Headlines

A top European Central Bank official urged euro-zone governments to make their €440 billion ($602 billion) crisis fund more flexible so that it can buy bonds of fiscally distressed governments and offer them short-term credit lines, a signal that the ECB wants to reduce its role in fighting the currency bloc's debt crisis.

An amendment to the legislation covering the National Asset Management Agency (Nama) published yesterday will allow for the transfer of up to 20,000 additional small loans from Bank of Ireland and AIB to the agency, the Irish Times reported. The National Asset Management Agency (Amendment) Bill 2011 provides a legislative framework for the transfer to Nama of land and development loans previously excluded on the basis that they were valued below a threshold of €20 million. The removal of this threshold was agreed with the EU and IMF in November as part of the bailout package.

Standard & Poor's cut Japan's credit rating on Thursday for the first time since 2002, saying Tokyo lacked a plan to deal with its mounting debt, in a warning that will rattle other heavily indebted rich nations, Reuters reported. The agency reduced Japan's long-term sovereign debt rating by one notch to AA minus, three levels below the highest possible rating. It said Japan's fast-aging population, persistent deflation and the loss of the coalition's upper house majority had compounded the government's fiscal challenge.

Vietnam's inflation posted another double-digit rise ahead of the Lunar New Year, adding pressure on authorities to raise interest rates to slow the nation's growth and curb pressure on its currency, The Wall Street Journal reported. The nation has struggled to deal with several economic stresses, fueling concerns about the government's ability to manage fiscal policy as the trade deficit balloons and the Vietnamese dong remains persistently weak, bucking a trend across the region.

The International Monetary fund has called on the European Union to increase the size of its sovereign bail-out fund, and allow it greater flexibility in tackling the problems of the so-called euro zone peripheral states, including Ireland, RTÉ News reported. The IMF also calls for a Europe-wide bank resolution scheme, and says bank creditors, and not taxpayers, should bear the ultimate cost. In its latest financial stability report, the IMF says the euro zone debt crisis is the most pressing problem in global finance.

A court ruling that could ban Banco Santander SA's chief executive from the banking industry has thrown a spotlight on succession strategy at the Spanish lender, already in disarray after the departure of one rising star last year, The Wall Street Journal reported. Alfredo Sáenz, who has been chief executive of the bank since 2002, is expected to be banned from running banks in coming weeks by Spain's Supreme Court after he was found guilty of making false criminal accusations in a 17-year-old case during his tenure at the helm of Banco Español de Crédito SA, known as Banesto.

Loan losses at the banks may be “a little larger” than was expected under the new regulator’s first round of stress tests last year, governor of the Central Bank, Patrick Honohan, has said, the Irish Times reported. The Central Bank will complete the second round of capital stress tests on the banks by the end of March. The liquidity of the banks will also be tested in this round. To ensure the banks are fully protected against further shocks, Prof Honohan has insisted they “overcapitalise” above a new core tier one capital ratio of 12 per cent.

Promotora de Informaciones SA said Tuesday it will cut its workforce by 18% through an estimated 2,500 layoffs, as part of the cash-strapped company's ongoing restructuring process, Dow Jones Daily Bankruptcy Review reported. In a regulatory filing, Prisa, as the company is commonly known, said the financial cost of the move will depend on planned discussions with trade unions and workers' representatives.

Korea Line Corp., South Korea’s second-largest operator of dry-bulk ships, filed for receivership after a global oversupply of vessels caused rates to tumble to the lowest in almost two years, Bloomberg reported. The shipping line intends to maintain operations, it said today in an e-mailed statement, after making the filing at the Seoul Central District Court. The company, which didn’t say how large its debts were, is seeking to freeze assets. Korea Line, unprofitable in six of the past seven quarters, halted its shares as it works to restructure debt.

Dubai Group LLC, the investment company seeking payment relief on $6 billion of loans, appointed eight banks to represent creditors in two committees as it tries to speed up agreement on a debt restructuring plan, Bloomberg reported. The committees were set up to bring the restructuring talks to a quicker conclusion, said a spokeswoman for Dubai Group, who declined to be identified because of company policy. The members have been selected to be representative of all lender groups, she said by telephone.