National Bank's plan to absorb Eurobank to form Greece's biggest banking group will be suspended until both are recapitalised, and a state bank support fund will decide if the they should merge, a Finance Ministry official said on Sunday, Reuters reported. National acquired 84.3 percent of Eurobank via a share swap in February with a view to absorbing it as part of broader consolidation in the banking industry to cope with fallout from Greece's debt crisis and deep recession.

Bank of Ireland approved €1 billion of new loans to small and medium-sized enterprises in the first quarter of 2013, an increase of 25 per cent in the number of loans approved in the first three months of 2012, the Irish Times reported. The bank yesterday said the increase reflected a pick-up in credit demand from viable Irish SMEs and the bank’s initiatives to grow business-banking operations.

Gyorgy Matolcsy, the governor of Hungary’s central bank , on Thursday revealed a package of measures potentially worth up to €4.6bn designed to stimulate growth in Hungary’s flagging economy, the Financial Times reported. Mr Matolcsy, who caused controversy as the architect of Hungary’s “unorthodox economic policy” when economy minister from 2010 until last month, said the plan, dubbed Funding for Growth, would provide cheaper credit to small and medium-sized businesses and reduce foreign exchange risks to creditors.

Restructuring specialist Hilco is set to throw British entertainment retailer HMV a lifeline in a 50 million pound deal that will save 2,500 jobs, Reuters reported on a Sky News story. The deal, which could be struck as soon as Friday, will see HMV emerge from administration, Sky News said on its website, with the chain expected to be run by incumbent HMV executives together with newly-appointed Hilco executives. As part of the deal, Hilco will acquire about 130 HMV stores and all nine outlets operating under the Fopp brand, Sky News said.

Rising and volatile Italian government bond spreads caught domestic banks off guard and caused a credit crunch in the euro-zone's third-largest economy in late 2011, the International Monetary Fund concludes in a new study, The Wall Street Journal reported. Banks with lower capital levels and higher rates of nonperforming loans suffered the most, while Italy's sovereign borrowing costs reacted significantly to the scale of foreign ownership, said the technical working paper from Edda Zoli, a senior economist in the IMF's European department.

The European Union's banking regulator will decide over the coming months which bankers should have bonuses capped, raising hopes among lenders that the rules can be eased before they take effect in 2014, Reuters reported. The EU approved a law to cap bonuses at no more than fixed salary, rising to twice the salary if shareholders give their approval. The new law is in response to public anger at the size of bonuses, especially at banks that had to be rescued by taxpayer money at a time of general austerity in Europe.

Complaints about the dearth of lending by banks can be heard in small and midsized businesses up and down the country, and are raising concern not just within the Spanish government but also the European Central Bank in Frankfurt, the Financial Times reported. Spain’s economic crisis and the near-collapse of its banking sector last year have conspired to choke off the flow of bank loans – threatening to dry out the vast and versatile pool that dominates Spain’s private sector.

Belgium-based television services company Alfacam Group said on Wednesday that its bank lenders had decided to cancel its credit lines, leaving it scrambling to find a new investor, Reuters reported. Alfacam, which was granted creditor protection in October, said in a statement that its banks had decided not to extend suspension of debt repayments beyond March 31. The provider of broadcast services, TV studios and Europe's largest fleet of outside-broadcast vans signed a memorandum of understanding in December with its banks and Indian family-owned conglomerate Hinduja Group.

The finance chief of Spain's Catalonia region said that unless the European Union relaxes its austerity drive, the recession in Southern Europe may spread north, The Wall Street Journal reported. "It would be a pity if a more prudent macroeconomic policy would happen only after recession has arrived in the center of Europe. It would be better to anticipate," Andreu Mas-Colell, head of economics of Catalonia's regional government, said in an interview here last week. "EU policy makers should not underestimate the depressive effects of austerity in the south," he added.

A group of Italian investors is ready to stump up over 100 million euros to take control of small cooperative lender Banca Popolare di Spoleto, which was put under special administration this year, Reuters reported. The Clitumnus group of investors said on Tuesday it would underwrite a capital increase of up to 102 million euros. Shares in Popolare Spoleto, in which Banca Monte dei Paschi di Siena has a 29.5 percent stake, closed up 3.2 percent at 1.85 euros after the offer by Clitumnus. Clitumnus offered in January to buy a 51 percent stake for 2.10 euros per share.