Headlines

Romano Prodi recalls how he persuaded Germany to allow debt-swamped Italy into the euro: support our membership and we’ll buy your milk, he said. When Prodi toured Germany’s agricultural heartland after becoming Italian leader in 1996, he pitched “a big milk pipeline from Bavaria,” pointing to a three-year, 40 percent plunge in the Italian lira that was hurting dairy sales. “To have Italy outside the euro, a huge quantity of exports from Germany would have been endangered,” Prodi, now 70, said.

AbitibiBowater Inc., the Canadian paper company that sought bankruptcy protection last year to restructure its crushing debt load, won approval to keep sole control of its Chapter 11 case for another two months, Dow Jones Daily Bankruptcy Review reported. Judge Kevin J. Carey of the U.S. Bankruptcy Court in Wilmington, Del., approved the Montreal-based pulp and paper manufacturer's request for an extension through July 21 of its sole right to file a plan to exit bankruptcy.

Creditors for the Riverland freight business, Fletcher's Freighters, will meet today to discuss the company's future, after the owner Barry Fletcher was made redundant, ABC News reported. Fletchers Freighters went into voluntary administration in March this year, to allow more time to developing a restructuring plan. But less than two-months on, interstate depots in Brisbane, Sydney and Melbourne have closed. Administrator McGrathNicol says there are about 100 workers left with the company, although the recent loss of a contract with National Foods cut 40 per cent of the freighter's business.

Patients will continue to receive their publicly funded knee and hip replacement surgeries at a private medical facility in Calgary until January, but it will come at an additional cost to taxpayers, The Vancouver Sun reported. Alberta Health Services filed an application in Court of Queen's earlier this month in a bid to ward off bankruptcy proceedings caused by a legal dispute between Networc Health — which owns the Health Resource Centre — and one of its creditors, Cambrian Group of Companies.

China Southern Airlines is now Asia's largest carrier by passenger numbers after overtaking troubled Japan Airlines Corp, or JAL, according to figures provided by the two companies, Agence France-Presse reported. China Southern actually overtook JAL in 2008 when its passenger volume rose to 58.24 million, according to data supplied by the Chinese carrier to AFP on Wednesday. The airline, which has China's largest fleet, extended its lead even further last year as its numbers climbed to 66.28 million passengers, China Southern said.

Revolving funds that were meant to help Kenyan youth and women start businesses are chalking up bad debt, causing fear of a looming liquidity crisis that could also rob them of support from financiers, Business Daily reported. Fund managers said there has been a huge build up of bad debts in the past 12 months forcing them to consider involving the provincial administration in the disbursement of new loans.

Fitch Ratings said today that Greek and Irish banks’ reliance on European Central Bank loans is out of proportion to the size of their assets, Finfacts reported. Greek banks accounted for 6.6% of the €749bn the ECB lent to financial companies by the end of 2009, though only held 1.6% of the Eurozone's banking assets, Fitch analysts wrote in a report. Irish banks took 12% of ECB funding, compared to a 5.24% share of the region’s bank assets.

The European Union's executive arm called for centralized review of member countries' budgets, a first step toward a tighter integration of fiscal affairs in Europe that would have been all but unthinkable just a few months ago, The Wall Street Journal reported. The European Commission proposed Wednesday that EU governments submit their budgets to Brussels for review by other governments before they are passed by parliaments. It also advocated punitive measures for countries that flout the EU's budget rules.

One of Scotland’s oldest housebuilders has been forced into receivership by the Bank of Scotland, The Herald reported. Renfrewshire-based John Dickie Group, founded in 1880, was told at the beginning of the month that the bank was not prepared to continue its support, and the directors were asked to call in administrators. They resisted, and yesterday the bank called in receivers, whose appointment is likely to be announced today.

The International Monetary Fund is ready to do deals. Bolstered by a big new balance sheet and the outsize ambition of its globe-trotting managing director, Dominique Strauss-Kahn, the I.M.F is now presenting itself as the indispensable institution in the sovereign debt crisis, The New York Times reported. Trying to shed its old image as a hidebound policy task master, the fund is refashioning itself as the investment bank of multilateral institutions — doing whatever it takes to get the deal done.