Headlines

The Institute of International Finance urged European policy makers to support the region’s short-term growth, which is being threatened by their efforts to decrease debt levels, Bloomberg reported. While policy makers in the 17-country euro area have made progress addressing their debt crisis, the austerity measures under way will at first depress growth that’s already “subpar,” IIF Managing Director Charles Dallara wrote in a letter to Mexican Finance Minister Jose Antonio Meade, who will chair a meeting of Group of 20 finance ministers and central bank governors this weekend.

Japan's financial regulator said Friday it has halted operations of a little-known Tokyo money-management company after the firm allegedly lost billions of dollars in client money, The Wall Street Journal reported. In one of the biggest cases of its kind in Japan, with Tokyo's reputation as a financial center still bruised by the billion-dollar Olympus Corp. accounting scandal, the regulator said investigators found that AIJ Investment Advisors Co. can't account for "most of" the 183 billion yen, or about $2.3 billion, in pension-fund assets under management.

China's two-year push to drive down property prices has punished many of the nation's once highflying property developers and stymied a number of upscale projects, The Wall Street Journal reported. Real estate was once one of the nation's most successful industries. Some stocks of mainland property developers in Hong Kong more than doubled in 2009, faster than the Hang Seng Index's 50% gain that year. As a result, developers plowed billions of dollars into huge developments—with apartments, commercial space, pools and golf courses—outside top-tier cities such as Beijing and Shanghai.

Troubled shipping companies face the threat of seizures of their vessels as banks lose patience with an industry struggling with overcapacity and falling demand, industry players say, Reuters reported. Banks have been fairly supportive until now, providing extensions such as last week's lifeline to Danish shipping company Torm A/S which was given a deferral on $1.8 billion of debt until March 1. But lenders are under pressure to cut their exposure to risky and dollar-denominated assets such as ship and trade finance to meet tougher capital rules.

More than half of Britain’s banks expect a rise in the number of companies defaulting on their loans this year amid warnings that financial houses are going on a lending “diet” and won’t be able to drive the economic recovery, Scotsman.com reported. Businesses looking to borrow more money or refinance their loans face “much tougher” conditions being imposed by the banks, according to a report published today.

Greece's parliament approved Thursday legislation to implement a massive EUR100 billion debt writedown for the country even as Athens sprinted to push through further reforms needed to secure a fresh bailout from its international creditors, Dow Jones reported. Passage of the legislation, which includes a controversial measure to strong-arm investors into the deal, clears the way for Greece to formally launch its long-awaited debt-restructuring program Friday.

European banks could face more pressure from regulators and politicians worried that big cuts in bonuses have barely dented a high-pay culture sustained by massive hikes in base salaries, Reuters reported. A string of banks have grabbed headlines with big reductions in handouts to staff for 2011. Royal Bank of Scotland, 82 percent state-owned after a government bailout, is to cut its bonus payouts for 2011 by 58 percent. French bank Credit Agricole will lower trader bonuses by 20 percent and larger rivals BNP Paribas and Societe Generale have pledged cuts of 50 percent.

Chinese banks are wrestling with rising funding costs both inside and outside China's borders, at a time when these banks are expected to lend more to bolster China when its trade and real-estate sectors are sagging, The Wall Street Journal reported. In China's interbank market, state-owned banks have seen a jump in the interest rates charged amongst themselves in recent days, leading the country's central bank to cut its bank-reserve requirements on Saturday, its second such move in four months. The reduction in reserve-requirement ratio, effective Feb.

The steady climb in housing prices over the past decade has made it easier for Canadians to borrow against the value of their homes, leaving many families vulnerable to “a significant shock” if prices were to snap back, the Bank of Canada is warning. Governor Mark Carney and his policy team have long pointed to record levels of household debt as the chief domestic risk to the financial system and the wider economy, urging borrowers to resist the lure of ultra-low mortgages unless they can afford them once rates inch up, The Globe and Mail reported.

The European Commission expects Greece, Portugal, Spain and the Netherlands to be Europe’s weakest economies in 2012. Wait a minute. The Netherlands? That stalwart of the euro zone? The same Netherlands that’s lending billions of euros to Greece, Portugal and Ireland? Yes indeed: The commission on Thursday said it expects the Dutch economy to contract 0.9% this year, the lowest growth rate in the 27-nation European Union apart from Greece, Portugal and Spain, The Wall Street Journal Real Time Brussels blog reported.