Headlines

Debt-ridden Japan Airlines Corp and the state-backed turnaround body overseeing its restructuring have sought lender approval to waive off more than 521.6 billion yen ($6 billion) that JAL owes, the Nikkei business daily reported. Of the 521.6 billion yen for which approval is being sought, the company has 383 billion yen in loans and the rest in corporate bond and derivatives, the paper said. As part of the restructuring plan, the Enterprise Turnaround Initiative Corp of Japan has asked the Development Bank of Japan to write off 142.1 billion yen of JAL debt on its books, Nikkei reported.

Households and small businesses across Central and Eastern Europe are sinking under the weight of foreign-currency debts, The Wall Street Journal reported. It's a sign of how the problems facing the region's financial system go beyond the borrowing by spendthrift governments that has been the main focus of investors. The rising number of borrowers' defaults already has hit bank profits. Ratings agencies warn that the exposure to foreign-currency lending could hurt the creditworthiness of financial institutions in the region.

At last some answers to a major question mark hanging over the Chinese banking sector: Just how much of its lending has gone to local government investment vehicles—and how iffy has that lending been? Because of restrictions on how much local governments can borrow from banks directly, off-balance-sheet funding has become a key means for them to obtain financing. These funds, in turn, have fueled the investment boom that lies behind China's solid economic growth since the global financial crisis, The Wall Street Journal Heard on the Street blog reported.

State-owned Anglo Irish Bank is set to take control of department store Arnotts, The Irish Times reported. The bank is one of the backers of Arnotts' planned Northern Quarter development, which has been put on hold. The department store will come under the joint control of the nationalised bank and Ulster Bank. Anglo is believed to have told the EU of its intended move. Arnotts is said to have debts of more than €250 million. In February, Art Holdings, which owns Arnotts, was negotiating new banking facilities with the lenders.

Canada's BCE Inc. has agreed to pay $40 million cash and drop $500 million worth of claims to settle litigation over the collapse of Teleglobe Communications Corp., a failed subsidiary, Dow Jones Daily Bankruptcy Review reported. Documents filed with the U.S. Bankruptcy Court in Wilmington, Del., set out terms of the pact, which caps five years of litigation in courts in the U.S. and Canada. The deal means cash for bondholders of Teleglobe and a smaller pile of debt in the bankruptcy case, a product of the telecommunications industry meltdown of 2000 and 2001.

India plans to start conducting twice-yearly stress tests on its banks, following in the footsteps of financial regulators in the US and Europe, the Financial Times reported. The Reserve Bank of India said on Tuesday that it had conducted rudimentary stress tests during the global financial crisis to check credit and interest rate risk. The bank said it would undertake more sophisticated tests in the future to build confidence in the country’s banking system.

Christchurch developer David Henderson has been granted a stay to fight a court order to liquidate his flagship company, Property Ventures, BusinessDay.co.nz reported. The company, of which Henderson is a director, owes Inland Revenue at least $88,734 in tax, which it failed to pay between September 2008 and February 2010.

The International Monetary Fund began inspecting Greece's public finances on Monday to make sure the government is implementing promised austerity measures before it gains access to a second rescue loan installment in mid-September, the Associated Press reported. The inspectors arrived as strikes continued against the painful spending cuts and an overhaul of labor rules. A walkout by fuel-tanker drivers caused supply shortages in Athens, while serious departure delays were reported at Athens International Airport as air traffic controllers continued a work-to-rule protest started last week.

According to Chinese officials Monday, Chinese banks have encountered high default risks on part of loans they have lent to local governments across the country, the Global Times reported. China's commercial banks have identified it to be at least one-fifth of the 7,700-billion-yuan loan ($1,135 billion). Though these questionable loans not always go bad, the country's non-performing loan (NPL) ratio is almost certain to increase slightly by the end of the year, said an official from the China Banking Regulatory Commission (CBRC).

Former Anglo Irish Bank chief Seán FitzPatrick, who owes creditors a total of €150 million and has assets of around €50 million, was in court as bankruptcy proceedings continued against him. Legal representatives for Anglo Irish Bank, which says it is owed up to €110 million, told the court it was seeking to have a “trustee in bankruptcy” appointed to the case. This trustee would replace a court-appointed official, Chris Lehane, who was assigned a fortnight ago to deal with Mr FitzPatrick’s assets and debts.