Spain's central bank said the country's lenders will need €15.15 billion ($21.07 billion) in new capital, but Moody's Investors Service published a far higher estimate that spooked markets and called into question the credibility of Spain's figures, The Wall Street Journal reported. The Bank of Spain's disclosure on Thursday, aimed at providing a new yardstick for the cleanup of the country's ailing banks and shoring up investor confidence, was overshadowed as Moody's downgraded its rating on Spanish government debt to Aa2 with a negative outlook, from Aa1 previously.

All Saints looks set to change hands after liquidators to two collapsed Icelandic banks put their stakes in the high street clothing retailer up for sale, The Telegraph reported. The liquidators of Kaupthing and Glitnir have appointed Ernst & Young to advise on the sale process. The accountancy and advisory firm is already in contact with a "select" group of interested investors, according to a source, with a deal likely to value the retailer at about £140m. All Saints said that the banks "are looking to exit and realise a return on their investment".

Ireland's new parliament elected soft-spoken Enda Kenny prime minister Wednesday to lead a coalition government that faces immediate pressure to revive the nation's debt-crippled economy, The Huffington Post reported. Kenny, 59, vowed to solve a bank-bailout crisis that has overwhelmed Ireland's finances and required an emergency rescue by the European Union and International Monetary Fund. He said terms of the EU-IMF loans must be renegotiated to make them more affordable for Ireland and enable the country's recovery from record deficits and double-digit unemployment.

One in two leading businesses in recession-hit Greece will need to refinance their loans or debt obligations over the coming year, research by auditors Ernst & Young showed on Tuesday, Agence France-Presse reported. The study found that 48% of Greek firms will have to raise new loans amid deteriorating financial conditions in the country, which is itself laboring under a public debt of more than EUR300 billion ($420 billion). Some 34% of respondents said that access to funding will not be a problem for their organizations in the next 12 months.

Authorities in the U.K. and Iceland arrested nine men, including a pair of high-profile U.K. property moguls, in connection with the collapse of Iceland's Kaupthing Bank hf, the latest arrests connected to the failure of the island's banking system, The Wall Street Journal reported. The U.K.-led probe is examining the extent to which funds were withdrawn from the bank prior to Kaupthing's 2008 collapse and who was involved. The British investigation is being conducted in addition to a separate probe by Icelandic prosecutors. Among those arrested Wednesday were U.K.

Greece raised €1.625 billion ($2.28 billion) in an auction of treasury bills Tuesday, though the higher interest rate it has to pay showed investor unease a day after the country's credit rating was downgraded sharply, the Associated Press reported. In return for selling the 26-week bills, Greece had to pay an interest rate of 4.75 percent, the Public Debt Management Agency said. The rate was up from the 4.64 percent it had to pay in a similar auction last month, but lower than the 4.90 percent demanded in January.

Eircom workers have been told by their union leaders the heavily indebted telecoms group could be taken over by its lenders if they do not agree to implement the €92 million in labour savings outlined last week in its rescue plan, the Irish Times reported. The warning came from the Communications Workers’ Union (CWU), which represents the majority of Eircom’s 7,170-strong workforce.

Key parts of a stress test for European banks designed to raise investor confidence in the sector have been softened by regulators despite widespread derision of a similar exercise last year, which was seen by financial markets as too lax, the Financial Times reported. Some of the scenarios under which bank balance sheets will be tested are more benign than the tests that failed to gain investor credibility last year.

The 17 countries that use the euro have agreed on all key elements of a new pact designed to inject more discipline into their currency zone — except for measures that would bring Europe’s corporate tax systems closer together, the International Herald Tribune reported. A meeting of officials from the euro-zone countries Tuesday gave broad agreement to a new text of the so-called pact for competitiveness, according to diplomats speaking on condition of anonymity due to the sensitivity of the discussions.

European Union lawmakers Monday night backed tough new rules on short selling, including a near-ban on so-called naked short selling of credit default swaps linked to sovereign debt, Dow Jones reported. The new legislation is aimed at limiting speculative trading that EU politicians have blamed for exacerbating the debt crisis that has roiled the currency bloc over the past year-and-a-half.