Headlines

Turkey's central bank kept its benchmark interest rate unchanged for a fifth month and said it will keep bank borrowing costs high to restrain inflation and slow credit growth, Blomberg News reported today. The central bank held the one-week repo rate at 5.75 percent today, according to a statement on the website of the Ankara-based institution. The lira weakened 0.1 percent against the dollar after the bank sold $50 million for liras, less than the $150 million maximum it had set. Yields on two-year lira bonds rose 4 basis points, or 0.04 percentage point, to 10.43 percent.

The turmoil in the eurozone is posing a serious threat to Ireland’s efforts to stabilise its debt burden and return to healthy economic growth, according to the International Monetary Fund, the Financial Times reported. In its latest report on the Irish economy, the fund cut its forecast for economic growth in Ireland next year by almost half, and said that the downside risks to growth had increased.

International regulators' efforts to strengthen the financial system by tightening bank rules may inadvertently serve to boost opportunities for unregulated or "shadow" financial players, Reuters reported. That is because it is the shadow players, primarily hedge funds and private equity firms, who are expected to buy the billions of euros worth of assets that banks will be selling in the coming months as they slim down their balance sheets to comply with the new rules. "The growth of the shadow banking system is a logical consequence," said Merck Finck analyst Konrad Becker.

China's Pang Da Automobile Trade said on Wednesday it would halt its attempt to acquire Swedish carmaker Saab in light of Saab's bankruptcy, Reuters reported. Saab was declared bankrupt by a court on Monday, ending a nine-month survival battle by its Dutch owner. "In view of Saab being declared bankrupt, Pang Da Automobile Trade has decided to stop the acquisition transaction of Saab," Pang Da said in a statement to the Shanghai stock exchange.

The European Commission Tuesday approved a plan to split up German state-controlled lender Westdeutsche Landesbank, or WestLB, leading to a change in ownership, an eventual winding down of its banking activities and the disappearance of a once prestigious name, Dow Jones Daily Bankruptcy Review reported. The plan, submitted by the bank's owners---the German state of North Rhine-Westphalia and regional savings banks---and Germany's federal government at the end of June, "is in line with EU state aid rules," the commission said.

A new report released by the European Commission late last week underlines the devastating consequences of the financial crisis on youth employment, and acknowledged the difficulty in implementing policies to alleviate this crisis as the European Union focuses on austerity, The Wall Street Journal Real Time Brussels blog reported. “Young people remain the hardest hit by the crisis and its aftermath,” says the report, and the faltering recovery is expected to make things worse.

Indian companies have a record $11.4 billion of dollar-denominated bonds to repay in 2012 just as the rupee falls to an all-time low and borrowing costs in the U.S. currency exceed all but one of Asia’s markets. Companies have more than double the debt coming due next year compared with a five-year average of $5.6 billion, while ICICI Bank Ltd. and Bank of Baroda have the most maturing debt, according to data compiled by Bloomberg.

Governments in Europe are tying themselves in knots to prop up their banks, desperate to blunt the cost and embarrassment of a fresh wave of taxpayer-funded bailouts, The Wall Street Journal reported. In Italy, for example, the government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans.

The foundation that owns 49 percent of Italy's Banca Monte dei Paschi di Siena said on Monday it had reached two debt standstill agreements with its own lenders as it tries to keep control of Italy's third-largest bank, Reuters reported. The foundation is expected to sell assets as part of a debt restructuring deal, with the sale of a stake of 10-15 percent in Monte Paschi seen as one possibility.

Saab Automobile filed for bankruptcy on Monday, giving up a desperate struggle to stay in business after previous owner General Motors Co. blocked takeover attempts by Chinese investors, the Associated Press reported. Saab CEO Victor Muller personally handed in the bankruptcy application to a court in southwestern Sweden, ending his two-year effort to revive the carmaker that over more than six decades has become known for its rounded sedans and quirky design features.