Austria must add about 8 billion euros ($11 billion) liabilities of state-owned KA Finanz AG to its accounts, the European Union said, putting further pressure on the country’s debt burden, Bloomberg News reported. The EU’s statistics office Eurostat told Austria to change the classification of KA Finanz, the wind-down unit for failed Kommunalkredit Austria AG, and revise government statistics for the past five years, according to a letter posted on Eurostat’s website.

The administrator of insolvent German bookseller Weltbild said on Wednesday he had broken off talks with investor Paragon Partners and agreed to do a deal with restructuring specialist Droege International Group instead, Reuters reported. Droege will participate in a 20 million euro ($27.1 million) capital increase at Weltbild and in return receive a 60 percent stake in the group, administrator Arndt Geiwitz said. It will also give Weltbild an unspecified loan.

Portugal Telecom and Oi of Brazil said on Wednesday that they had renegotiated the terms of their planned merger to salvage a deal threatened by the financing problems of the Espírito Santo group, which is controlled by Portugal’s most powerful family, the International New York Times reported. As part of the revised merger plan, Portugal Telecom will receive a 25.6 percent stake in the merged entity, down from almost 40 percent when the deal was announced in October.

Croatia's central bank on Wednesday ordered the liquidation of a small private bank, saying it had more liabilities than assets and had failed to meet supervisory requirements. "The central bank board has decided to propose opening bankruptcy proceedings for Nava Banka," the central bank said in a statement after a board meeting. The decision was taken after determining the bank had failed on three counts, it said.

The Central Bank has warned of a potential mortgage arrears time bomb as the high number of interest-only loans taken out during the boom revert to full-repayment arrangements, the Irish Times reported. While interest-only arrangements have been widely used as a means of forbearance in the current arrears crisis, just over 8 per cent of the total mortgage loan book - equating to €7.4 billion - were originally issued on an interest-only basis.

Austria must add about 8 billion euros ($11 billion) liabilities of state-owned KA Finanz AG to its accounts, the European Union said, putting further pressure on the country’s debt burden, Bloomberg News reported. The EU’s statistics office Eurostat told Austria to change the classification of KA Finanz, the wind-down unit for failed Kommunalkredit Austria AG, and revise government statistics for the past five years, according to a letter posted on Eurostat’s website.

Espírito Santo International SA's main unit, Rioforte Investments, is preparing to file for creditor protection in Luxembourg because of mounting pressure to repay debt with funds it doesn't have, The Wall Street Journal reported. In the latest sign of stress, Rioforte is unlikely to repay €897 million ($1.22 billion) in debt held by Portuguese telecom giant Portugal Telecom SGPS SA, according to a person familiar with the situation. The deadline for the majority of the debt is by midnight Tuesday.

Some large shareholders in Grupo Oi SA could sue partner Portugal Telecom SA if a debt investment made by the latter ends up in default, which could delay the companies' planned merger, a source close to the deal said, Reuters reported. Shareholders of Rio de Janeiro-based Oi want to push Portugal Telecom to take a smaller stake in the company resulting from the merger, depending on the outcome of the debt negotiations later on Tuesday, said the source, who declined to be identified because of the sensitivity of the issue.

Bulgaria is asking the European Central Bank to take over supervision of its lenders after runs on deposits triggered the worst financial crisis in 17 years, Bloomberg News reported. Bulgaria’s central bank has contacted the ECB’s Executive Board to start the procedure to join the Single Supervisory Mechanism, it said in an e-mailed statement today. The request follows an announcement by President Rosen Plevneliev after a meeting with leaders of the country’s biggest parties and senior government officials yesterday.

British regulators said on Tuesday that they planned to cap the fees and interest that so-called payday lenders can charge for short-term loans, the International New York Times reported. The Financial Conduct Authority, which began regulating consumer credit companies this year, is calling for a cap on interest and fees of no more than 0.8 percent per day on payday loans, beginning in January. Fixed default fees would be capped at 15 pounds, or about $26, and the overall cost of any loan would not be allowed to exceed the amount borrowed.