More than a year after liquidity problems swept across the banking world, a great deal remains unresolved. This is a sampling of what’s going on around the world as 2010 gets started:
Iceland will hold a referendum on whether to repay $5 billion in savings lost by depositors from the Netherlands and United Kingdom when Landsbanki and its other two major banks collapsed. The referendum happened after only the second veto in the country’s modern political history. Some citizens say the country cannot afford the cost, which would add $18,000 per person to the country’s foreign debt. A narrow majority in the legislature, though, voted for the measure as a way to enhance Iceland’s prospects for European Union membership.
Egypt has adopted a regulation to allow cash-strapped banks to use foreclosed real estate to repay loans to the government. The government does not yet know what it will do with all that real estate.
Dubai tried to put a brave face on its $100 billion debt load, as it finally opened the world’s tallest building this week. Construction on the 200-story building had been delayed twice because of problems with financing the project. In a nod to the suspense surrounding its financial condition, it named the new tower after the head of Abu Dhabi, which has been instrumental in rescuing Dubai. State-owned Dubai World has effectively kept up with its interest payments so far, but will be sending creditors this month a formal proposal to freeze payments for a period of time.
The Basel Committee, an organization represents the central banks of about 30 countries, is working on new rules that would prohibit some of the abusive contracts and practices that led to the financial crisis, and would require more disclosure of risks taken by banks. It is expected to isse a draft of the new rules this month.
Japan’s third-largest bank, Sumitomo Mitsui Financial Group (SMFG), plans to raise 800 billion yen in a stock offering to shore up its capital position.
