Madoff Fund Suit, Belvedere Court, Danish Banks: Bankruptcy
Standard Chartered Bank Plc was sued by two groups of Dubai-based investors in Singapore claiming they lost $10 million after being misled into investing in funds that channeled money to Ponzi scheme operator Bernard L. Madoff.
American Express Bank Ltd., which has since been acquired by Standard Chartered, had misrepresented Fairfield Sentry Ltd. as an “extremely stable” investment, the investors said in two lawsuits filed with the Singapore High Court. The bank also claimed it performed “extensive due diligence” on Fairfield, a so-called feeder fund in Madoff’s Ponzi scheme, according to court papers submitted by the investors.
The two groups of former clients were experienced investors who knew of the risks involved, Standard Chartered said in filings on June 27. The London-based bank denied misleading the investors and wasn’t responsible for their investment decisions, it said in the filing.
Ally Lim, a Singapore-based spokeswoman at Standard Chartered, declined to comment as did Niru Pillai, the lawyer representing both groups of investors.
The first group of seven investors is claiming $5.34 million from the bank while the second group of 17 is seeking $4.75 million, according to their lawsuits.
Belvedere Says French Court Has Given It Creditor Protection
The company will enter talks with its creditors, it said in a statement yesterday.
Danish Bank Profits to Fall on Funding Squeeze, Moody’s Says
Denmark’s banks face a decline in earnings as the fallout from Europe’s toughest resolution laws sends funding costs higher in the Nordic country, Moody’s Investors Service Senior Vice President Janne Thomsen said.
The June 24 failure of Fjordbank Mors A/S, a regional lender with about $1.4 billion in deposits, underlined the Danish state’s commitment to resolution laws that force senior creditors to share losses, Moody’s said in a note yesterday. The government’s goal of avoiding more insolvencies by encouraging consolidation is proving “elusive,” the rating company said.
“We are worried about the loans to farmers, still worried about commercial real estate and we are also worried about the earnings of the banks because funding is going to be, and has shown to be, much more costly than it was in the past,” Thomsen said in a telephone interview.
Credit default swaps on senior debt issued by Danske Bank A/S, Denmark’s biggest lender, last week touched the highest in two years.
“The government proposed law changes to enable sector solutions,” Thomsen said in the interview. “But we did not see this happen in relation to Fjordbank.”
Denmark isn’t planning further measures to support troubled lenders which involve taxpayer funds, Jacob Jensen, a spokesman for the ruling Liberal Party, said in an interview last week. Doing so would send the wrong signal, given that it’s only “a few small banks” that are in trouble, he said.
Denmark’s biggest banks have enough capital to withstand the fallout from a spate of failures amongst regional lenders, Financial Supervisory Authority Director General Ulrik Noedgaard said last week.
Seat Pagine Allowed to Contact Creditors on Debt Renegotiation
Seat Pagine Gialle SpA (PG) said it agreed with its senior creditor Royal Bank of Scotland to change loan terms so the company would be allowed to contact other creditors “to identify and implement financial options to achieve a long-term stabilization of the company’s financial structure by renegotiating its outstanding debt.”
The publisher of Italian telephone directories made the comments in a statement through the Italian exchange yesterday.
Amax Says Its Auditors Dispute Company’s Holding in Casino
Amax Holdings Ltd. (959)’s said its auditors disputed the size of the business’s holding in a Macau casino and expressed concern about the future of the company.
The controller of junket operators, which posted net income of HK$1.2 billion ($154 million) on July 3, claimed it holds 49.9 percent of Greek Mythology Casino. The auditors believe Amax’s interest in the casino is actually 24.8 percent and its profit should be reduced in line with the smaller stake, according to a company statement to the Hong Kong stock exchange.
“The issued share capital of the associate has been increased on October 30, 2010, and the equity interest of the group was diluted to 24.8 percent,” Hong Kong-based auditors CCIF CPA Ltd. said. These and other concerns “may cast significant doubt about the group’s and the company’s ability to continue as a going concern.”
Amax’s shares were suspended from trading June 23. The company is working with the exchange to apply for resumption, Michelle Tam, vice president of the human resources department, said by phone on July 5.
“At this time we aren’t able to confirm our holding in Greek Mythology, and we won’t comment on what the auditors said,” Tam said.
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