Headlines

Nigerian banks are extremely risky, despite a N620bn bailout of the sector in 2009, a global rating agency, Standard & Poor, has said. “The Nigerian banking system is still highly risky. The ratings we have for the banks are in the single ‘B’ category, it‘s a very very low level compared to most banks in the world,” Mr. John Gibling, Managing Director (financial institutions) at S&P, said in London on Monday, Punch reported.

The European Commission Tuesday cleared Spanish aid for the restructuring of the local savings bank Caja Castilla-La Mancha, Dow Jones reported. "The commission is satisfied that Caja Castilla-La Mancha has been restructured in a way that limits distortions of competition and ensures the viability of the banking activities," said Joaquin Almunia, the commission's vice president in charge of competition.

Failed Dutch bank DSB should not have been given a licence to operate, the commission that investigated its collapse said on Tuesday, pinning the ultimate blame on bad management of the bank. The tough report will put added pressure on central bank president Nout Wellink, who has been heavily criticised for his work since the start of the financial crisis. The Dutch central bank, known as the DNB, issues banks their operating licences. DSB, which got its license in 2005, failed after an Oct. 1 TV interview with a lawyer for a DSB mortgage holders' foundation.

It is time to recognise that Greece is not just suffering from a liquidity crisis; it is facing an insolvency crisis too, the Financial Times reported in a commentary. Rating agencies have started to downgrade its public debt to junk level, while spreads on Greek sovereign bonds last week spiked to new highs. The €110bn bail-out agreed by the European Union and the International Monetary Fund in May only delays the inevitable default and risks making it disorderly when it comes. Instead, an orderly restructuring of Greece’s public debt is needed now.

Public services in Greece ground to a halt and transport was disrupted on Tuesday as thousands of workers joined a general strike, the fifth this year, to protest deeply unpopular spending cuts that the debt-ridden government has promised its international creditors, The New York Times reported. The country’s two main labor unions, representing some three million workers, vehemently oppose a draft law that aims to raise retirement ages, reduce monthly payments to pensioners and facilitate layoffs.

Nortel Networks Corp. has complained to a U.S. bankruptcy court that Avaya Inc. is balking at handing over $22 million of the agreed $900 million purchase price for Nortel's enterprise business, Dow Jones Daily Bankruptcy Review reported. As it musters cash to pay creditors, Nortel says, it needs a court order to force Avaya to turn over the money, which it says is being withheld in violation of the sale agreement.

Bankruptcy laws have been modernised under legislation passed by the Senate, as a growing number of Australians get into financial strife through consumer debt, The Sydney Morning Herald reported. There was an 11 per cent increase in personal bankruptcies last financial year, according to the federal government. Labor's amended draft laws raise the minimum amount on which a creditor can petition for bankruptcy from $2000 to $5000. Originally, the amount was $10,000, but the government successfully moved to reduce the figure.

The Financial Stability Board on Sunday urged leaders of the world's 20 largest developed and emerging nations to support the introduction of stricter capital rules to help banks withstand possible future crises, Dow Jones reported. The statement, made in a letter to the Group of 20, comes amid a tussle involving governments, banks and regulators on the scope of the new rules and the timing of their implementation.

The French government on Friday announced a further €3.5bn of tax rises for 2011 the latest in a series of announcements that puts Paris’s austerity drive on par with Berlin’s much-criticised plan to trim its budget, the Financial Times reported. The latest announcement – intended to reassure the markets while not scaring the French public about impending austerity –- brings to €13.2bn the amount France aims to raise from tax increases next year.

A confectionary company at the centre of a landmark intellectual property fight with Mars Australia has been placed in voluntary administration following the collapse of its parent company Reseau International Trading, which is believed to owe about $100 million to investors and creditors, SmartCompany.com.au reported. The Sweet Rewards, RIT and another company called Salt Pan Trading were placed in administration late last week at the request of RIT director Richard Smith.