Europe

Responding to a popular outcry, the French government issued a decree Monday banning stock options and limiting bonuses for bankers or auto executives who lay off workers after accepting government aid to weather the economic crisis, The Washington Post reported. Prime Minister François Fillon, announcing the measures, said France was the first European country to lay down such legal restrictions on executive pay. Although not retroactive, they will run through 2010, he said in a statement, and they could be extended.

Prime Minister Gordon Brown, who pledged to freeze his own salary last night, said U.K. companies shouldn’t award big bonuses to executives whose efforts have backfired, Bloomberg reported. “Most people who have worked hard to build up their firm or shop don’t understand why any company would give rewards for failure or how some people have grown fabulously wealthy making failed bets with other people’s money,” Brown told religious leaders at St. Paul’s cathedral in London today.

Spain's central bank will bail out struggling regional savings bank Caja de Ahorros Castilla La Mancha, marking the first time a Spanish financial institution has been rescued since the current financial crisis began, The Wall Street Journal reported. The Spanish government said on Sunday that the Bank of Spain will take over management of the troubled lender, known as CCM, and inject liquidity to keep it afloat, backed by government loan guarantees of up to €9 billion ($12 billion).

The overnight oustings of Rick Wagoner and Christian Streiff as chief executives of General Motors and Peugeot Citroën respectively, today sent tremors through the boardrooms of Europe's battered auto industry, The Guardian reported. Dieter Zetsche, head of Mercedes owner Daimler, and Norbert Reithofer, head of Quandt family-controlled BMW, could be next in the firing line as premium carmakers suffer disproportionately from the global collapse of sales.

The International Monetary Fund reached a deal with Serbia on Thursday to provide a 27-month, 3 billion euro loan to help the country address its vulnerability to the financial crisis, The New York Times reported. The agreement for the loan of about $4 billion was announced at a news conference in Belgrade by Serbian government officials and Albert Jaeger, a fund representative. The deal, which still requires the approval of the monetary fund’s board in Washington, will force painful budget cuts on Serbia, the country’s finance minister, Diana Dragutinovic, told reporters.

As oil sands developer BA Energy Inc. seeks help from an Alberta court Friday to prevent a fire sale of its assets and appease nervous bankers, it joins a growing list of Canadian oil and gas companies fighting for their lives amid the credit crunch, the Calgary Herald reported on a Financial Post story. While so far only smaller players have run into trouble, insolvency experts say the flood of energy companies headed to court will swell if energy prices stay weak.

AIG executives in Europe are adamant they should not have to return their controversial bonuses and some feel that pressure on them to do so may amount to blackmail, according to a company employee and internal emails. AIG Financial Products unit head Gerald Pasciucco told a staff meeting for UK and Paris employees on Monday that he thought a demand for repayments was to a certain extent "blackmail," said a London-based recipient of one of the retention bonuses from the bailed-out insurer.

The failure last week of Ventracor Ltd., once the “darling” of Australia’s life-sciences industry, may herald more collapses as a global capital drought forces cash-starved companies to find partners or wind down, Bloomberg reported. Almost half the nation’s 130 publicly traded life-sciences companies risk insolvency in the next year, according to AusBiotech Ltd., a Melbourne-based industry group. Capital raised by listed biotechs plummeted to A$183 million ($129 million) in 2008 from A$943 million in 2007, the group has said.

The International Monetary Fund said Wednesday that it would come to the rescue of Romania as part of a $27 billion financing package to help the country weather the financial crisis. The fund said in a statement from Washington that agreement had been reached on an economic program supported by a loan of about $17.5 billion under a two-year stand-by arrangement, The New York Times reported. Pending the approval of the fund’s executive board, Romania would be able to draw $6.75 billion upon board approval.

A wave of indignation swept over France when it became known Tuesday that the head of a large auto parts company who was edged out because of poor results walked away with a severance package worth more than $4 million, The Washington Post reported.