Another day brings another installment of the ongoing soap opera starring the Greek government and its creditors. Athens delivered yet another fresh proposal to the European Commission and International Monetary Fund today, intended to find a middle ground on sticking points. Initial reports suggest that Prime Minister Alexis Tsipras has asked that his nation be provided access to the European Stability Mechanism to cover €6.7 billion ($7.55 billion) in debt payments due in the coming three months. European leaders appear to be speaking from both sides of their mouths on the topic, with German Chancellor Angela Merkel using the Group of 7 summit this week at the Schloss Elmau resort in Krun, Germany to warn that time is running out for a resolution. Separately, reports have emerged that European Union leaders have proposed a bridge that would finance Greek debt into spring 2016 without a final resolution of divides over tax and entitlement reform. The fatigue over the ongoing crises has reverberated throughout European markets, with the German DAX index reaching a correction of more than 10 percent since its peak in mid-April, only to decline further in trading today.
Elliott protests Samsung merger. Elliott Associates, a hedge fund overseen by Paul Elliott Singer’s Elliott Management Corp., made a court filing in South Korea today seeking an injunction attempting to block the proposed $8 billion merger of Cheil Industries and Samsung C&T Corp. In a rare activist action in Korea, the fund’s filing contends that the merger between the two Samsung-affiliated companies is unfair to C&T shareholders.
Beijing holds veto power at AIIB. The Wall Street Journal today reported that sources familiar with the finalized structure of the Asian Infrastructure Investment Bank have confirmed that China’s government will have final control over decisions made by the joint venture among 57 nations. In public remarks last week, former Federal Reserve chair Ben Bernanke suggested that the decision by U.S. legislators to block greater participation by the governments of developing economies over the management of the International Monetary Fund had lead to Beijing’s power play.
HSBC to reduce headcount. HSBC Holdings today announced a layoff of as many as 50,000 employees, a nearly 20 percent reduction in staff. The bank will scale back operations in Latin America and Europe and withdraw from Turkey entirely in a strategic shift to refocus on operations in rapidly growing Asian economies.
Iceland rebuffs distressed funds. In public comments yesterday, Iceland Prime Minister Sigmundur Davíð Gunnlaugsson warned that any challenge by hedge funds to a special tax on failed bank assets would be contested by his government. Iceland’s government has recently announced an unwinding of capital controls that will allow assets resulting from the Nordic island nation’s 2008 banking crisis to be liquidated, subject to a special 39 percent tax that will significantly impact profits for distressed debt hedge funds that purchased assets of failed banks during the restructuring period.
Apple enters streaming music contest. During Apple’s annual Worldwide Developers Conference in San Francisco yesterday, company executives unveiled a new streaming music service designed to compete with upstarts such as Spotify, Pandora and Google’s YouTube platform. Analysts reacted positively, noting that the success of Apple’s iTunes product has created a massive existing audience to reach for a premium, non ad-based streaming service.
SEC to review constitutionality of use of in-house administrative-law judges. In a federal court ruling in Atlanta yesterday, U.S. District Judge Leigh Martin May agreed to delay the prosecution of an alleged insider trading case by the Securities and Exchange Commission while considering the constitutionality of the commission’s use of in-house administrative-law judges. If the use of internal SEC judicial proceedings is ultimately ruled unconstitutional, it would significantly impede the regulatory agency’s ability to prosecute cases by requiring it to seek convictions exclusively in federal court.
