Headlines

Poland’s central bank may start increasing interest rates in January as the zloty has lost its power to keep inflation in check, said Adam Glapinski, a member of the Monetary Policy Council, Bloomberg News reported today. The zloty weakened 2.3 percent against the euro in the six weeks through Dec. 22, when the policy makers left the central bank’s benchmark 7-day rate unchanged for the 18th month.

The new chairman of South Korea's financial regulator said the government will act sternly against financial-market disruptions or distortions and ensure systemic stability, the Wall Street Journal reported today. The comments come as Seoul takes steps to protect the domestic market from risks posed by rapid foreign capital flows into and out of the country. "The government will respect the financial industry's autonomy and provide the grounds that will allow the industry to develop on its own," Financial Services Commission's Kim Seok-dong, who officially assumed his post today.

China’s inflation may cool after manufacturing growth slowed in December because of a tighter monetary policy and the closure of energy-wasting and highly polluting factories, Bloomberg News reported today. Premier Wen Jiabao is seeking to limit bank lending and inflows of capital that could fuel inflation after a record expansion in credit drove the nation’s recovery. The central bank raised interest rates on Christmas Day and, six days later, the currency regulator said it was expanding a program to let exporters keep revenue overseas.

The mergers-and-acquisitions market in Europe continued its slow recovery in the fourth quarter, and most investment bankers predict a continued improvement in 2011 despite persistent concerns over Europe's financial health, the Wall Street Journal reported today. There were $228 billion of takeover deals with a European target announced in the quarter through Dec. 30, up 11 percent from the same period a year earlier, according to Dealogic. However, the volume of deals in the fourth quarter was 44 percent lower than in the same period of 2007, the year the last M&A boom peaked.

Royal Bank of Canada is withdrawing from a lawsuit against MBIA Inc. over the insurer’s restructuring in 2009, the third bank this week to drop out, Bloomberg News reported on Friday. Royal Bank of Canada joined JPMorgan Chase & Co. and Barclays Plc in withdrawing from the case, according to a filing today in New York State Supreme Court. The discontinuance orders for Barclays and JPMorgan were filed Dec. 29, according to court papers.

A senior Hero Group executive has been arrested for allegedly receiving a part of more than 3 billion rupees ($67 million) believed to have been misappropriated at a Citigroup Inc. bank branch on the outskirts of New Delhi, the Wall Street Journal reported today. The executive, Sanjay Gupta, allegedly got about 200 million rupees, said Assistant Commissioner of Police Dalbir Singh. A court has allowed the police five days custody of the employee for questioning.

Japan Airlines Corp is privately placing stock with its top executives as the bankrupt carrier looks to boost accountability and reduce its tax burden, the Nikkei business daily reported. About two dozen top executives, including President Masaru Onishi, took part in a recent offering, with each investing several hundred thousand yen. The combined stake comes to less than 1 percent, the paper reported. JAL needed to have multiple shareholders since a wholly owned subsidiary cannot adopt consolidated taxation, it said.

The target date for the completion of Air Malta’s restructuring plan has been extended to the end of the month as the “sensitivity” of the task made it more difficult to meet the early January deadline, Timesofmalta.com reported. The government had set itself the ambitious target of having the plan in place by early January for submission to the European Commission, but this has now been pushed back by a few weeks. Despite this, the government is still well ahead of its EU deadline for the plan and there will be ample time to discuss the reform programme with the European Commission.

There was plenty of Schadenfreude when, in late 2009, Dubai was forced to admit it had trouble paying its debts. The brash emirate’s Gulf neighbours quietly hoped to tempt bankers and business people to their rival financial hubs. Now, irritatingly for many, Dubai is showing signs of recovery, The Economist reported. A $10 billion bail-out by Abu Dhabi staved off the threat of a big default. The emirate returned to the bond markets in September. Although the issue was unrated, it was heavily oversubscribed. So what’s the worry? One concern is how Dubai will meet its future payments.

Korea Asset Management Corporation (KAMCO) will buy about 5 trillion won ($4.38 billion) worth of bad loans from financial institutions and assets from companies under restructuring this year, local media said on Sunday, Reuters reported. The planned purchase amount is a third of KAMCO's purchases set for 2010 a year earlier. South Korea's news agency Yonhap quoted KAMCO Chairman and Chief Executive Chang Young-chul as saying that KAMCO would buy 3.5 trillion won worth of bad loans from savings banks and one trillion won worth of bad loans from commercial banks.