Spain public debt hits record high

Spain's accumulated public debt soared to a record high at the end of June, the Bank of Spain says, shattering government targets despite a relentless austerity squeeze.

Spain, which boasts the eurozone's fourth largest economy, had racked up an unprecedented public debt of 942.8 billion euros ($A1.36 trillion) by mid year, the bank said on Friday.

The figure was equal to 92.2 per cent of the nation's total annual economic output - up 14.7 percentage points from the same period last year.

With just half of the year gone, Spain had already missed its target of limiting the public debt to 91.4 per cent of gross domestic product in 2013, the figures showed.

Prime Minister Mariano Rajoy's conservative government is battling to rein in the soaring public debt by curbing spending.

The ensuing budget cuts have sparked angry street protests as Spaniards endure a two-year recession which pushed the unemployment rate to 26.26 per cent in the second quarter of this year.

High unemployment leads to lower tax income and bigger social security bills for the state, making it even harder to plug the hole in Spain's public accounts.

Rajoy's Popular Party government says it is determined to pursue austerity measures to help the country save 150 billion euros between 2012 and 2014.

It aims to curb the annual public deficit from 7.0 per cent of economic output last year to 6.5 per cent in 2013, on the way to finally bringing it below the European Union-agreed ceiling of 3.0 per cent by 2016.

The Bank of Spain also revised up the first-quarter figures to show the public debt amounted to 90.1 per cent of gross domestic product rather than 88.2 per cent, in line with recent downward revisions of Spain's economic growth.

source: bigpondnews.com

Wells Fargo not modifying mortgages as required, lawsuit says

Accusing Wells Fargo & Co. of reneging on a sweeping mortgage-modification deal, a lawyer for troubled homeowners is trying to reopen a case involving risky "pick-a-pay" loans written during the housing bubble.

Legal filings last week claimed Wells Fargo failed to provide wide-ranging reductions of loan balances to delinquent borrowers as it had promised two years ago when it settled a combined national class-action suit. A bank spokeswoman strongly disputed the claim, saying it was riddled with errors.

The litigation illustrates how lawsuits continue to dog major home lenders more than five years after the mortgage industry imploded, including recent challenges to certain cases the banks thought had been put to rest.

The original lawsuits over pick-a-pay, or pay-option, mortgages contended that the loans were issued with inadequate notice to borrowers that the amount owed would rise if they chose the lowest payment among four options. The loans were made by banks later acquired by Wells Fargo.

"Hundreds of thousands of homeowners were suffering the effects of undisclosed negative amortization for their Pick-a-Payment loans, while the declining U.S. housing market was sucking the remaining equity out of their homes," plaintiffs attorney Jeffrey K. Berns said in a filing Friday.

The settlement was reached in December 2010 before U.S. District Judge Jeremy Fogel in San Jose. At the time, the San Francisco-based bank said it would provide at least $50 million and as much as $600 million in modification benefits to troubled borrowers with the pay-option loans, the Reuters news service reported.

Berns, of Woodland Hills, had calculated the number might reach $2 billion.

Of the 66,000 requests for loan modifications made in the 18 months ending Sept. 30, Wells Fargo granted 1,746, or 2.6%, Berns alleged.

"Thousands of people have been denied loan modifications -- people who, in our opinion, should not have been denied," Berns said in an interview Monday.

His filings included a new lawsuit accusing Wells Fargo of breaching the settlement, acting in bad faith and violating a state unfair competition law. In a separate filing, Berns asked the court to order the bank to stop all foreclosures on the loans to allow him to investigate the situation.

The pay-option loans were made by a large Oakland savings and loan, World Savings, which was acquired in 2006 by Wachovia Corp. of Charlotte, N.C. Wachovia continued to make the mortgages and was near collapse in 2008 when it was acquired by Wells Fargo.

In a statement, Wells Fargo said it would "immediately and forcefully" defend the new lawsuit, which it said "maligns a very effective consumer loan settlement program."

Wells Fargo didn't break out how many borrowers covered by the settlement had received reductions in the principal on their loans.

But it said its overall efforts on behalf of people with the tricky loans had been extensive, including many loan modifications that included principal reduction in the two years leading up to the settlement.

"We have provided modifications for nearly 110,000 borrowers with Pick-a-Pay loans and principal reductions of more than $5 billion for those borrowers," Wells said. "That means that more than a third of all Pick-a-Pay loans --  including those covered by the settlement and those not included -- have been modified since the beginning of 2009."

source: latimes.com

Standard Chartered CEO takes charge of Iran probe talks

(REUTERS) - Standard Chartered's chief executive Peter Sands has flown to New York to take personal control of the bank's attempts to reach a settlement with United States (US) regulators over allegations it hid transactions involving Iran.

Mr Sands is also ready to attend a hearing set for Wednesday at which the London-based bank has been told by the New York banking regulator that it must demonstrate why its state banking license should not be revoked over the transactions.

A Standard Chartered spokesman said the bank was waiting to hear from the Department of Financial Services (DFS) what form the hearing will take.

"Peter is happy to go if that's appropriate," a Standard Chartered spokesman said on Tuesday.

source: straitstimes.com

Philippine bank in $1 billion rights issue

MANILA, Philippines -- BDO Unibank, the Philippines' largest lender, launched a record $1 billion rights offer Tuesday, as it looks to boost its capital base to comply with new global banking rules due to come into effect.

The bank, controlled by the Philippines' richest man Henry Sy, said in a statement it will sell 895.2 million common shares to existing shareholders at 48.60 pesos ($1.12) per share.

The offer will run from June 18 to 27 but will only be available to those who hold BDO stock as of June 7, said its chairwoman, the shopping mall tycoon's daughter Teresita Sy.

"This capital raising is intended to support the growth and expansion of the bank amidst the positive sentiment on the economy," Teresita Sy said in the statement.

"At the same time (it will) strengthen the bank's capital position in anticipation of new Basel III requirements," she said.

Existing shareholders will be entitled to buy one share for every three they already own.

BDO Unibank closed 0.15 percent higher on Tuesday at 65.05 pesos.

The additional shares have been given a tentative listing date of July 4.

The move comes as the so-called Basel III rules mandating banks increase their capital-to-assets ratios, which are designed to avert another crisis like that seen in 2008, are set to be rolled out from next year.

The new rules will require banks to raise their high-quality core capital to 7.0 percent of total assets from the current 2.0 percent.

source: interaksyon.com