Iceland was within its rights not to repay billions of euro to the United Kingdom and Dutch governments, who were forced to compensate depositors after an Icelandic bank collapsed at the height of the global financial crisis, a court has ruled, the Irish Times reported. The decision was taken by the court of the European Free Trade Association (Efta), which ruled that Iceland had not broken depositor protection laws by refusing to compensate people who had invested in Landsbanki’s Icesave online banking accounts.

Monte dei Paschi di Siena said on Sunday it was seeking a financial investor as the political storm over a derivatives scandal at the ailing bank intensified ahead of next month's Italian election, Reuters reported. Italy's third-biggest lender, which needs state loans to stay afloat, this week revealed opaque derivatives trades, conducted between 2006 and 2009, that could cost it some 720 million euros.

Ever since the 2008 collapse of Lehman Brothers, global banking regulators have been searching for a better way to handle failures that cross international lines, the Financial Times reported. Meeting as the Financial Stability Board, central bankers and regulators from the biggest economies and financial centres agreed to force all of the “global systemically important financial institutions” to write recovery and resolution plans, essentially guidebooks aimed at helping regulators stabilise or wind them down in a crisis.

Thousands of teachers from around Portugal are marching in downtown Lisbon to protest proposed spending cuts they say will slash (EURO)1 billion ($1.3 billion) from the education budget, the Associated Press reported. Unions say the government plans to privatize many public schools and cut around 50,000 sector jobs.

The few listed Spanish property firms to survive a brutal real estate crash are stepping up the fight with banks for more generous debt relief to outlast a crisis that could yet have years to run, Reuters reported. Companies must persuade banks that have already been forced by the government to write down property loans to cut their debt to reflect the plummeting value of the assets linked to it or simply to give them more time. But property prices have dropped by some 30 percent since a building boom collapsed in 2008, crippling Spanish banks that were heavily exposed to the sector.

Spain's unemployment rate reached a record 26% in the fourth quarter, the latest sign of deepening recession even as growing investor appetite for the country's government bonds brings relief from the country's debt crisis, The Wall Street Journal reported. Data released Thursday by the National Statistics Institute showed the economy continued to shed public- and private-sector jobs in the final quarter of 2012 as the government worked to slash a big budget deficit.

In the first step to unwinding its crisis policy measures, the ECB announces on Friday how much of 489 billion euros ($649 billion) in ultra long-term loans it funnelled to banks in late 2011 they are opting to repay early, Reuters reported. The European Central Bank lent banks a total of more than 1 trillion euros in twin 3-year, ultra-cheap lending operations in December 2011 and February 2012 - a ploy that ECB President Mario Draghi said "avoided a major, major credit crunch".

Mario Monti, Italy’s prime minister, was forced to offer to recall parliament on Thursday amid questions about his government’s handling of the financial crisis at Monte dei Paschi di Siena and the role of the central bank, the Financial Times reported. Shares in Italy’s third-largest bank by assets, which has requested a second state bailout in four years, have fallen more than 22 per cent in the past few days since revelations five days ago of derivatives transactions that may force the 500-year-old bank to restate hundreds of millions of euros of losses.

Talks to divide $9 billion raised from the sale of businesses of Nortel Networks, the telecoms equipment maker that went bankrupt in 2009, ended without agreement, and the mediator said on Thursday further discussions were no longer worthwhile, Reuters reported. The failure of nearly two weeks of talks in Toronto raises the prospect that disputes among various creditors and retirees around the world could lead to years of litigation over how to divide the cash.

The Spanish government will on Friday present an ambitious plan to reverse the fragmentation of the country’s internal market by taking aim at the web of business rules and regulations imposed by Spain’s autonomous regions, the Financial Times reported. Madrid hopes the proposal will give a much-needed boost to the country’s economy, and improve Spain’s lacklustre reputation as a business destination.