Spain says it expects its banks to set aside up to €50bn in further provisions on their bad property assets as part of a new round of reforms for the country’s financial sector, the Financial Times reported. Luis de Guindos, economy minister in the centre-right government that took office two weeks ago after defeating the Socialists, said on Wednesday it was essential that the banks clean up their balance sheets without imposing a burden on the treasury. The €50bn figure, equivalent to about 4 per cent of Spain’s GDP, is higher than private expectations by bankers.

In a new sign of a Spain's deepening financial crisis, the regional government of Valencia on Wednesday said it was a week late in repaying a €123 million ($160 million) debt to Deutsche Bank AG, The Wall Street Journal reported. A spokeswoman for the Valencia government said the region had assistance from Spain's central government in Madrid in finding a solution to its liquidity crunch, but said Madrid didn't provide extra funds or a guarantee. The spokeswoman said the central government was "sensitive" to Valencia's difficulties, but declined to elaborate.

Bankrupt primary aluminium producer ZALCO is in talks with eight potential buyers for a takeover of part or all of its plant in Zeeland, the Netherlands, the company's receiver said on Wednesday. ZALCO, which has a production capacity of 275,000 tonnes per year of aluminium, filed for bankruptcy in mid-December. The plant, which had employed 500 people, was shut down a few days later due to lack of funding to pay energy suppliers.

Commercial banks' overnight deposits at the European Central Bank hit a new record high of €453 billion, data showed Wednesday, underscoring the ongoing fear banks have about lending to each other in the current debt crisis, the Irish Times reported. The ECB also bought up bonds of peripheral euro nationas, including Ireland and Portugal, two people with knowledge of the transactions said. The ECB pays 0.25 per cent interest for overnight deposits, well below the 0.396 per cent banks could lend their spare cash out for on interbank markets.

The insolvency administrator of Manroland said on Wednesday it was homing in on an investor for the German printing machine maker and saw a deal feasible by the end of the month, Reuters reported. "We now have parties seriously interested in all three production sites in Augsburg, Offenbach and Plauen, with whom we are involved in ongoing negotiations," Werner Schneider of law firm Schneider, Geiwitz & Partner said in a statement, without naming any possible buyers. The firm said no orders had been cancelled and production would continue beyond Jan. 31 based on the current backlog.

Greece will have to leave the euro zone if it fails to clinch a deal on a second, 130 billion euro (108 billion pound) bailout with its international lenders, a government spokesman said on Tuesday, Reuters reported. It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves. Greece is racing against the clock to agree with the EU, the IMF and private bondholders on the details of the rescue plan before a major bond redemption in March.

Registered unemployment in Spain, where almost half of young people are out of work, rose for a fifth month in December as the euro area's fourth-largest economy contracted, the Irish Times reported. The number of people registering for unemployment benefits rose 1,897 to 4.42 million, the labour ministry in Madrid said in an e-mailed statement today. In November, it surged 59,536. Spain's economy contracted in the final months of the year as tourism and exports, the drivers of its first-half recovery from a three-year slump, weakened, the Bank of Spain said on December 29th.

European leaders return to work this week seeking to buy time for the Spanish and Italian governments to wrest control over their debt and rescue the single currency from fragmentation in its 10th anniversary year, Bloomberg reported. Some 157 billion euros ($203 billion) in debt will mature in the 17-member euro area in the first three months of 2012, according to UBS AG. By the end of that period, leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin Jan.

The Spanish government said Monday it will introduce more austerity measures this week on top of a swath of spending cuts and tax increases approved last week, as it scrambles to contain a budget deficit that may have surpassed 8% in 2011, The Wall Street Journal reported. The new measures are set to be approved at a Cabinet meeting Thursday, Budget Minister Cristobal Montoro said Monday during an official event in Madrid. He didn't specify what measures the government plans to introduce.

Companies collapsed at a rate of more than 160 a month in the first 11 months of last year, with the rate of failure increasing 20 per cent on 2010, according to a business information provider, the Irish Times reported. From January to November, some 1,930 Irish companies failed, with almost three-quarters of the companies liquidated and most of the rest going into receivership. The failed companies owe a total of almost €1.2 billion in unpaid debt to unsecured creditors, Vision-net said. Businesses in the hotel and restaurant sector were the hardest hit.