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.

SAirGroup (formerly Swissair) was responsible for the bankruptcy of Sabena in November 2001, a Belgian court ruled, although it ordered a much lower payment than the claimants had sought, ATWOnline reported. It said the Swiss group, which held a 49.5% stake in the Belgian flag carrier, did not respect an August 2001 agreement to provide 60% of a €430 million ($589.4 million) cash injection needed to keep Sabena in business. The court ordered SAirGroup to pay Sabena’s creditors, its liquidator and the Belgian state €18.3 million in provisional damages.

The founders of Lernout & Hauspie Speech Products NV, once a global leader in speech-recognition technology, were found guilty by a Belgian court of fraud violations in the accounting scandal that led to the company's downfall a decade ago, Dow Jones Daily Bankruptcy Review reported. Jo Lernout and Pol Hauspie were each given sentences of five years, of which they were expected to serve three, a court spokesman said. Six other defendants in the case, including L&H's former chief executive, were also convicted.

Truvo Group's unsecured creditors say the European directory publisher's proposed plan to hand control of the company to its senior lenders is a "sham," Dow Jones Daily Bankruptcy Review reported. In papers filed Thursday with the U.S. Bankruptcy Court in Manhattan, the creditors allege that the Chapter 11 filing by Truvo USA and four other holding companies at the top of Truvo Group's corporate structure is a scheme to sever unsecured bondholders' liens against the company's operating assets and push through a debt-for-equity swap with secured lenders.

The European Commission Thursday cleared the €1.5 billion recapitalization given by Belgium to the insurance company Ethias for the company's restructuring, Dow Jones reported. The Commission concluded that Ethias' restructuring plan will restore the company's viability, without distorting competition due to the state support. In order to participate in the costs of the restructuring, Ethias will sell or wind down its retail life insurance business and a number of other assets, the Commission said. The insurer ran into severe difficulties in 2008 in the wake of the financial crisis.

Nationalised Dutch bank ABN Amro forecast more than €1 billion in second-quarter charges today, offsetting profitable results from both its units in the first quarter, The Irish Times reported. The Dutch government nationalised the local operations of former Belgian concern Fortis in October 2008, including both banks, amid a liquidity crisis. It has spent more than €26 billion on the nationalisation and subsequent support, making it one of the world's costliest rescues due to the credit crisis.

German Chancellor Angela Merkel welcomed a proposal to set up a European lender of last resort, saying that the European Union’s ability to act as a bloc is on the line over the Greek financial crisis, Bloomberg reported. “Our instruments are not sufficient,” Merkel told members of the foreign press association in Berlin today. “The European Union must be able to respond to the challenges of the moment.” Merkel was speaking after officials in Berlin and Brussels said European leaders are in talks to establish what may become the European Monetary Fund and limits on credit-default swaps.

Tens of thousands of Greeks took to the streets Wednesday as much of the country went on a 24-hour strike against government austerity measures, The Wall Street Journal reported. Public- and private-sector unions called the strike to protest a range of measures aimed at reducing Greece's budget deficit. The government has announced a freeze on civil-service wages, cuts in public-sector entitlements and the closing of tax loopholes for certain professions, including some civil servants. It has also announced a fuel-tax increase.