Headlines

Prior to the financial meltdown, Germany’s ailing state-owned banks -- with government backing -- borrowed hundreds of billions of euros at favorable terms and invested the money in what they believed to be highly profitable securities. But after the collapse of US investment bank Lehman Brothers, many of these investments proved to be toxic, Spiegel Online reported. The government had to rush to the banks' aid with billions in bailout funds, but the banks still have large numbers of the toxic securities on their books. All attempts to tackle the problem have failed.

Cracks remained in the euro zone's package of debt-crisis measures, even as the European Union's finance ministers approved new legislation that sets fresh sanctions for budget offenders and puts new focus on broader economic problems that have destabilized weaker countries, The Wall Street Journal reported. Jean-Claude Trichet, the president of the European Central Bank, told finance ministers meeting in Brussels that the changes to the sanction regime are "insufficient." They still must be debated and approved by the European Parliament, which is likely to try to toughen them.

Embattled tycoon Vincent Tchenguiz's property management company, Peverel Group Ltd, has entered administration after failing to repay a loan, Reuters reported. Bank of America Merrill Lynch demanded repayment within 24 hours of a 124.6 million pounds loan plus 11.4 million pounds in accrued interest, another Vincent Tchenguiz company, Consensus Business Group (CBG), said in a statement.

Lawyers for the European Union's executive arm are studying EU treaty law to determine whether it has the right to set up an EU-wide board to review strategic investments in the 27-nation bloc, according to an internal letter reviewed by The Wall Street Journal. The European Commission is considering whether to form a board similar to the Committee on Foreign Investments in the U.S., or CIFUS, which has the power to block investments in "strategic" sectors if they are deemed a threat to national security. It is aimed especially at Chinese companies.

With the scale of the disaster in Japan still being measured, concerns are growing that last week's earthquake and tsunami could lead to a long-term disruption in the world's supply of automobiles, consumer electronics and machine tools, the Los Angeles Times reported. Japan is the world's third-largest economy and a huge exporter of cars, electronic components and industrial equipment as well as steel, textiles and processed foods. In turn, it's a voracious consumer of petroleum, imported agricultural products and luxury consumer goods.

The European Commission is "very satisfied" with the progress Ireland has made on restructuring its banks, a spokesman said Monday, Dow Jones reported. The spokesman for European Commissioner Olli Rehn said Irish banks "have already booked very substantial losses." The EU is "very satisfied with the progress being made with this restructuring," he said. The spokesman also said the European Union expects to complete by the end of March an analysis of the Irish banking system's balance sheets and liquidity situations.

Shares in Southern Cross Healthcare, the UK's biggest care homes operator, have plunged 60% on news that financial problems are mounting, the BBC reported. The firm has appointed KPMG to look at restructuring options after cuts in local authority spending worsened its trading outlook. Southern provides care to more than 31,000 people, with the bulk of funding coming from the NHS and councils. The company said that budget cuts meant its rent burden was "unsustainable".

Minister for Finance Michael Noonan has asked European Central Bank (ECB) chief Jean-Claude Trichet to deepen the bank’s emergency support for Ireland’s financial system, the Irish Times reported. At his first EU meeting yesterday, the Minister said he wanted the Frankfurt-based institution to allow a longer deleveraging process for the Irish banks and to provide medium-term liquidity so they do not have to rely on two-week funding.

More than half the market value of Southern Cross Healthcare was wiped out on Monday after the UK’s largest care home operator said it was seeking to renegotiate the rent paid to its landlords and admitted cuts by local authorities in the amounts paid for elderly care would force a breach in its banking covenants, the Financial Times reported.

Ipico Inc said its creditors approved its plan to reorganize its debt and capital structure and an Ontario court sanctioned an interim loan facility from Brookfield Asset Management, possibly saving it from going bankrupt, Reuters reported. Ipico, which makes smart tags and other Radio-frequency identification (RFID) products, had said last month it would become bankrupt and go under receivership if the loan facility did not materialize or if its reorganization plan is not approved by creditors and the court.