Headlines

China's central bank said risks from the country's local government financing vehicles are controllable, underscoring Beijing's effort to dispel growing concerns about potential default risks associated with local government debt, The Wall Street Journal reported. The statement released late Monday by the People's Bank of China came after the National Audit Office rejected criticism of its estimate of local government debt, saying its assessment was accurate and made independently.

The public sector pensions liabilities stood at 1.1 trillion pounds ($1.763 trillion) in 2009/10, the government will say on Wednesday, a Treasury source told Reuters. The Conservative-Liberal Democrat coalition government is seeking to push through reforms of public sector pensions to make them more affordable as part of an austerity plan to eliminate a record budget deficit.

Stockbrokers have reserved large portions of the Nairobi Stock Exchange (NSE) for collapsed rivals in a move that could see them rake in billions of shillings when the bourse is sold to the public early next year, Business Daily Africa reported. A legal document drafted by the brokers’ advisers shows that each of the NSE’s 21 intermediaries – whether operational, in receivership or collapsed – has been allocated one million shares worth millions of shillings.

U.K. care home operator Southern Cross Healthcare Group PLC has finally collapsed under the weight of its unpayable rent bill, saying Monday that it plans to cease operating and hand its homes over to landlords. The arrangement promises to resolve the financial turmoil at one of the U.K.'s largest private care organizations, with 31,000 residents in its homes, Dow Jones Daily Bankruptcy Review reported.

With no consensus on how to share the burden of a new Greek bailout with the troubled country's private-sector creditors, European finance ministers struggled at a meeting Monday to make progress on a fresh aid package, The Wall Street Journal reported. Arriving in Brussels, officials offered widely divergent views on how to proceed.

Cash-strapped carmaker Saab said on Monday it had reached deals with many suppliers to settle debts as it struggles to secure parts and resume production, Reuters reported. Saab, owned by Netherlands-based Swedish Automobile , has scraped together 61 million euros ($88.5 million) in short-term funding in recent days. But it needs to get supplies moving again so car assembly can resume, and investors are worried about its prospects after it said last week production will not restart until Aug. 9.

Bank of Ireland secured temporary approval from the European Commission for recapitalisation of up to €5.35 billion by the State ahead of yesterday’s extraordinary general meeting. The commission’s final approval of the State recapitalisation depends on the submission of an updated restructuring plan by the end of this month, the Irish Times reported. Approval is conditional on ensuring a return to long-term viability, an adequate participation by shareholders and subordinated bondholders and proper measures to limit the distortion of competition by the State support.

Italian President Giorgio Napolitano Monday appealed for “national cohesion” as the Italian economy came under pressure amid fears the state could become the next victim of the euro zone’s debt crisis, the Irish Times reported. For the second consecutive trading day, the Italian stock exchange registered a loss, closing down 3.96 per cent, while the much-quoted spread between Italian government bonds and German bonds reached its highest figure since the introduction of the euro, at over three percentage points.

An unidentified bondholder last week called for an event of default on Gajah Tunggal's outstanding dollar bonds, raising the possibility of another debt restructuring for the Indonesian tyre maker, Reuters reported on an International Financing Review story. Gajah Tunggal has not defaulted on its interest payments, but one unnamed bondholder has claimed that a Rp42bn (US$4.9m) dividend payment on June 30 constituted a technical breach of covenants on its US$435m due 2014 paper.

Germany's upper house of parliament, the Bundesrat, Friday approved government plans to impose an annual levy on banks that would generate funds for the rescue of any stricken institutions deemed too big to fail, Dow Jones Daily Bankruptcy Review reported. The government must now rubber stamp the regulation, which will come into effect in coming weeks, once official approval by the German president has been given.