Headlines

The European Central Bank is falling behind on a €40bn asset purchase programme launched at the height of eurozone crisis, in a sign it could be dropped as a first step towards unwinding huge emergency support for the region’s financial system, the Financial Times reported. Purchases of “covered bonds” – debt backed by pools of assets favoured by some institutional investors – have so far totalled less than €9bn. The scheme started last November and was originally intended to run until October at the latest.

Bahraini investment house Arcapita's move to file for bankruptcy protection in the United States, while a milestone for debt restructuring in the Gulf, is unlikely to prompt other regional firms to follow suit, Reuters reported. Arcapita became the first Gulf Arab firm to file for Chapter 11 in the U.S. on Monday, under pressure from hedge funds which demanded full repayment ahead of the maturity of a $1.1 billion Islamic finance facility on March 28.

The British government said Wednesday that it was sticking to its austerity program as it presented a budget of tax and benefit changes intended to spur economic growth. The opposition criticized it as benefiting higher earners, the International Herald Tribune reported. George Osborne, the chancellor of the Exchequer, said that the government’s plan for reducing the budget deficit was on track and that it was the only way for Britain to retain relatively low interest payments on its debt. For now, he said, Britain is expected to avoid falling back into a recession.

Spain has never been so close to default and Greece, Ireland and Portugal may need further bailouts, Citigroup Inc. chief economist Willem Buiter said. “Spain is the key country about which I’m most worried,” Buiter, a former Bank of England policy maker, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

Air Canada is obliged by law to keep operations going at facilities that service its planes in the Canadian cities of Winnipeg, Mississauga and Montreal, Canadian Transport Minister Denis Lebel said on Wednesday, Reuters reported. Lebel said the government was receiving advice about Air Canada's legal obligations with regards to Aveos, once part of the carrier's own maintenance unit. Aveos obtained bankruptcy protection on Monday, but it has since ceased all operations in Canada.

The Governor of the Central Bank Patrick Honohan will probably ask the European Central Bank Governing Council tomorrow for permission to delay a cash payment on the Anglo Irish promissory note due at the end of this month, according to the Bloomberg news agency, the Irish Times reported. Mr Honohan will ask for the delay to ease the debt burden on the State. The State is due to make a €3.1 billion payment to the former Anglo Irish Bank, which is then supposed to use the funds to reduce its emergency borrowings from the Central Bank.

Germany appears to have accepted defeat in its efforts to convince other European countries to impose a kind of sales tax on financial transactions in the European Union or in the smaller euro zone, possibly putting up an obstacle to ratifying the permanent euro-zone bailout fund in Parliament, The Wall Street Journal reported. "The probability of imposing an EU-wide financial-transaction tax is very slim," German Finance Minister Wolfgang Schäuble told a gathering of conservative lawmakers on Tuesday, according to a person in the meeting.

The Chinese government has begun making it much easier for foreign investors to put money into China’s stock market and other financial investments, in a slight relaxing of more than a decade of tight capital controls, the International Herald Tribune reported. The move, not publicly announced but disclosed by some private money managers, indicates that Chinese officials are eager to counter a rising flight of capital from the country, a worsening slump in real estate prices, a weak stock market and at least a temporary trade deficit caused by a steep bill for oil imports.

Nortel Networks Inc, a former telecoms company that is liquidating in bankruptcy, won a dismissal of some claims by European affiliates that were seeking a large chunk of the company's $9 billion cash pile, Reuters reported. Nortel's British, Irish and French affiliates had sought more than $3 billion, claiming Nortel Networks Inc has breached its fiduciary duties to the European businesses by stripping them of cash and leaving them insolvent. A Delaware bankruptcy court dismissed those claims in part because Nortel Networks, or NNI, was not a director of the European affiliates.

German solar project developer solarhybrid AG said on Tuesday it will open insolvency proceedings with a German court, Reuters reported. It said it was filing for insolvency "due to illiquidity" with the court in Arnsberg. No other details were given in a statement issued late on Tuesday. In December, Solar Millennium AG filed for insolvency after running out of cash before it was able to finalize deals to sell large projects in the United States and Spain. German solar module marker Solon SE also filed for insolvency in December.