ICBC does bank capital, but not as we know it

By Steve Garton

Fri Dec 5, 2014 11:02am EST

LONDON, Dec 5 (IFR) - China's latest bank capital benchmark has answered some questions over the depth of the investor base for the product, but it says more about the gulf in approaches to Basel III capital that exists between Europe and Asia.

ICBC, the world's second biggest bank by market value, has become the second Chinese lender to make waves in the bank capital market with a jumbo offer of Additional Tier 1 capital .

While the slightly smaller Bank of China had relied heavily on Greater China investors for its US$6.5bn debut in October, ICBC's deal had a much more global flavour, adding a euro and Dim Sum tranche, and securing more orders from fund managers.

Still, this was far from a regular bank capital issue - at least in the European definition.

For one thing, 40% of the euro tranche went to central banks. That would be a bizarre allocation in Europe, where strict selling restrictions are in place to minimise systemic risk.

German authorities, for example, do not even allow insurance companies to invest in AT1, while retail buyers are barred across the continent for fear that individual investors would make it harder for governments to enforce loss-absorption triggers.

If AT1 is to function as a capital cushion, bolstering banks' balance sheets with debt that can be written off in times of trouble, then central banks have no place investing in these securities.

In Europe, where banks are mostly privately owned, imposing a write-down on a government would defeat the purpose of a product that was conceived to protect taxpayers from unnecessary bank bail-outs.

But in China, as in much of Asia, many financial institutions are state-owned, and some rely regularly on government injections to continue policy-directed lending. The line between public and private investments is far more blurred.

True, BOC and ICBC carefully designed their AT1 securities to resemble the western model as closely as possible. But that is where the similarity ends. A global standard remains a long way off. (Reporting by Steve Garton, Editing by Matthew Davies)

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UPDATE 1-Apparel retailer Delia*s to file for bankruptcy

Fri Dec 5, 2014 10:55am EST

(Adds details, updates share move)

Dec 5 (Reuters) - Delia*s Inc said it was liquidating assets and would file for Chapter 11 bankruptcy protection "in the very near term," becoming the second teen retailer to go out of business in as many days.

Delia*s announcement wiped out more than 85 percent of the company's market value on Friday.

Teen and young women's fashion chain Deb Shops, which is controlled by private equity firm Cerberus Capital Management , filed for its second bankruptcy in less than four years on Thursday and said it would seek a buyer.

Several teen apparel retailers have been losing market share to fast-fashion brands such as H&M, Forever 21 and Inditex's Zara, which bring the latest styles from the runway to their stores within weeks.

Many, like Abercrombie & Fitch Co, are moving away from logo-based goods to trendier merchandise that appeals to fashion-conscious teens and increasing online presence.

Sales at Delia*s, which has 95 mall-based stores, has fallen for six quarters in a row.

The New York-based company, which launched a review of strategic alternatives in September, said it was unable to sell itself or secure financing to allow it to remain a going concern.

The company, which has not reported a quarterly profit since early 2011, had total liabilities of $37.6 million and assets of $75.6 million as of Aug. 2.

The company had 499 full-time and 1,190 part-time employees as of February.

Delia*s shares were trading at 1.5 cents. The stock, which traded as high as $12 in 2006, hit a 52-week high of $1.35 in March. (Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Saumyadeb Chakrabarty)

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Detroit may not exit bankruptcy until Dec. 15

DETROIT Fri Dec 5, 2014 4:01pm EST

DETROIT Dec 5 (Reuters) - Detroit might not be ready to exit the biggest municipal bankruptcy in U.S. history until Dec. 15, a spokesman for the city's emergency manager said on Friday.

"(The) 15th is the target we think the city can meet," said Bill Nowling, the spokesman.

An attorney for the city said last month Detroit could potentially exit bankruptcy around Dec. 8-10 as it incorporated the debt adjustment plan into its budget. The plan was approved by a U.S. Bankruptcy Court judge on Nov. 7.

Detroit, which was sinking under heavy debt, loss of population and falling revenue, filed for bankruptcy in July 2013. Under the plan, the city will shed about $7 billion of its $18 billion of debt and obligations.

Kevyn Orr, the city's state-appointed emergency manager, told a state-created financial review commission on Friday that he plans to sign his last order soon. It will inform Michigan Governor Rick Snyder and the commission that Detroit's financial emergency is over and that he is resigning from the post he has held since March 2013.

Orr also said Detroit's two-year budget will eliminate a carry over deficit of about $58 million and incorporate a reserve fund totaling $62 million, or 5 percent of appropriations required under state law. The budget will also provide $49 million that could be tapped to fund restructuring initiatives in fiscal 2016, he added. (Reporting by Serena Marie Daniels in Detroit. Additional reporting by Karen Pierog in Chicago. Editing by Andre Grenon)

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Vitol-linked Cockett Marine to hire ex-OW Bunker China team

SINGAPORE Fri Dec 5, 2014 12:23am EST

SINGAPORE Dec 5 (Reuters) - A Dubai-based venture half-owned by commodities trader Vitol SA has hired more than 10 ex-OW Bunker employees in China, showing how swiftly merchants are filling the vacuum left by the former top marine fuel supplier, China-based traders said on Friday.

The hiring spree by Cockett Marine Oil follows a similar move by Swiss trader, Mercuria, who has scooped up close to 20 ex-OW Bunker employees in South Korea and Japan.

OW Bunker, once the leading supplier of the marine fuel oil know as "bunker" with a 7 percent market share, filed for bankruptcy in Denmark in November after revealing losses of at least $125 million at one of its Singapore-based subsidiaries.

Cockett Marine's hiring will extend its reach in China, where total sales of bunker fuel amount to around 900,000 tonnes of bunker fuel a month. Dubai-based Cockett Marine currently sells about 30,000-50,000 tonnes a month in China, according to a China-based trader,

OW Bunker China, which had offices in Beijing and Shanghai, sold around 80,000-100,000 tonnes of shipping fuel a month in China, nearly 10 percent of the entire Chinese market.

Market sources said there were at least 10 traders in the China team, and that finance and operations staff have also been absorbed by Cockett Marine.

Besides seizing OW Bunker China's businesses, Cockett Marine is also looking to hire six to seven traders from OW Bunker's Singapore office, Singapore-based industry sources said.

Cockett Marine and Vitol declined to comment.

Cockett Marine is a 50-50 joint venture between Vitol and South Africa-based Grindrod Group which has businesses in logistics, shipping, and commodities. (Reporting By Jane Xie, with additional reporting by Jacob Gronholt-Pedersen in SINGAPORE and Dmitry Zhdannikov in LONDON; Editing by Tom Hogue)

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Cerberus-owned Deb Shops files for bankruptcy

Thu Dec 4, 2014 11:43am EST

(Reuters) - The owner of the Deb Shops retail chain filed its second bankruptcy in less than four years on Thursday, blaming outdated stores and competition in the teen and young women's fashion business, according to court documents.

Deb Stores Holding LLC said it would seek a buyer of the business, but if it failed to do so, it planned to conduct a going-out-of-business sale at its 295 stores, according to filings with the U.S. Bankruptcy Court in Wilmington, Delaware.

Investors in Deb Stores Holding include affiliates of Cerberus Capital Management, Abelco LLC and Styx Partners LP, according to court documents. (Reporting by Tom Hals in Wilmington, Delaware)

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UPDATE 1-Cerberus-owned Deb Shops files for bankruptcy

Thu Dec 4, 2014 1:30pm EST

(Adds details and background from paragraph three)

By Tom Hals

Dec 5 (Reuters) - The Deb Shops retail chain filed its second bankruptcy in less than four years on Thursday and said it may conduct a going-out-of-business sale at its 295 stores that specialize in teen and young women's fashion, according to court documents.

Deb Stores Holding LLC, which is controlled by private equity firm Cerberus Capital Management, said it would seek a buyer of the business. If no buyer emerged, it planned to call in the liquidators, according to filings with the U.S. Bankruptcy Court in Wilmington, Delaware.

"Deb's recent performance has been strained due to a combination of factors, including historic lack of capital invested in (the) business resulting in old tired stores," said Dawn Robertson, the company's president, in a court filing.

Robertson also blamed weakness in teen fashion.

Teen apparel retailers such as Aeropostale Inc and American Eagle Outfitters have struggled to compete with modestly priced "fast fashion" chains such as H&M of Sweden and Forever 21.

Philadelphia-based Deb Shops operates in 44 states, primarily along the East Coast and in the Midwest. The company employs 4,000 full-time and part-time employees, according to court documents.

The company said its revenues in the first 10 months of the year was $205 million, down about 10 percent from the same period in 2013.

Deb Stores retained investment bank Houlihan Lokey in October to find a buyer, and while none were found, Robertson said in court papers the company remains hopeful for a rescue sale to keep the chain operating.

Deb Shops also filed for bankruptcy in 2011, and sold the business to its lenders who converted what they were owed into ownership.

Those lenders included Cerberus Capital Management, which now owns nearly 70 percent, followed by Guggenheim Partners, with 21 percent, and Credit Suisse Securities USA LLC and Lee Equity Partners.

Lee Equity is the investment firm of Thomas H. Lee, who bought the chain in 2007 during the buyout boom for $395 million.

Deb Shops traces its roots to Philip Rounick and Emma Weiner, who opened their first shop in Philadelphia in 1932 under the name JOY Hosiery. (Reporting by Tom Hals in Wilmington, Delaware)

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BRIEF-Court in Wroclaw announces Aduma's bankruptcy

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

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BES successor is Portugal's No.3 bank, has solid 9.2 pct CET1 ratio

LISBON Wed Dec 3, 2014 4:31pm EST

LISBON Dec 3 (Reuters) - The first balance sheet of Portugal's Novo Banco, the successor to Banco Espirito Santo after a state rescue, showed the bank slipped behind rival Millennium bcp in terms of assets but had a solvency ratio well above the required threshold.

The balance sheet published on Wednesday showed Novo Banco had a common equity Tier 1 ratio of 9.2 percent, above the minimum 7 percent required by the Bank of Portugal, which separately confirmed that ratio.

When it devised a 4.9 billion euro rescue plan for BES in early August, the Bank of Portugal said the capitalisation would leave Novo Banco with an 8.5 percent capital ratio. Just before the rescue, the solvency ratio had fallen below 5 percent.

The bank's consolidated assets stood at nearly 72.5 billion euros, meaning the lender had shed some 7.75 billion euros in assets following huge losses and the rescue of BES and is now the country's third-largest lender by assets after state-owned Caixa Geral de Depositos and the listed Millennium bcp.

CGD has assets of over 100 billion euros and Millennium nearly 79 billion.

The state rescued Portugal's BES in early August with a 4.9 billion euro ($6.1 billion) package, mostly in public funds, after the business empire of the Espirito Santos collapsed under a mountain of debt.

The rescue split BES into the working Novo Banco and a "bad bank" exposed to the liabilities of its founding Espirito Santo family. The government wants to sell Novo Banco in the coming months to recover the rescue funds.

Banco BPI, a smaller bank with assets at around 42 billion euros, has said it may be interested in buying Novo Banco. Local media have said China's Fosun may also be interested.

Novo Banco's gross loans to clients stood at 43.8 billion euros, down from BES's 51.3 billion as of the end of June, while deposits stood at 25.1 billion euros, down from 35.9 billion.

Novo Banco CEO, Eduardo Stock da Cunha, said last week the bank's deposits were recovering after a slump in the wake of the rescue. (Reporting By Sergio Goncalves and Andrei Khalip, editing by Axel Bugge and Angus MacSwan)

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NECC trustee files compensation plan for 2012 meningitis outbreak victims

Wed Dec 3, 2014 11:41pm EST

Dec 3 (Reuters) - The trustee overseeing the bankruptcy of a Massachusetts pharmacy linked to a 2012 meningitis outbreak that killed 64 people, filed a plan that would set aside at least $135 million to compensate victims and their families.

The plan was filed after a federal bankruptcy court in July approved a deal to settle scores of lawsuits against New England Compounding Center (NECC).

NECC shut down in October 2012 after authorities linked it to the worst outbreak of fungal meningitis in U.S. history due to drugs it shipped to health providers across the country. The company filed for bankruptcy two months later.

Owners of NECC, which produced a tainted steroid that sickened more than 700 people in 20 states, have already contributed nearly $50 million to the NECC estate for eventual distribution and are expected to contribute additional sums through tax refunds and the sale of a related business.

Other third parties, including NECC's insurers and certain clinics and health care providers that administered the tainted drugs, are expected to contribute $56.8 million.

"The filing of this plan marks a crucial step in this tragic saga to provide much needed financial relief to the victims and their families. When NECC entered bankruptcy, many people doubted that the victims would ever receive compensation through the bankruptcy process," said David Molton, a lawyer for NECC's creditors' committee.

If the plan is confirmed by U.S. Bankruptcy Court Judge Henry Boroff, the contributing parties will receive releases from NECC-related liability. The plan is expected to be confirmed at a hearing to be held in early spring.

A pharmacist who worked for NECC pleaded not guilty in September to the first criminal charges filed in the case. (Reporting by Supriya Kurane in Bengaluru; Editing by Gopakumar Warrier)

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UPDATE 2-Mexico's Urbi files for bankruptcy to restructure debt

Tue Dec 2, 2014 5:34pm EST

(Adds details from company on bankruptcy filing)

MEXICO CITY Dec 2 (Reuters) - Mexican homebuilder Urbi has filed for bankruptcy protection to restructure its debt, the company said on Tuesday.

The creditors which have so far signed the restructuring plan held some 21.9 billion pesos ($1.55 billion) in debt, equivalent to around 53.3 percent of the total claims on Urbi, the company said in a statement.

Urbi, Mexico's third-largest homebuilder in recent years, is following its bigger peers after struggling under heavy debt loads and slumping sales of their cheap, single-unit homes in developments often located far from urban centers.

Urbi said it was still coping with "constrained liquidity" to manage its operations and meet its obligations and that it was working with its creditors to eventually authorize additional financing and reactivate bridge loans provided by the company's major bank creditors.

The builder, along with Geo and Homex, reported slowing revenue as more Mexicans chose to live closer to their jobs and schools and a change in government housing policy diverted subsidies to apartment purchases rather than single-family homes.

Homex and Geo, formerly Mexico's No. 2 and No. 1 homebuilders respectively, filed for bankruptcy protection earlier this year. (1 US dollar = 14.0950 Mexican peso) (Reporting by Gabriela Lopez and Elinor Comlay; Editing by Grant McCool)

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