Headlines

The Bank of England said on Thursday that a small British bank with just 250 depositors, Southsea Mortgage and Investment Co Ltd, had been placed in the bank insolvency procedure and had ceased trading, Reuters reported. The BoE stressed Southsea's failure was due to particular problems at the company rather than broader market issues. "The failure of Southsea ... follows a deterioration in its financial position as a result of management decisions and the firm's specific business model," the BoE said in a statement.

Europe’s competition commissioner has declared Ireland’s banking guarantee was a mistake whose sweeping scope served to concentrate losses on taxpayers, the Irish Times reported. Joaquín Almunia told The Irish Times that the intervention in September 2008 resulted in citizens having to assume responsibility for losses that would have been “better distributed” in the absence of an unlimited guarantee.

Shares of Muhibbah Engineering plunged 20% or 38 sen yesterday on news that Asia Petroleum Hub (APH), a big client that owes money, was in receivership, The Star reported. The stock closed at RM1.52 with 74.35 million shares traded. CIMB Research on its report yesterday said the receivership status for the APH project as reported by a foreign newspaper on Wednesday was a negative surprise. APH had been put under receivership mainly because it could not come up with other investors to help fund the development and repay its debt.

Prospects of any returns for unsecured creditors owed $556,000 from failed Auckland finance company Dominion Finance Group remain dismal, according to the latest liquidators' report, and it's not so great for secured creditors either, BusinessDay.co.nz reported. Dominion Finance was put into receivership in September 2008 owing about $176.9 million to more than 5900 investors. It was put into liquidation by the High Court at Auckland in May the next year. The Securities Commission laid criminal charges and filed civil suits a year ago against the group's directors.

State-backed German lender HSH Nordbank AG has formed a joint venture for managing its EUR3 billion Nordic real-estate loan book with two U.S.-based property finance firms, as the bank moves forward with its restructuring efforts, Dow Jones reported. HSH has teamed with property consultants Situs Cos. and special loan servicer Helios AMC LLC to create the new joint venture, which will initially service the bank's legacy loan book over the next couple of years.

The Cameron government's deep reluctance to commit UK taxpayers' money to preventing a European insolvency is being tested by German insistence that all of the EU has to come to the rescue of Greece, The Guardian reported. With European governments embroiled in a fierce dispute over how to structure a second bailout of Greece to forestall the first sovereign default in the 17-country single currency zone, Britain is keen to remain on the sidelines, insisting that Greece is purely a eurozone problem.

Troubled Austrian engineering group A-TEC is holding talks with potential investors and hopes to remain a going concern despite a preliminary 2010 net loss of 584.5 million euros ($840.2 million), Reuters reported. A-TEC struck a deal with creditors in December to repay 47 percent of its debts and agreed to find an outside investor by June 30 as a way to avoid bankruptcy. "The management board of A-TEC Industries AG has received non-binding offers from various potential investors and is conducting intensive negotiations with them," it said in a statement on Wednesday.

The European Central Bank said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability, Bloomberg reported. “Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt today, when presenting the bank’s semi-annual Financial Stability Review.

Irish high net-worth individuals who invested £92 million in the Quinlan Private-led purchase of a portfolio of almost 50 Marriott hotels in the UK in 2007 have seen their investment wiped out, after a receiver was appointed to the portfolio of hotels, the Irish Times reported. Royal Bank of Scotland has appointed Ernst & Young as receiver to over 42 Marriott hotels in one of the largest ever corporate restructurings of the hotel sector.

Europe's sovereign-debt crisis washed closer to U.S. shores Wednesday after Moody's Investors Service warned it may downgrade three French banks that rely heavily on U.S. money funds for short-term financing, The Wall Street Journal reported. Moody's cited the banks' exposure to Greek debt, and added that it may do the same to other euro-zone banks. The three banks—BNP Paribas SA, Crédit Agricole SA and Société Générale SA—have all said recently that their exposure to Greece remains manageable.