FOREX NEW YORK COMPANIES

Marissa Mayer isn't Yahoo's only high-level appointment this week.

The Silicon Valley search portal-turned-content titan, which on Monday named Mayer, a popular Google executive, as its new C.E.O., has tapped some internal talent to head up two of its most highly-trafficked brands.

Hillary Frey, who joined the company from Adweek almost a year ago, has been named editor-in-chief of Yahoo! News. Aaron Task, a former editor at TheStreet.com who's been with Yahoo since 2008 and hosts its "Daily Ticker" webcast, has been named editor-in-chief of Yahoo! Finance. Both positions, which a spokesperson said are the first of their kind since Yahoo! News and Yahoo! Finance began focusing on original content over the past several years, are based in the company's New York offices near Bryant Park.

Yahoo is expected to announce the promotions later today in a move that seems meant to reinforce its commitment to original journalism as company leadership changes hands for the second time in six months and the fifth time in as many years.

That commitment came into question back in January as the keys were handed over to Scott Thompson, a former eBay executive who saw data and technology as the key ingredients to the future of Yahoo, which is still struggling to cement its identity and improve earnings while remaining relevant in the face of a growing bench of competitors. The company's latest financial results, released Tuesday, dipped a little more than 4 percent from a year earlier.

After Thompson was ousted in May amid controversy over his inflated resume, insiders and outsiders alike expected that the baton would pass to the more media-focused Ross Levinsohn, who'd assumed the C.E.O. title on an interim basis. Instead, along came Mayer, a former engineer and programmer who'd climbed up to the twentieth rung on Google's corporate ladder during her 13 years at the company and was responsible for some of its most successful product innovations.

So far, it's unclear whether Mayer is as committed to media as her immediate predecessor. But last month, as the C.E.O. search was in full swing, one of Levinsohn's lieutenants told Capital that Yahoo's premium content ambitions, which became a big investment under former C.E.O. Carol Bartz, remained unchanged.

"We have never wavered on the media strategy," said Robertson Barrett, vice president of news and finance at Yahoo, in a phone interview. "We're going to keep evolving."

Making two top editorial promotions is a step in that direction.

On the Yahoo! News side in particular, Frey's leadership appears to streamline a disjointed operation with staff spread across Santa Monica, New York and Washington D.C., while at the same time dropping an anchor on the East Coast.

"This puts a stake in the ground to say that we've headquartered Yahoo! News editorial in New York," said Frey, who was hired as managing editor last October. (Disclosure: Frey was one of my editors when we worked together at The New York Observer from early 2008 to mid-2010.)

"We have this great blessing of being a bi-coastal news operation with people on at all different hours from morning until night. So one of the things I'm thinking about is the best way to allocate our resources," she said. "I'm excited about further integrating the Santa Monica and East Coast operations."

Over the past few years, Yahoo! News has progressed from primarily functioning as a third-party content portal with no shortage of wire copy to becoming a destination that showcases content largely produced by people who actually work there. Seventy percent of the pageviews on Yahoo! News are now derived from original content, a significant increase from a year ago, according to Barrett.

Starting in 2010, there was a big push to develop a stable of reported news blogs manned by a small group of editors and reporters, including brand-name hires like Andrew Golis, Chris Lehmann, John Cook, Michael Calderone and Laura Rozen, who have all since moved on, along with several others. (Second disclosure: I co-wrote a Yahoo media blog called The Cutline from November of 2010 until I started working at Capital last September.)

Though the blogs generate substantial pageviews and have come in handy from a P.R. perspective as the company seeks to redefine itself as a hub for original journalism, they were recently deemphasized as Yahoo! News recalibrated its efforts around election-year coverage and a partnership with ABC News that has boosted both brands' already astronomical web traffic. In June, the combined Yahoo!-ABC News Network had more than 81 million unique U.S. visitors, more than any other "general news" property on the web, according to comScore.

Two of Yahoo's news blogs, The Cutline and The Envoy, which covered foreign affairs, have stopped publishing altogether.

"We're moving away from a blog strategy," said Frey. "When I came here it sort of made me crazy that we had all these great reporters being referred to as bloggers. We're a newsroom, not a blog network."

Frey said her immediate impetus was to be "smart and focused with the stuff we already have" as opposed to rushing out new editorial products and increasing the head count. The Yahoo spokesperson declined to confirm how many journalists work for Yahoo! News in total, but it's safe to say the number is far smaller than the several hundred who occupy the newsroom of Yahoo's main competitor, AOL, which has the firepower of The Huffington Post under its hood.

"We're not in an arms race with AOL," said Barrett during our interview last month.

Frey said her team was also concentrating on "deploying resources around the upcoming conventions and debates"—and around election night in November, of course. To that effect, Yahoo! News has strengthened its political roster in the past year with the additions of New York and D.C. based journalists including David Chalian, Jeff Greenfield, Walter Shapiro and Olivier Knox, as well as Chris Suellentrop and Virginia Heffernan, both of whom worked at The New York Times Magazine. Reporters Holly Bailey, Rachel Rose Hartman and Chris Moody, meanwhile, have all become regulars on the campaign trail.

(It's worth noting that Yahoo! Sports, which laid the groundwork for the company's original content plans, has also made a considerable investment in journalism. Barrett told us that its August 2011 expose on the University of Miami's football and basketball programs was submitted for Pulitzer consideration this year.)

As for Task, one of his main duties will be to work closely with CNBC, which Yahoo! Finance struck up a partnership with last month similar to its arrangement with ABC News. Yahoo! Finance had a U.S. audience of 36.7 million in June, according to comScore, thereby maintaining its 54-month streak as the country's most widely-read financial news site.

“My goal is to make Yahoo! Finance the primary source for original content on all news about the economy, investing and the financial markets, for everyone from Wall Street insiders to the budget moms,” said Task in a statement. “A key component in this will be leveraging our industry leadership in financial video, to create a one-stop shop for the latest news and insights into the often complex world of finance and economics.”

These commitments represent key stepping stones towards the mutually beneficial goals of ensuring Ireland’s economic recovery and its durable return to the bond market, thereby avoiding continuing dependence on official financing.

17.34 London's blue-chips have ended the day ahead, with the FTSE 100 up 1pc to 5685. The same went for Germany's DAX, up 1.6pc to 6684 and Spain's IBEX, up 0.5pc to 6591.

Angus Campbell, head of market analysis at Capital Spreads, commented:

The FTSE was also supported by BOE minutes that showed the MPC is actively considering a further interest rate cut to try and kick start the economy. So on the one hand you have an improving labour market and on the other you have the central bank looking at further measures to ease monetary policy, as well as a government assisting by spending on infrastructure projects. All this combines to provide a number of compelling reasons for investors to buy equities.

Spain's 10-year bond yields widened though, rising 15.9 basis points to 6.875pc. Italy's added 3.5 basis points to 6.045pc.

17.19 As well as Tim Geithner commenting this afternoon on the eurozone - saying European officials have not pulled the debt crisis far enough back from the edge - Ben Bernanke has been talking about the crisis too. He said:

I don't think [the euro zone] is close to having a long-term solution that will solve the problem. Until they find those long-term solutions we are going to continue seeing period of financial market volatility.

16.53 This afternoon, the Sicilian governor has apparently said the state has a liquidity crisis because the Italian government owes it €1bn.

Mario Monti, the Italian prime minister, held an urgent meeting with the Italian president today to discuss Sicily's financial position. Sicily had a budget deficit of €5.3bn at the end of last year.

16.47 While Greece wrestles over its spending cuts, there are warnings that Sicily could become the "Greece of Italy". Italian prime minister, Mario Monti, said yesterday that he's "gravely concerned" that Italy's autonomous region may soon default. Italian news reports say Sicily's government may soon be unable to pay salaries and pensions.

Think tank, Open Europe, has published this article on Siciliy's predicament, arguing that Sicily shows Italy still has a lot to do:

Politically, the situation is obviously serious, but not particularly controversial. Regional autonomy in Italy is not the same thing as, for instance, in Spain. The right for the central government to step in and grab the helm if regional administrations go off course is enshrined in the Italian constitution. However, the unbelievable list of waste and mismanagement examples which led Sicily so close to default (some of which featured in our 50 examples of EU waste, 2010 edition) offers a clear explanation of why Italy still has a lot to do to find its way out of the woods of the eurozone crisis.

16.38 This is what Nicholas Spiro of Spiro Sovereign Strategy makes of the IMF's latest report on the eurozone. He says it reads like a "nuts-and-bolts manual for crisis management":

Yet the report also reads like an investor's wish list. It is a cri de coeur for Germany and the ECB to take swifter and bolder measures to shore up confidence. The tone of the report is alarmist, and intentionally so. For the IMF, the eurozone is now in the last chance saloon. Time is of the essence.

Although a comprehensive report, its message is clear: the causes and symptoms of the eurozone crisis have yet to be meaningfully addressed and require credible short and longer-term measures to sever the links between banks and sovereigns and mitigate the effects of fiscal austerity. Half-rescues are not going to work and the risks of the crisis escalating further are significant.

16.28 Pier Carlo Padoan, the Organisation for Economic Cooperation and Development's chief economist, has been speaking to Dow Jones today. He said that the eurozone must demonstrate that it will do "whatever it takes" to stay intact. He added that granting a banking license to its permanent bailout mechanism would be one way of demonstrating it has the means and will to stabilise bond markets in order to give ongoing reforms time to take effect.

16.05 Greek coalition leaders have reiterated there are no new cuts planned for 2012. But Alexis Tsipras, leader of opposition party, the radically leftist Syrzia, is having none of it. He said:

They are lying when they say there will be no new measures. There will be and they will be catastrophic for the Greek people. This government obeys the troika and does not protect the people.

15.26 Ben Bernanke, the Fed chairman, is having a busy couple of days. Having presented on the US economy and monetary policy to a senate committee yesterday, he's presenting again today to a congressional committee. It's being streamed here.

15.24 Has lack of sleep hampered leaders' decision-making abilities at those all-night summits? A report by Bloomberg suggests that sleepless summits can lead to mistaken decisions:

If the leaders of the 17 euro-area countries really want to solve the debt crisis shadowing their currency, they may want to sleep on it.

That’s not likely to happen. Of Europe’s last six summits, three ended no earlier than 4 a.m. The most recent, on June 29, ended at 5 a.m. And finance chiefs’ monthly gatherings routinely extend past midnight.

Those late hours haven’t served European leaders well and may be one reason why their next meeting, to hammer out a bailout for Spain’s banks on July 20, is scheduled to begin at noon. Lack of sleep, the evidence shows, has played a role in faulty decision-making that led to disasters at Three Mile Island, Chernobyl, and the Exxon Valdez oil spill as well as the ill-fated launch of the space shuttle Challenger.

“We’re not well designed to work well into the night,” Chris Idzikowski, a co-founder of the British Sleep Society who has explored the land of nod for more than three decades, said in an interview. “It has to be one of the worst times to do negotiations.”

14.54 For context, this report is the result of the IMF's mission to Europe. It issued a concluding statement on that mission in June, which you can read here, and then made public its full report on the mission today. It includes some pretty direct language, with the organisation saying that the ECB could achieve "further monetary easing through a transparent QE program encompassing sizable sovereign bond purchases".

14.17 Here's the link to more details on that IMF report, which says that the euro area crisis has reached a "critical stage":

There are severe downside risks to the outlook, with possible substantial regional and global implications. Reinforced negative bank-sovereign linkages could further weigh on confidence, growth, and public debt trajectories, while boosting sovereign spreads and risk premiums. Depending on the pass-through of weaker growth and financial market stress, the global spillovers are likely to be significant. The potential for failure of a systemic bank, or stalled reform or fiscal adjustment efforts at the country level, could spill into the euro area and beyond.

14.07 The International Monetary Fund has published one of its regular reports on the eurozone. In it, the IMF says that the European Central Bank could play a bigger role in fighting the debt crisis through more rate cuts, bond purchases and further liquidity provision:

The ECB can provide further defences against an escalation of the crisis.

These could include policies to support demand in the short run and fend off downside risks to inflation, as well as measures to ensure that monetary transmission, currently impaired by financial stress in some countries.

And to further strengthen its financial markets role, the ECB could also be given explicit responsibility for financial stability and full lender-of-last-resort functions, thereby eliminating bank-sovereign linkages present in the current Emergency Liquidity Assistance (ELA) scheme.

13.58 US Treasury Secretary, Timothy Geithner, is speaking this afternoon. He's said that the 'trauma' from Europe, along with after-effects of oil, is slowing the American economy. He says that Europe and political dysfunction dominate risks to the economy.

13.23 As mentioned at 12.05, Reuters reported that Evangelos Venizelos has said the Greek leaders will meet again next week to thrash out the budget cuts. Reuters now has a bit more detail on that:

Greek coalition leaders agreed to meet next week to hammer out almost €12bn-worth of austerity cuts demanded by the near-bankrupt country's lenders after a deal proved elusive at an initial round of talks on Wednesday.

Greek officials have spent the past week scrambling to identify €11.7bn-worth of spending cuts for 2013 and 2014 required by the country's latest rescue package before European and IMF officials visit Athens next week.

But a final decision is expected only after much bargaining among the three party leaders in the new conservative-led government, each of whom is keen to avoid appearing in favour of cuts that heap more misery on austerity-weary voters.

After a three-hour meeting with Prime Minister Antonis Samaras, his two coalition allies - Socialist party leader Evangelos Venizelos and leftist party chief Fotis Kouvelis - emerged to give the public the message that the government would not impose any new spending cuts this year beyond those already agreed.

"We had a very good discussion," Finance Minister Yannis Stournaras told reporters after the meeting. "We agreed on the basic direction."

Greece's government must agree the cuts to secure the next tranche of EU and IMF aid, probably in September.

12.54 A finance ministry official in Greece has been talking to Bloomberg. They say that the finance minister is still working on putting together an €11.5bn package of budget cuts, but that about €8bn of cuts and savings for the next two years have been found so far.

He said that the government was trying to avoid implementing any new budget measures for this year, due to a deeper than forecast recession, and was committed to pushing ahead with state asset sales.

12.37 Spanish prime minister, Mariano Rajoy, has been speaking in the Madrid parliament this morning. He said Spain has to cut spending because it can't finance its budget deficit:

We can’t spend what we don’t have because they won’t give it to us. There are already institutions in Spain that can’t fund themselves.

12.14 Nick Malkoutzis, deputy editor of Kathimerini, tweets that the talks between Greek leaders has delivered more of the same:

12.05 In a sign that Greek leaders still have "some way to go" to finalise their €11.5bn in spending cuts, socialist party leader Evangelos Venizelos has said that the leaders will meet again next week to hammer out the cuts.

Reuters writes:

The decision to call a new meeting suggested the three leaders had yet to agree on the controversial cuts during talks held earlier on Wednesday.

12.00 AFP has now published a fuller story on those talks between the Greek coalition leaders. They write:

Greece's finance minister on Wednesday said the crisis-hit country had "some way to go" to finalise 11.5 billion euros in spending cuts demanded by its EU-IMF creditors in return for fresh loans.

"We still have some way to go," Yannis Stournaras told reporters after a meeting with Prime Minister Antonis Samaras and the other two party leaders backing Greece's coalition government.

He added that the three leaders had reached agreement on the "basic guidelines" on where the spending cuts should be made.

Auditors from the EU, IMF and the European Central Bank - the so-called 'troika' of Greek creditors - are expected in Athens next week for another in-depth inspection of the new government's economic programme.

The 'troika's' report will determine whether Greece will receive fresh loans of 31.5 billion euros by September due under its debt rescue programme.

11.49 There are a few more details on Twitter of the Greek meeting:

11.38 Greek newspaper, Ekathimerini , has also tweeted this nugget from the talks between coalition partners in Greece:

11.34 There are reports that the meeting between Antonis Samaras and his coalition partners to thrash out budget cuts has ended, with suggestions there was an 'agreement in principle'.

11.26 Angela Merkel has given an interview for the website of her Christian Democratic Union party. In it, she says that she won't take on added liability in the eurozone's debt crisis without stronger budget oversight:

The basic principles that I apply — no solidarity without effort in return, no liability unless we can really exercise control — are shared by a large part [of the German population]. That encourages me to continue shaping Europe’s future based on these principles.

She also said that the "European project" may be in jeopardy unless policy makers work harder to make it succeed:

Of course, we haven’t yet shaped the European project in a way that we can be sure that everything will work, will turn out well. That means we have to keep working. Still, I’m optimistic that we will succeed.

There are more details - in German - on the CDU website.

11.20 Yet more excitement on yields - the UK's 10-year yields fell below America's this morning, with the UK's at 1.47pc compared to America's 1.48pc. We last fell below the US in June.

11.01 Still with yields, the UK's five-year note yields fell to a record low, slipping as much as two basis points to 0.526pc, after the Bank of England minutes showed that policy makers voted 7-2 to increase stimulus and said they may consider the case for cutting interest rates again. France's 10-year yields also apparently dropped to record lows this morning of 2.068pc.

Conversely, Spain's 10-year yields have ticked up 2 basis points to 6.739pc.

10.49 Germany has sold two-year notes with a negative yield for the first time. The country allotted €4.17bn of the securities at an average rate of minus 0.06pc. That means investors paid to lend Germany money for two years.

10.25 At 09.16, we mentioned a speech made by ECB policy maker, Joerg Asmussen, to a think tank yesterday. He's also been speaking to German magazine, Stern. He told them that the economic split between northern and southern eurozone countries is the largest it has been during the common currency's existence and the problem must be overcome.

He also told the magazine that not only the debt-ridden southern European countries have to reform, but all eurozone countries, including his native Germany.

10.04 While Greece struggles to agree on sweeping budget cuts, a tweet from Nick Malkoutzis, deputy editor of Kathimerini, suggests there is one bright spot on the horizon, with singer Lady Gaga reportedly planning to build a €12m home on land she bought in Crete:

09.47 Here's some initial reaction to that fall in unemployment and the Bank of England minutes:

Philip Shaw, an economist at Investec, said it was a "little suprising" that the vote in favour of QE was 7-2 as a unanimous vote had been expected. He added:

Also it was interesting that the committee considered a £75bn addition but scaled it back because of the new lending schemes.

This does indicate that there is a degree of polarisation on the committee but with inflation falling we don't see much of a barrier to further QE being sanctioned later in the year if the economy remains weak.

The labour figures paint a slightly brighter picture of the economy despite the claimant account being up modestly, the reduction in the labour force survey measure over the three months to May is greater than we thought and the jobs gain is also a bright spot.

The labour market does seem to be virtually the only news coming from the UK economy that is positive right now.

09.41 Minutes from the Bank of England's monetary policy meeting earlier this month are also out and show that both Spencer Dale and Ben Broadbent opposed this month's £50bn increase in quantitative easing.

Dale and Broadbent argued that the recent fall in inflation was due to a fall in oil prices that could not be relied upon, and that other credit measures - such as the BoE's Funding for Lending scheme - would give enough help to the economy.

Other members disagreed, and even considered raising the asset purchase target by £75bn.

09.37 While unemployment has fallen, the number of people claiming unemployment benefits rose slightly more forecast in June. The number of people claiming jobless benefit rose by 6,100 last month, the Office for National Statistics said. Analysts had forecast an increase of 5,000 on the month. The statistics office suggested that a change in benefit rules for lone parents may have contributed to the increase.

09.34 Unemployment figures in the UK are out and the total number of Britons without a job dropped by 65,000 in the March to May period to 2.584m. The jobless rate stood at 8.1pc, compared with forecasts for an unchanged reading of 8.2pc. Employment rose by 181,000 in the three months through May to 29.354m. The ONS said the rise in employment and the drop in unemployment was concentrated in London, indicating that the Olympics, which start on July 27, have created jobs.

09.25 Bank of Spain data out today shows that Spanish banks' bad loans rose to 8.95pc of their outstanding portfolios in May, up from 8.72pc a year earlier. The May level is the highest since April 1994. Loans that fell into arrears increased by €3.1bn from April, reaching €115.84bn in May. Since the decade-long property boom ended four years ago, non-performing loans on the books of Spanish banks have been rising steadily.

09.16 Bruno Waterfield, the Telegraph's man in Brussels, points out this article on euobserver.com:

Euobserver.com writes that Joerg Asmussen, a member of the European Central Bank's board, told a think tank yesterday that eurozone states need to give up more sovereignty in order to fix the construction flaws of the euro, with the bailout fund possibly turning into a budget authority further down the road. He said:

We have construction mistakes of Economic and Monetary Union and it is time to correct them. It is clear that the core of the current debate has a name: further sharing of sovereignty.

09.01 In Greece today, prime minister Antonis Samaras is holding talks with his coalition partners to discuss proposed budget measures. The government is under pressure to come up with €11.5bn in savings for 2013 and 2014.

As we mentioned yesterday, Evangelos Venizelos, leader of the socialist Pasok party, has warned that a pledge by Greece to save €11.5bn in the next two years in return for EU/IMF loans is "nearly impossible" to keep.

08.48 Christian Noyer (pictured below), Bank of France's governor, believes that France's economy should be able to grow by at least 1pc next year if the government presses ahead with deficit reduction plans and reforms. He told Europe 1 radio:

We are in a severe economic slowdown in Europe. I consider that 1pc growth should be reachable [in 2013], at least 1pc.

What the government can do is put in place a reform of the cost of labour and ease the burden on salaries of financing welfare. We need to find other resources.

He also urged eurozone governments to press ahead swiftly with implementing new fiscal rules and measures for common banking supervision.

08.13 Nouriel Roubini, the New York University professor dubbed "Dr Doom" for predicting the 2008 financial crisis, is standing by his prediction for a global "perfect storm" next year as economies slow down or shudder to a complete halt. He told Reuters:

Next year is the time when the can becomes too big to kick it down [the road]...then we have a global perfect storm.

08.10 Greece's coalition government will seek a bridging loan to tide it over while it scrambles to find €11.7bn of spending cuts to bring its bailout plan back on track, Reuters reports:

The measures must be submitted for approval by July 24, when auditors of the so-called "troika" of the European Union, the International Monetary Fund and the European Central Bank are expected to return to Athens for a check-up mission.

The visit, and subsequent haggling that is expected to last until September, will determine whether the EU and IMF continue bank rolling Athens or abandon it and let it slide towards chaotic default and eventual exit from the euro zone.

The troika has already turned the screws on cash-strapped Athens, effectively suspending payments under its ongoing 130 billion euro rescue and prompting it to seek a bridging loan from its lenders to cover financing needs until September.

"We are fighting to secure the bridging loan by September," a finance ministry official told reporters, speaking on condition of anonymity.

08.08 Yesterday Ben Bernanke testified to US politicians, but offered few hints on whether the US central bank was moving closer to a fresh round of monetary stimulus. He did warn that the US economy had slowed significantly in recent months due to the continuing eurozone debt crisis.

We appear to be in a muddling-through type of environment, which is costly to everybody - Europe even more so than us. They're already in a recession, at least many countries in Europe are already in recession. I think based on all I can observe, it seems that (resolving the debt crisis) could take a very long time because the structural and institutional changes that Europe is trying to make are not ones to take place quickly.

08.05 Good morning and welcome back to our live coverage of the European debt crisis.

Debt crisis live: archive

The bank could try quantitative easing (QE) with "sizable" sovereign bond purchases, possibly preannounced over a given period of time, the IMF said.

"Buying a representative portfolio of long-term government bonds - for example, defined equitably across the euro area by GDP weights - would also provide a measure of added stability to stressed sovereign markets," the IMF said.

"However, QE would likely also contribute to lower yields in already 'low yield' countries, including Germany," it said.

The ECB could also embark on further sovereign bond purchases of countries that are under market stress - its Securities Market Programme (SMP).

"A well-communicated re-activation of SMP purchases would likely carry strong signalling effects which might mitigate the need for very large purchases. The benefits from lower yields would also ease collateral constraints on official and interbank lending facilities," the IMF said.

Another way to ease market tensions was to launch another Long-Term Refinancing Operation (LTRO) - cheap, long-term lending by the ECB to banks that ensures they remain liquid despite the frozen interbank lending market.

"This could encompass additional multi-year LTRO facilities, coupled with adjusted collateral requirements, if needed - including a broadened collateral base and/or a lowering of haircuts - to address localised shortages," the report said.

"The associated credit risk to the ECB would be manageable in view of its strong balance sheet and high levels of capital provisioning. Nevertheless, one of the disadvantages of the LTRO facility is that it tends to strengthen sovereign-bank links."

A priority for the eurozone was to create a banking union, which would entail a common eurozone bank supervisor, as well as a common deposit guarantee scheme and bank resolution fund.

Eurozone leaders agreed the ECB would play the role of the supervisor, but the IMF suggested the bank should also play a role in the bank deposit guarantee scheme, which, while financed from a levy on banks, should have access to an ECB credit line.

Meanwhile, Moody's has warned that European companies that have held up well against the eurozone debt crisis are now increasingly exposed and their credit ratings could be cut in coming months.

"The credit quality of non-financial companies has been relatively resilient so far during the sovereign financial crisis in Europe but the risk of credit deterioration is now increasing," it said in a report.

Moody's said the industrial sectors most vulnerable to the crisis included building materials, auto manufacturing, auto parts, paper and forest, shipping and steel production.

"Revenues and cash flow are declining severely for some companies in markets with falling domestic demand, such as Greece and Portugal and more recently Spain, with increasing risks for Italy," Moody's said.

It warned that if the situation worsened, it would expect the ratings of most investment-grade companies in the EU peripheral states to decline, with some moving into speculative grade.

The report said that HSBC accepted more than $15bn in cash between 2006 and 2009 from Mexico, Russia and other countries at high risk of money-laundering but failed properly to monitor transactions. The bank even managed to label Mexico, ravaged by corruption and drug wars, as “low risk”, the committee said. HSBC also provided US dollars and banking services to banks in Saudi Arabia and Bangladesh despite apparent links to terrorist financing, according to the report.

David Bagley, HSBC’s global head of compliance who had worked at the bank for 20 years, today resigned from that job in front of the committee. Mr Bagley, who will stay with the bank, admitted HSBC had “fallen short of our own and regulators’ expectations”.

Senator Carl Levin, who led the committee’s investigation, said HSBC’s lack of controls in America and abroad between 2006 and 2010 had been “a recipe for trouble”.

The report said many of the abuses occurred as a result of HSBC’s failure to monitor its so-called “bearer share accounts”, facilities that legally keep secret the owners and some transactions. At one stage the Miami branch had 1,670 bearer share accounts, holding $2.6bn of assets and generating revenues of $26m. Mr Levin told the hearing: “In an age of international terrorism, drug violence in our streets and on our borders, and organised crime, stopping illicit money flows that support those atrocities is a national security imperative.”

The chairman accepted HSBC had overhauled its systems since the failures were found and was “committed to cleaning its house”.

The investigation into HSBC is the latest US attempt to crack down on money-laundering. Last month, ING agreed to pay $619m to settle allegations that it broke American sanctions against Cuba and Iran.