Headlines

Worries that Greece might default on its debts or even leave Europe’s currency union have deepened since May 6, when Greeks voted in shocking numbers for a left-wing party willing to tear up Greece’s $170 billion international bailout agreement, the International Herald Tribune reported. These days, even though 80 percent of Greeks say they want to stay with the euro, talk of “drachmageddon” can be heard in conversations all around Athens — in executive suites, at mom-and-pop shops and even in nightclubs.

Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro, Bloomberg reported. While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising defaults in other indebted euro nations.

The Spanish government will provide about €9 billion ($11.4 billion) to cover Bankia SA's provisioning needs, Finance Minister Luis de Guindos said on Wednesday, in the latest sign that Spain's economic deterioration is forcing authorities to inject more public funds to bail out ailing banks, The Wall Street Journal reported.

Bigger companies may be enjoying low borrowing costs thanks to low central bank rates but for smaller ones the outlook is decidedly murkier, the Financial Times reported. Although the extent varies significantly from country to country, Europe is the worst- affected region, and a looming credit crunch for small and medium-sized enterprises (SME) could impact economic growth significantly, bankers warn. “The decline of SME lending is a challenge that is just getting bigger and bigger,” says Christopher Drennen, a senior banker at BNP Paribas.

Chinese shipper Sinotrans Ltd. said Wednesday that the board of Grandstar Cargo International Airlines, a freight forwarder jointly owned by a unit of Sinotrans and Korean Air Lines Co., has approved plans to liquidate the carrier amid mounting losses and lackluster prospects in the air-freight market, The Wall Street Journal reported. Sinotrans said Grandstar Airlines, which has already suspended flight operations, had a net loss of 340.1 million yuan dollars ($53.8 million) in 2011, widening from losses of 20.7 million yuan in 2010 and 94.3 million yuan in 2009.

Sino-Forest Corp said on Wednesday it is reviewing fraud charges leveled against it by the Ontario Securities Commission and considering what steps, if any, it ought to take in response to the allegations, Reuters reported. The embattled Chinese forestry company, whose stock imploded last year in the face of fraud allegations, said the regulator is seeking penalties of up to C$1 million for each alleged failure by the company to comply with Ontario securities law. The OSC, Canada's most powerful securities regulator, is also seeking to permanently halt trade in shares of Sino-Forest.

Germany dismissed a French-led call for euro zone governments to issue common bonds, a day before a European Union summit which investors are looking to for new measures to counter the bloc’s debt crisis, the Vancouver Sun reported. After a torrid week, stock markets rallied on optimism that the Wednesday summit would produce measures to foster growth and ward off the threat of contagion should Greece exit the euro.

A five-year survival scheme for Eircom approved by the High Court Tuesday will see it and related companies exit the State's biggest-ever examinership on June 11th, the Irish Times reported. Mr Justice Peter Kelly said today he was satisfied to confirm the scheme advocated by Michael McAteer - the examiner to Eircom Ltd, Meteor Mobile Communications and Irish Telecommunications Investments Ltd - and endorsed by most of its creditors.

Canada's largest securities regulator alleged Tuesday that Sino-Forest Corp. and certain former executives inflated timber purchases and sales, capping an 11-month investigation into the troubled forest-products company, The Wall Street Journal Deals & Deal Makers blog reported. The Ontario Securities Commission signaled last month it would file fraud allegations against the company, after issuing a so-called enforcement notice. A spokesman for Sino-Forest, which conducts most of its business in China, declined to comment.

India's mounting economic and political woes are prompting market players to raise the specter of a Greek-style crisis in Asia's third largest economy, Reuters reported on an International Financing Review story. This is not simply idle speculation. Last Friday, the rupee crashed to an all-time low against the dollar of 54.9 and it was stuck most of Tuesday at the psychologically significant Rs55/USD level, where the currency is seen as having no obvious technical support. And the implications of a rupee collapse would be immense.