Headlines

Ireland’s banks face a capital shortfall of up to €32 billion, the country’s regulator and finance ministry said on Tuesday, with the Irish government liable for up to three-quarters of that figure, the Financial Times reported. The black hole, equivalent to about 20 per cent of gross domestic product, is far bigger than expected. It emerged after the country’s new bad bank, the National Asset Management Agency, announced the acquisition of €16 billion ($21.5 billion, £14.3 billion) of mostly real estate loans, setting it on the road to become Ireland’s biggest property owner.

Lehman Brothers Australia Ltd. will remain in liquidation after the High Court of Australia ruled Tuesday against an arrangement that would have left creditors with small recoveries on complex structured debt products and also would have also prevented creditors from suing Lehman entities, Dow Jones Daily Bankruptcy Review reported. The City of Swan, in Perth, and the Parkes and Wingecarribie councils in New South Wales state all lost millions of dollars investing in Lehman's structured products prior to the firm's collapse in September 2008.

A council overseeing the restructuring of Dubai's chief conglomerate says a new board has been named to lead Dubai World's deeply indebted property development unit Nakheel through its restructuring, The Sydney Morning Herald reported. An statement emailed Tuesday from the Dubai ruler's office said the board will outline the developer's priorities over the coming period and oversee implementation of its remaining projects.

Greek sovereign bonds suffered a sharp sell-off on Tuesday as investor concerns over the country’s financial health flared up again, the Financial Times reported. In spite of mooted support from the European Union and the International Monetary Fund, investors remain concerned that Germany could refuse to provide financial aid if the Greeks fail to meet their deficit reduction targets later in the year. Greece must raise €35 billion ($47 billion) of debt this year to avoid a bail-out. It has sold €18 billion so far.

Alliance Bank, the second-largest Kazakh lender to default last year, said it completed restructuring 677 billion tenge ($4.6 billion) of debt, BusinessWeek reported on a Bloomberg story. Under a plan accepted by creditors in December, all of Alliance’s obligations were “restructured and annulled in exchange for money, new bonds and shares,” the lender said in an e-mailed statement today. The bank plans to start borrowing from abroad next year after markets open for Kazakh lenders, Chief Executive Officer Maksat Kabashev told reporters in Almaty.

Defense attorneys want a federal judge to throw out a $24 billion predatory lending lawsuit filed against Credit Suisse Group by investors in broke resorts in the West and the Bahamas, The Associated Press reported. The investors contend Credit Suisse set up a branch in the Cayman Islands to skirt U.S. rules and appraised the resorts at inflated prices as part of a scheme to later foreclose on the properties. In court documents filed Monday, attorneys for Credit Suisse said the legal action was based on absurd claims by people who never borrowed money from the bank.

The financial regulator has placed Quinn Insurance Limited, one of Ireland's largest insurance companies, into provisional administration but Quinn said it could have resolved its problems in another way, Reuters reported. The regulator said the move would allow the firm to remain open for business and run as a going concern under different management while it is put on a sound commercial and financial footing. "At the same time the Financial Regulator has commenced an investigation into certain matters within Quinn Insurance Limited that have very recently come to light," the regulator said.

Macquarie DDR Trust has sought an indefinite trading suspension as its battles with its bankers for a refinancing package, The Sydney Morning Herald reported. If a deal is not brokered it could lead to involuntary administration and the loss of control by management, according to brokers. The trust, which went into a trading halt last week, said yesterday it needed more time to finalise the repayment of its debt or organise a refinancing schedule for a number of loans and derivatives that matured on Friday.

After Dubai World unveiled its much anticipated restructuring proposal for its debts last week, the overwhelming reaction seemed to be that of “a step in the right direction”. Yet the phrase was swiftly followed by a “but”, the Financial Times reported in a commentary. Some of the caution is linked to details that have still to be thrashed out – significantly, whether bank creditors of Dubai World will receive interest and, if so, at what level. That will help decide just how much pain the creditors will be asked to endure.

Germany's tough conditions for any aid for Greece, which other euro-zone countries were forced to swallow at a European Union leaders' summit last week, signal a broader division that threatens to hamper Europe's ambitions as a global power: Germany has cooled to unity, except on its terms, The Wall Street Journal reported. In the past two years Germany effectively vetoed joint European action to rescue banks and stimulate growth, and rejected euro-zone calls for more teamwork on economic policy.