizations to reduce operating costs, The Korea Times reported. But if things go from bad to worse, businesses are widely expected to implement a full-scale overhaul, that would send tens of thousands of workers onto the street as seen in the wake of the 1997-98 Asian financial crisis.

Britain’s exports fell sharply in the second quarter, highlighting the difficulty the UK economy faces as it tries to recover amid slowing global growth, the Financial Times reported. Goods exports fell 3.1 per cent in volume terms as the UK recorded its biggest trade deficit for at least 15 years. David Tinsley, economist at BNP Paribas. described the data a “spectacularly bad”. The rumbling crisis in the eurozone, the destination of about 40 per cent of the UK’s exports, has been compounded by slowing growth in the US and emerging markets such as China.

New research from the Central Bank has shown that the number of mortgage top-up loans for equity release has fallen by 97 per cent since the peak of the property boom, the Irish Times reported. The research showed that between 2005 and 2006, €5.5 billion of mortgage top-up loans were drawn-down annually, accounting for a third of all loans issued and 15 per cent of new loan balances.

Brazilian electricity utility Equatorial Energia is considering ways to beef up its capital, including selling stock, to make way for the purchase of debt-laden rival Celpa, two sources with knowledge of the situation said on Thursday, Reuters reported. A share sale would comply with rules for companies that list common shares in the São Paulo Stock Exchange. Alternatives include borrowing from banks in the form of bridge loans, said one of the sources, who declined to be named because the process is in the works.