Prime Minister Silvio Berlusconi's drive to cut public spending is turning the spotlight on some of Italy's most profligate spenders—its political class, The Wall Street Journal reported. Despite many belt-tightening measures imposed on Italians over the past few years, the paychecks and benefits of Parliament members have been left largely untouched. Rome's lawmakers are among Europe's highest-paid: In 2010, members of the lower house earned an average gross salary of more than €140,000 ($196,000), nearly double U.K. lawmakers' annual salary.

Deutsche Bank has expressed an interest in purchasing the €457 million loans held by developer David Daly and his children with Allied Irish Banks, which were called in last month by the National Asset Management Agency, the High Court heard yesterday, the Irish Times reported. Moving the loans to Deutsche Bank would be “hugely” in the interest of the Dalys who, despite having initiated the talks with Deutsche Bank, are being excluded from the current negotiations by Nama, Michael Cush SC said.

Helaba, a German public sector bank, is pulling out from the EU’s bank stress test to avoid a public failure, heightening concerns over the credibility of this week’s results. The bank said on Wednesday that the European Banking Authority, which is running the tests, had rebuffed its attempts to shore up its capital and that Helaba was expected to publish its own results separately, the Financial Times reported. The withdrawal reduces the number of participating banks to 90.

The recent bear raid on Italian bank stocks and government bonds makes plain that fixing Greek finances won't halt the contagion that Brussels and Frankfurt fear so much. If Europe wants to save the euro, it is going to need to act more boldly, The Wall Street Journal reported in a commentary. Nobody outside the European Central Bank believes any longer that Greece can avoid restructuring its debt, and hefty haircuts for bondholders are likely to be part of that if a restructuring is going to do any good.

The Italian parliament is working on approving a €40 billion ($57.05 billion) austerity plan by Sunday, officials said, a fast timetable aimed at keeping Europe's debt crisis from infecting the continent's third-largest economy, The Wall Street Journal reported. Silvio Berlusconi's conservative governing coalition two weeks ago unveiled the austerity measures, which include public-sector wage freezes, higher fees for doctor visits and fewer transfers of funds from the central state to local administrations.

Moody's on Tuesday night cut Ireland's credit rating to junk, the Irish Times reported. The ratings agency said it was downgrading the country's bond ratings by one notch to Ba1 from Baa3 with a negative outlook. Ireland joins Portugal and Greece in becoming the third euro zone country to have its ratings cut to junk. Portugal's rating was cut four levels to Ba2 just over a week ago.

The public sector pensions liabilities stood at 1.1 trillion pounds ($1.763 trillion) in 2009/10, the government will say on Wednesday, a Treasury source told Reuters. The Conservative-Liberal Democrat coalition government is seeking to push through reforms of public sector pensions to make them more affordable as part of an austerity plan to eliminate a record budget deficit.

Dutch bancassurer ING asked a European court on Tuesday to revoke certain terms imposed as part of its state rescue, a move which could postpone asset sales and cut the cost of repayment, Reuters reported. A ruling in ING's favour could give the financial group more time to spin off its insurance operations in two separate initial public offerings (IPOs) and to sell WestlandUtrecht, a small local bank -- divestments which ING must carry out as a condition of its rescue during the credit crisis.

U.K. care home operator Southern Cross Healthcare Group PLC has finally collapsed under the weight of its unpayable rent bill, saying Monday that it plans to cease operating and hand its homes over to landlords. The arrangement promises to resolve the financial turmoil at one of the U.K.'s largest private care organizations, with 31,000 residents in its homes, Dow Jones Daily Bankruptcy Review reported.

With no consensus on how to share the burden of a new Greek bailout with the troubled country's private-sector creditors, European finance ministers struggled at a meeting Monday to make progress on a fresh aid package, The Wall Street Journal reported. Arriving in Brussels, officials offered widely divergent views on how to proceed.