European banks battered by the downturn in the shipping market face a tough 2014: the European Central Bank has vowed to make the sector a core focus of its upcoming asset quality review and stress tests, the Financial Times reported. Lenders – in particular German banks – are increasingly seeking innovative ways to reduce their shipping portfolios before the regulator takes over direct supervision of about 130 European banks at the end of the year. Yet there is a sticking point: bankers say it is not clear whether the more creative solutions will be approved under the new regime.

What the US Supreme Court decides in a key court case involving Argentina and its bondholders will greatly impact how sovereign debt restructuring is done in the future, the BBC reported. The essence of the decade-long lawsuit between the country and a handful of its creditors is: Can bondholders demand full repayment of what they lent to a country even when others have settled for a haircut? Argentina's 2002 default of around $100bn (£61bn) was the largest at the time, until Greece's around 200bn euros debt restructuring.

The board of Permanent TSB is targeting a return to profitability for its “good bank” retail arm by 2016 and a full or part-return to private ownership by “2017 or earlier”. It also plans to begin deleveraging non-core assets this year, the Irish Times reported. The plans have emerged from an investor presentation given on January 7th by chief executive Jeremy Masding and group treasurer Kieran Bristow.

Iceland is losing patience with creditors in its failed banks as the government considers forcing through bankruptcy proceedings to help it exit capital control in place since 2008, Bloomberg News reported. “The Bankruptcy Act doesn’t anticipate that attempts to seek composition last forever,” Finance Minister Bjarni Benediktsson said in a Jan. 10 interview in Reykjavik.

The German state of Bavaria may offer insolvent bookseller Weltbild financial backing to try to avert thousands of job losses, a newspaper cited Bavarian state premier Horst Seehofer as saying, Reuters reported. There are a number of options ranging "from debt guarantees to bridge financing", the Sueddeutsche Zeitung quoted Seehofer as saying on Monday. Weltbild, owned by the Roman Catholic Church and which has 6,300 employees, filed for insolvency on Friday after failing to keep up with competition from Internet-savvy rivals such as Amazon.com (AMZN.O) and to obtain new financing.

German wind park operator Prokon has warned that it may have to file for insolvency if it is unable to strike a deal with investors who bought its profit-participation certificates, Reuters reported. "If we do not succeed - together with you, our investors - to stabilise the liquidity position very quickly, we will likely be obliged to initiate a self-administered insolvency plan at the end of January," Prokon said on its website on Saturday.

Global regulators have watered down controversial new rules aimed at reining in banks’ reliance on debt, following ferocious industry lobbying, the Financial Times reported. Central bankers and supervisors on Sunday approved an international standard for the leverage ratio – a measure of financial strength that is considered less susceptible to being gamed by bankers – that offers some concessions to banks. The changes announced in Basel, Switzerland, will come as a relief to big investment banks who had been fretting they would be forced to raise billions in extra capital.

Roman Catholic Church-owned bookseller Weltbild, which competes with online retailer Amazon.com in Germany, filed for insolvency on Friday after its sales shrank and it unexpectedly found itself unable to obtain fresh financing, Reuters reported. Unlisted Weltbild, which has 6,800 employees, has been posting losses as it invests in a shift to more internet-based business. The company, which relies on catalogue sales and is part owner of Germany's second biggest brick-and-mortar bookstore chain, has struggled to keep up with Amazon and its sales fell in the second half of 2013.

Thousands of consumers who sent their old mobile phones to recyling site Cash4phones.co.uk have been left out of pocket after the company filed for insolvency, The Guardian reported. The website offered cash to consumers who wanted to get rid of an old phone after an upgrade, but payments were only made once handsets were received and users complained they were ultimately offered far less than originally quoted online. In some cases they reported the company failed to pay up at all.

A plan that would have changed the business models of Europe's dominant banks appears to have run into the sand. In Europe's first response to the U.S. Volcker rule, which puts strict limits on banks' trading activities, the European Commission rejected an automatic mandatory separation of banks' market-related activities from deposit-taking, according to draft legislation seen by The Wall Street Journal. That will disappoint those who had hoped the European Union would do more to ensure that banks' state-guaranteed deposits aren't used to support riskier market-related business.