Headlines

The chairman of the $75 billion Future Fund has warned the debt crisis engulfing Europe and the United States could take at least 20 years to resolve, causing ongoing market volatility, The Australian reported. David Murray warned the post-global financial crisis environment would continue to be characterised by a series of market shocks, with investor uncertainty heightened by concerns over the ability of political systems to contain any emerging meltdown.

The intervention of the European Central Bank this week to buy Italian and Spanish bonds has successfully dragged the two countries’ cost of borrowing to sustainable levels. However the threat posed by contagion in the euro zone’s debt crisis is far from over, with analysts warning yields could rise again to danger levels (generally understood to be 6 per cent rates on 10-year bonds) if the ECB does not continue to buy the debt of both states in the short run before a longer-term solution is agreed, the Irish Times reported.

Nigeria's recently nationalised Mainstreet Bank, formerly Afribank, said on Tuesday it had paid the central bank back the 50 billion naira ($327 million) in intervention funding given in a 2009 bailout and the lender was now fully recapitalised, Reuters reported. The Nigerian central bank revoked the licences of Afribank, Spring Bank and Bank PHB on Friday because it said they did not show the necessary capacity to recapitalize following a $4 billion bailout of nine lenders in 2009.

France and Britain are most vulnerable within Europe to a rating review following the U.S. downgrade, with anaemic growth and hefty borrowing placing them among the shakiest of the world's triple-A rated lenders, Reuters reported in an analysis. Both countries have stable rating outlooks, making a sudden downgrade unlikely and markets have been so impressed by Britain's debt-cutting strategy that they have pushed its bond yields to record lows. But a surge in the cost of insuring French debt against default on Monday highlighted alarm sparked by Friday's U.S.

The crisis intervention measures undertaken by the world's seven leading industrial nations only briefly quieted markets on Monday, Spiegel Online reported. By early afternoon, shares began falling again on European markets, with Germany's blue chip DAX index dropping to an 11-month low. Now investors are awaiting the opening bell on Wall Street, where further negative developments are anticipated. Over the weekend, many in Europe had worried this would be a Black Monday -- and it could still turn out that way.

An Irish academic best known for correctly calling the property crash four years ago has raised fresh concerns over a potential tsunami of debt default from "high rolling" professional classes, the Guardian Irish Business blog reported. Professor Morgan Kelly said there is about €11bn (£9.6bn) tied up in domestic loans that were handed out to lawyers, doctors and estate agents for homes they can no longer afford – loans the banks are not counting as problematic.

Allied Irish Bank Plc chairman David Hodgkinson has proposed a buy-out scheme to help homeowners, who are struggling to meet their mortgage obligations, InsolvencyJournal.ie reported. Speaking at the MacGill Summer School in Glenties, Co. Donegal, Mr. Hodgkinson outlined the plan, which AIB have presented to the Central Bank. Under the scheme, the bank would use capital injected by the government, to buy back the homes of mortgage holders and renting them back to the occupants.

The banking stock index on the Nigerian Stock Exchange on Monday fell by the highest margin this year as investors offloaded their shares, Punch reported. The NSE Banking Index, which measures the performance of the top 10 most capitalised stocks in the sub-sector, fell by 3.7 per cent at the close of trading, the highest percentage fall in eleven months. Analysts have linked the fall to a panic induced by last Friday’s nationalisation of three banks – BankPHB, Afribank and Spring Bank – by the Nigerian Deposit Insurance Corporation.

Receivers for Yarrows the Bakers say the business has attracted considerable interest from potential buyers as their first report highlights significant debt across the wider group, The National Business Review reported. Yarrows the Bakers and two associated companies went into receivership in May when the company’s directors could not reach agreement on a restructure proposal that involved selling its Australian business.

Saab staved off a fresh bankruptcy threat on Friday by finding the money to pay its workers, but its car production lines remained silent and its long-term funding issues unresolved, Reuters reported. Fears over the survival of the 60-year-old firm, rescued from closure early last year, have ebbed and flowed as owner Swedish Automobile chases funding. Its production line has been closed since late April. On Friday the company paid a delayed July salary to its 1,600 whitecollar workers, almost half the workforce. This stopped unions from pursuing a bankruptcy application.