For the first time, the estimated 700 financial industry lobbyists working in Brussels can now expect to meet with some resistance. Though extremely outnumbered, the new organization Finance Watch is preparing to confront them head-on -- with a former industry insider at its helm, Spiegel Online reported. Indeed, some things will take getting used to in the offices Finance Watch has just leased near the building housing the European Parliament in Brussels. The project is backed by 40 European organizations, including unions, consumer-protection groups, foundations and think tanks.

Dexia, the stricken Franco-Belgian lender that has been at the centre of recent market turmoil, loaned €1.5bn of fresh capital to its two largest institutional shareholders which then used the cash to buy Dexia shares before 2008, the Financial Times has learnt. The unorthodox funding move, which raised the Belgian regulators’ concerns at the time, amounted to Dexia borrowing money from itself to finance a capital increase. This is illegal in most jurisdictions and is now banned in the European Union, but did not break Belgium’s existing laws.

European competition authorities on Monday gave temporary approval to Belgium's nationalisation of Dexia's Belgian unit under a rescue plan of the Franco-Belgian banking group, Agence France-Presse reported. The European Commission gave the Belgian government six months to provide a new restructuring plan for Dexia Bank Belgium, saying it was too soon to determine if the 4.0-billion-euro acquisition complies with EU state aid rules. "The Commission acknowledges that the measure is necessary to preserve financial stability," the European Union's executive arm said in a statement.

An autopsy of Franco-Belgian lender Dexia shows how funding and solvency are intertwined, highlighting the dangers facing other banks if the eurozone sovereign debt crisis is not resolved soon, International Financing Review reported. There are scores of financial institutions for whom wholesale funding markets are shut and who would be bust were it not for the European Central Bank pumping billions of unlimited liquidity into the system.

Europe's banks expect to be told to raise more capital under a Franco-German effort to solve the euro zone debt crisis after the state rescue of Franco-Belgian lender Dexia SA, Reuters reported. Dexia agreed to the nationalisation of its Belgian retail bank and secured 90 billion euros (£78.4 billion) in state guarantees, in a rescue that raises pressure on other euro zone countries to strengthen their banks.

Trading in Dexia's stock was suspended Thursday as governments and the bank's management scrambled to figure out what to do with the Franco-Belgian lender, The Wall Street Journal reported. It has been clear for days that the bank would have to be broken up, given its heavy exposure to Greek and Italian sovereign debt—a factor that has made other financial institutions wary of lending to Dexia. But details of the plan have yet to be agreed upon.

France and Belgium rushed to the aid of Dexia SA on Tuesday, in what will be the first state rescue of a European bank in the euro zone sovereign debt crisis, Reuters reported. The lender to hundreds of French and Belgian towns, which also needed propping up after the 2008 financial crisis, will see its French municipal finance arm broken off and put under the ownership of French state banks.

Belgium and its financial institutions aren’t having the easiest summer. There’s been no federal government since elections in June 2010 and coalition negotiations continue tackling the thorny issues, The Wall Street Journal The Source blog reported. The Bel-20 index, like most European bourses, has taken a pounding—leaving bank Dexia down 51% from 12 months ago; peer KBC down 44% and insurer Ageas down 37%.

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition, the Financial Times reported. The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.

KBC NV is mulling changes to its restructuring plan, but it is too early to give a date for repaying state aid, the Belgian bank said Wednesday, Dow Jones reported. "KBC confirms that, as good business practice and as a reflection of sound management, it is currently pro-actively examining what the added value of certain changes to its strategic plan could be," the bank said in an emailed statement.