An attempt by the Austrian province of Carinthia to avert the threat of insolvency has failed as too few creditors accepted its offer to buy back a failed bank's bonds at a discount, a person with knowledge of the total said on Friday. Carinthia guaranteed local bank Hypo Alpe Adria's bonds before the lender collapsed and the so-called bad bank Heta Asset Resolution was formed to wind it down. The province wants to repurchase the bonds at a discount to their face value of 10.8 billion euros ($12.1 billion) to avoid having to honour those guarantees, which it says it cannot afford.

An Italian banking merger that executives see as a crucial step for cleaning up the sector is teetering on the brink of collapse amid a struggle to win approval from the European Central Bank, the Financial Times reported. Senior financiers are warning that the proposed merger between the mutual banks Banca Popolare di Milano and Banco Popolare will fall apart if it fails to secure approval from Frankfurt regulators by next month.

Worldview Capital, the dissident shareholder in Petroceltic International that has battled its board for more than a year, has emerged in prime position to gain control of the troubled exploration company after doing a deal with its banks to buy a majority of its $232 million debts, the Irish Times reported. The Cayman Islands-registered fund, run by former investment banker Angelo Moskov, has told the stock market it bought has 69.44 per cent of the senior debt at at “a significant discount to face value”.

The ECB has cut its main interest rate to zero, taking the financial markets by surprise as it unveils a major efforts to boost the euro zone economy, the Irish Times reported. As well as cutting its main refinancing rate to zero, it has cut the rate it pays banks to deposit money with it and announced an aggressive expansion of its quantitative easing programme. The ECB also announced that more corporate bonds from the non-financial sector would qualify for the programme and also the provision of additional long-term finance to banks at low cost.

Debt-laden engineer Abengoa said on Thursday it had agreed a draft rescue plan with creditors to cut debt and inject fresh cash, in the latest attempt to avoid what could be Spain's biggest bankruptcy. Loss-making Abengoa, which started out 70 years ago as an engineering business in Seville and expanded into clean energy by taking on huge debts, entered pre-insolvency proceedings last year when lenders refused to extend credit lines.

EON, Germany’s largest utility, reported its biggest annual loss after writing down the value of its coal and gas-fired power plants by billions of euro. Its net loss more than doubled to €7 billion in 2015 from a year earlier, the company said. That was worse than the consensus figure among analysts for a €6.4 billion loss. Germany’s shift to renewable energy is hurting utilities as solar and wind plants get priority access to the grid, squeezing margins at traditional coal and gas-fired stations.

European Union authorities on Wednesday warned six countries including Spain and Italy that their budget plans for the coming years risk breaking the European Union’s spending rules and called on them to take measures to reduce their deficits, The Wall Street Journal reported. The warnings, which are part of a process aiming to ensure eurozone economies keep their public finances in order, come at a time when several European countries such as Italy have called for more flexibility within the rules, arguing that they can hold back the bloc’s flagging economies.

Poland's prime minister has dismissed Deputy Finance Minister Konrad Raczkowski, the finance ministry said on Wednesday, over his comments that a few small lenders were destined to fail, Reuters reported. "We can confirm that Raczkowski has been dismissed by the prime minister," the ministry's press office said. Earlier this month, Raczkowski said that a few small Polish lenders were "toxic" and would go bankrupt later this year. In response, the financial regulator KNF said the banking sector was stable and effective.

Two of Greece’s biggest lenders are being probed by the eurozone’s banking watchdog in connection with last year’s €14.4bn recapitalisation of the sector, which was as a condition of Greece’s latest international bailout, the Financial Times reported. Piraeus Bank, the country’s largest lender, and Attica Bank, its fifth-largest, are under scrutiny by the European Central Bank’s single supervisory mechanism in its first audit of Greek financial institutions since it was set up in 2013.

The Central Bank has sold another €500 million of the legacy debts of Anglo Irish Bank, bringing total disposals so far to €3 billion, the Irish Times reported. Some €22 billion in government bonds remain outstanding from the 2013 deal to scrap the Anglo promissory note scheme. The 2041 floating rate government bonds were acquired yesterday from the Central Bank and cancelled by the National Treasury Management Agency (NTMA). Following this cancellation the total nominal outstanding for the 2041 bond reduces to €1 billion.