European authorities are pushing Bankia group to impose losses on junior debtholders as part of Spain’s bank bailout by swapping their securities for stock in the nationalized lender, two people with knowledge of the matter said, Reuters reported. The European Central Bank and European Commission want investors including preference shareholders to accept newly issued shares in exchange for their existing securities to help reduce the cost to the taxpayer of Spain’s 100 billion-euro ($130 billion) bank rescue, said the people, who declined to be named because the matter isn’t public.

The German government is urging “compulsory” hiring of outside experts to help collect taxes, fight corruption and privatise government assets in Greece in return for agreeing an overhauled bailout that would include two more years of EU aid for Athens, the Financial Times reported. The measures would go further than ever before in asserting international control over Greek budgetary decision-making.

A concession from Greece's lenders on Tuesday failed to win over two junior parties in the ruling coalition who blocked agreement on a vital austerity package because they oppose labour reforms. Hopes that a final deal on the austerity cuts was near had grown after inspectors from the lenders left Athens last week saying the two sides had agreed on most reforms and austerity cuts needed to unlock the country's next tranche of aid.

The Madrid region has been pushed further towards requesting a bailout from Spain’s regional government rescue fund after it pulled a planned debt sale amid limp investor demand, the Financial Times reported. The failure to sell bonds by the Community of Madrid, which has the second-highest credit rating of Spain’s 17 regional governments, came after Moody’s downgraded the debt of five other Spanish regions, including the economic powerhouse of Catalonia.

One of the biggest puzzles facing the Bank of England is why British labor productivity has been so poor since the financial crisis, The Wall Street Journal The Source blog reported. This matters, because it suggests the economy has little capacity to grow before inflation becomes a concern. So far, the BOE has largely shrugged off the productivity puzzle as an anomaly. It could be that productivity growth has only apparently been poor because GDP growth has been under-reported. That’s because of accounting identities: the U.K.

Investors in two European property funds at the failed investment firm Custom House Capital have been told that winding up the company behind the funds is the cheapest way to recover more than a third of their money on one fund and a fifth on the other.Accountants appointed to manage the properties by the Central Bank last year have recommended investors vote to wind up Custom House Capital Investment Property Funds plc in a ballot by a deadline of November 9th.

One of the hottest trades of the past few months has been the bonds of a country so shaken by economic and social turmoil that a neo-Nazi party is running third in the polls, The Wall Street Journal reported. That's right: Hedge funds have been buying Greece. Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed.

The 40,000-person town of Sciacca has become a mausoleum of decades-old unfinished public works. Rainwater and weeds fill the basins of two indoor Olympic-scale swimming pools that have never opened, The Wall Street Journal reported. The cement carcass of a retirement home, overlooking Sciacca's port, remains bereft of tenants, or electricity, decades after its construction. "Our model for economic growth is not one based on balanced budgets," said longtime Sciacca resident Calogero Mannino, 73 years old, one of the town's principal rainmakers.

Bankia and three other Spanish lenders will win European Union approval for government bailouts by the end of November, EU Competition Commissioner Joaquin Almunia said, Bloomberg reported. “The Bank of Spain, the Commission and the management of the four entities have been working on their restructuring plans during the summer, and the commission will take a decision approving them by the end of November,” Almunia said in the text of a speech he gave in Barcelona today.

A former Barclays banker who is among the new shareholders in the National Asset Management Agency’s ownership company was involved in a scheme to remove toxic assets from Barclay’s books that a top UK regulator described as “pushing the envelope too far”, the Irish Times reported. Nama yesterday said Irish Life had sold its 17 per cent stake in the special purpose vehicle that owns the loans agency to London company Walbrook Capital. One of the firms’s three founders is Australian lawyer Michael Keeley, who worked for the structured credit division of UK bank Barclays.