Headlines

State Bank of India, the country's largest lender by assets, today tapped into the debt market to raise short-term funds for the first time in three months, as the banking system continued to face a severe liquidity crunch, the Wall Street Journal reported today. The state-run bank privately placed 11.50 billion rupees ($255 million) of certificates of deposit maturing in March and the deposits will pay a yield of 8.97 percent.

Ireland's Finance Minister Brian Lenihan today announced plans to recapitalize Allied Irish Banks PLC by €3.7 billion ($3.93 billion) to meet the financial regulator's year-end capital requirements, effectively making it the fourth Irish lender to be nationalized, the Wall Street Journal reported today. Allied Irish Banks already received €3.5 billion in state aid in 2009, but the bank needs another €3.7 billion by year-end to meet its 8% Core Tier 1 target and, observers say, another €6.1 billion by the end of February to meet the financial regulator's 12% Core Tier 1 target.

Henderson Global Investors said that it had acquired a major development site in the southeast English city of Winchester for shops and over 300 homes, from the administrators of UK developer Thornfield, Reuters reported today. The 600,000-square-foot Silver Hill project was put on hold after Thornfield entered into administration last January, Henderson said on Wednesday. Henderson said that it got the development through the acquisition of two Thornfield entities from administrators Deloitte for an undisclosed sum.

DP World said Wednesday it sold 75 percent of its Australian port interests to an infrastructure fund managed by Citigroup Inc. for around 1.5 billion Australian dollars ($1.49 billion) to reduce debt, the Wall Street Journal reported today. The Dubai-based ports operator, majority-owned by government conglomerate Dubai World, will retain a 25 percent interest in DP World Australia, which operates five container terminals. The sale price includes repayment of loans owed to DP World by DP World Australia, it said.

Deutsche Bank agreed to pay $553 million and admit to criminal wrongdoing yesterday, settling a long-running investigation into tax shelter fraud that prosecutors say generated billions of dollars in bogus tax benefits, the New York Times reported today. In an agreement with the United States Attorney’s Office in Manhattan, Deutsche Bank will avoid prosecution for helping 2,100 customers evade taxes through 2,300 financial transactions.

The chief executive of the Indian Banks Association indicated today that banks will ensure microlenders remain fully funded in the short term to help them overcome temporary hiccups in repayments and maintain business as usual, the Wall Street Journal reported today. Indian microlenders have been plagued by liquidity issues after the southern Indian state of Andhra Pradesh recently enacted laws to tighten regulation of the microfinance industry.

What is not in the documents published by the Basel Committee on Banking Supervision, and the escape hatches that are, may have more impact on how financial institutions will operate following a global credit crisis that led to $1.8 trillion in bank losses and writedowns, according to an Bloomberg analysis today. The committee’s most significant achievement, members say, an agreement to increase the amount of capital banks need to hold, will not go into full effect for eight years.

China has promised to take further “concerted action” to support European financial stabilisation, including continuing to buy the bonds of countries at the centre of the sovereign debt crisis, the Financial Times reported yesterday. Officials said that Wang Qishan, a Chinese vice-premier, had given assurances that China would step up support for European stabilisation efforts “if necessary”. Wang made the pledge during the third annual China-EU High Level Economic and Trade Dialogue, held in Beijing on Tuesday.

Hungary's central bank raised interest rates for the second month in a row, deepening the rift between it and the country's government, which is trying to jump-start a flagging national economy, the Wall Street Journal reported today. After announcing another quarter-point increase in the National Bank of Hungary's policy rate Monday, the central bank's governor, Andras Simor, said that the step was necessary to keep inflation in check.

The Bank of Japan said that it will “steadily” provide liquidity, as a climb in short-term borrowing costs posed a risk to the nation’s expansion, Bloomberg News reported today. “The bank will steadily purchase various financial assets and provide longer-term funds” so that “the effects of comprehensive monetary easing spread,” it said in the statement in Tokyo today. It left the size of its asset-buying fund and credit programs at 5 trillion yen ($60 billion) and 30 trillion yen respectively and kept the key interest rate unchanged.