European Union authorities on Monday told Italy to adopt more austerity policies, despite pleas from Italian Prime Minister Matteo Renzi for breathing space from EU requirements to cut its large debt burden, The Wall Street Journal reported. The move comes as part of annual directives sent by the European Commission, the EU's executive arm, to its member states covering everything from the budget deficit to labor-market rules.

A potential $10 billion U.S. penalty against France’s largest bank BNP Paribas SA for its alleged dealings with Iran and other sanctioned nations is stirring outrage in the country. It is putting pressure on President Francois Hollande, who hosts Barack Obama this week to mark the 70th anniversary of D-Day, to protect the bank from the American onslaught, Bloomberg News reported. Le Monde in its May 31 edition called the possible fine a “masterful slap.” Le Figaro newspaper said the U.S.

Greece is far from saved. The recovery is weak and poverty is endemic. Greece, Greek Finance Minister Yannis Stournaras says, needs one more big fix: A great bleeding chunk of flesh needs to be taken out of its mammoth debt load, equivalent to 170 per cent of gross domestic product, the highest in Europe by a long shot (Italy is second, at about 135 per cent). “The debt is high and we want to lower it to make the annual amortization payments and interest payments lower so resources can go more to growth and investment,” he said. “We badly need investment and growth to bring down unemployment.

The UAE-based Etihad Airways has said that it is pressing ahead with a plan for an equity investment in the struggling Italian carrier Alitalia, The Economic Times reported. Etihad Airways, which has been in negotiations for almost a year, said it will forward a letter detailing the conditions precedent and the criteria for a proposed equity investment in the Italian airline which had to turn to shareholders for a 250 million pound cash injection for its bail-out in January.

German finance minister Wolfgang Schäuble reckons a third bailout for Greece will be less than €10 billion, significantly smaller than each of the previous aid packages, German magazine Focus has reported. Greece was cut off from markets in 2010 as the true scale of its debt burden became apparent. After four years of painful measures to contain debt, two bailouts totalling €240 billion and a hit on private bondholders, the Greek economy is expected to return to modest growth this year.

Six years after the start of an economic crisis that left Spain on the verge of collapse, the country has finally seen bankers sentenced for financial abuses, the Irish Times reported. On Thursday Ricard Pagès, a former managing director of Catalan savings bank Caixa Penedès, was handed a two-year jail sentence for embezzling funds from the lender, while three of his former colleagues were given one-year sentences. The defendants’ jail terms were cut after they admitted their guilt and agreed to give back €28.6 million which they had ploughed into their pension funds.

A dangerous precedent could be set by Austria if its government goes ahead with a potential bail-in of Hypo Alpe-Adria's guaranteed subordinated debt, market participants said last week, Reuters reported. This small Austrian lender could be another test case for European authorities. Bail-in of bank subordinated debt has become commonplace over the last two years, but no country has retroactively removed a guarantee before. "The cost benefit of going down that route would be poor," said one analyst.

Lending to UK businesses fell sharply in the first quarter of the year, according to Bank of England figures that raise questions about the effectiveness of the UK’s Funding for Lending Scheme to encourage bank loans, the Financial Times reported. The UK central bank said yesterday that lending under the scheme dropped by £2.7bn in the three months to April. The fall was driven by a sharp decrease in lending to the commercial real estate sector.

Almost a quarter of employers running final salary pension schemes face a substantial increase in the annual levy they pay into the pensions lifeboat fund under proposals announced on Thursday. In a consultation document, the Pensions Protection Fund, which continues to pay benefits to scheme members if their employer goes bust, unveiled plans for a radical overhaul of the way it assesses the insolvency risk of schemes paying the levy.

The liquidator of Pierse Contracting, once Ireland’s second-biggest construction company, began a High Court action seeking restriction orders against nine of its former directors under section 150 of the Companies Act, 1990, yesterday, the Irish Times reported. Pierse went bust in 2010 leaving a deficit of €212 million, making it one of the biggest collapses of the bust. About €50 million was owed by Pierse to unsecured creditors, including subcontractors.