Headlines

A Latvian government proposal to radically restructure the country's ailing economy is credible and ambitious, the Swedish government said Wednesday on behalf of a group of Nordic and Baltic countries, Agence France-Presse reported. "The fiscal restructuring programme is...one of the most credible restructuring programmes we've seen. It's very ambitious," Swedish Finance Minister Anders Borg told reporters in Stockholm, speaking for the eight-nation constituency.

Philippine Deposit Insurance Corp. took over the Rural Bank of Parañaque, Inc. after the central bank ordered its closure on Monday. The receivership order, which meant the responsibility of recouping as much of the bank’s unpaid loans has been transferred to the state deposit insurer, was stated in Monetary Board Resolution 1616 issued on Monday. Central bank records showed the bank, known for its double-your-money-time-deposit scheme, has a capital deficiency of P983.5 million as of July 2007. RBPI has 37,400 deposit accounts worth P5.4 billion, of which P5 billion is insured.

Even if Detroit's car makers get an interim bailout, their suppliers face a wave of business failures in coming months that are expected to disrupt the flow of parts to U.S. assembly lines run by both U.S. and foreign makers, The Wall Street Journal reported. The disruptions won't be as severe or widespread as they might be in the face of a sudden bankruptcy by a Detroit auto maker, but industry experts say they are inevitable.

Tribune Co's bankruptcy filing on Monday could put an additional burden on newsprint producer AbitibiBowater Inc, which has been pushed to the brink by mounting liquidity concerns and a slump in newsprint demand, Reuters reported. Although Tribune plans to continue operate while under bankruptcy protection, analysts fear that Tribune's bankruptcy filing could lead to further deterioration in newsprint demand, which is already down about 15 percent year-to-date in the United States.

Landsbanki Islands hf sought bankruptcy protection from its U.S. creditors on Tuesday, the last of Iceland's three largest banks to do so in the last two weeks, Reuters reported. The Reykjavik-based lender filed a Chapter 15 bankruptcy petition with the U.S. bankruptcy court for the Southern District of New York. It said it had more than $1 billion of both assets and liabilities. Iceland's banks had taken on billions of dollars of debt in recent years to fund aggressive overseas expansion.

Nortel Networks Corp. has sought legal counsel to explore bankruptcy-court protection from creditors in the event that its restructuring plan fails, according to people familiar with the situation. The move comes as the Toronto-based company grapples with plummeting sales for its wireless gear and as the credit crunch hobbles the sale of key assets, The Wall Street Journal reported. A spokesman for Nortel said that "no bankruptcy filing is imminent," but added that the company has engaged several advisers to help it chart a way forward.

Rio Tinto, the giant miner, said Wednesday that it would cut 14,000 jobs and sharply reduce spending as demand for raw materials slows sharply, the International Herald Tribune reported. The Anglo-Australian company cited the "unprecedented rapidity and severity of the global economic downturn," and said it was shedding 14,000 jobs, of which 8,500 are contract positions. It will also cut capital expenditure next year by more than half. It said the measures would help to reduce operating costs by $2.5 billion a year by 2010.

Global airlines are heading into their worst business crisis for 50 years with carriers facing possible collapse, revenues tumbling and hundreds of thousands of jobs at risk, the industry body IATA said on Tuesday. In a forecast for 2009, it said losses were expected to total $2.5 billion despite a boost from falling oil prices, with European airlines' deficits soaring tenfold over 2008 to $1 billion and Asia-Pacific's doubling to $1.1 billion.

Troubled German property lender Hypo Real Estate, already saved from bankruptcy by the state, has said it would finally receive 30 billion euros in state loan guarantees rather than 20 billion under a government rescue plan for the banking sector, Agence France-Presse reported. The real estate specialist would use the guarantees to refinance debts coming due on January 15, it said in a statement on Tuesday. HRE, Germany's biggest victim of the banking crisis, was caught in a liquidity crunch that worsened after the US investment bank Lehman Brothers declared bankruptcy in mid-September.

Kazakhstan sought to reassure investors on Wednesday that none of its banks would default on foreign debt although some bilateral loans may be restructured, the Guardian reported. Central bank Governor Anvar Saidenov said he was confident none of the local banks would default on its obligations. Kazakhstan has been hit badly by the global financial crisis and has announced a $21 billion aid package--roughly equivalent to 20 percent of gross domestic product--to help its oil-fuelled economy.