German public-sector bank BayernLB says it lost nearly €2.62 billion ($3.5 billion) last year - a performance blamed largely on losses and expenses related to former Austrian unit Hypo Group Alpe Adria, The Associated Press reported. The 2009 performance was still an improvement on its huge loss of euro5.08 billion the previous year at the height of the financial crisis. BayernLB said Wednesday that it aims for a "positive result" in 2010. The bank said losses, writedowns and other expenses related to HGAA weighed down its results by a total €3.3 billion last year.

Greek sovereign bonds suffered a sharp sell-off on Tuesday as investor concerns over the country’s financial health flared up again, the Financial Times reported. In spite of mooted support from the European Union and the International Monetary Fund, investors remain concerned that Germany could refuse to provide financial aid if the Greeks fail to meet their deficit reduction targets later in the year. Greece must raise €35 billion ($47 billion) of debt this year to avoid a bail-out. It has sold €18 billion so far.

Germany's tough conditions for any aid for Greece, which other euro-zone countries were forced to swallow at a European Union leaders' summit last week, signal a broader division that threatens to hamper Europe's ambitions as a global power: Germany has cooled to unity, except on its terms, The Wall Street Journal reported. In the past two years Germany effectively vetoed joint European action to rescue banks and stimulate growth, and rejected euro-zone calls for more teamwork on economic policy.

European Union leaders hold what is likely to be a tense and difficult summit on Thursday, divided over how to help heavily indebted Greece and struggling to maintain confidence in the euro, Reuters reported. Diplomatic efforts on the eve of the two-day summit failed to bridge differences over whether to offer a safety net to Greece, helping push the euro down to a 10-month low after Portugal suffered a debt down downgrade.

Euro-zone leaders on Tuesday were working on a deal that could secure German backing for a financial rescue plan for Greece in return for an agreement by other countries to let the International Monetary Fund play a substantial role, according to senior European officials, The Wall Street Journal reported. But Germany, which has been pushing for IMF involvement in any bailout, is demanding tough conditions: Chancellor Angela Merkel insists that aid could come only to prevent a Greek default.

German chancellor Angela Merkel’s hard-line stance on Greece has come under attack from a top European Central Bank policymaker, who warned that the cost of inaction could be far worse than offering temporary financial support, the Financial Times reported. The unusually-strong criticism by Lorenzo Bini Smaghi, an ECB executive board member, highlighted frustration in Frankfurt at Berlin’s intransigence, which is threatening a showdown among eurozone political leaders at their summit in Brussels starting on Thursday.

Germany has set out three fundamental preconditions for any rescue package for Greece, including involvement of the International Monetary Fund, and a commitment by its European Union partners to tough new rules to control public debt and deficits in the eurozone – including necessary EU treaty changes, the Financial Times reported. A senior government official in Berlin said there would be no agreement at this week’s EU summit on a specific rescue package for the debt-strapped Greek government.

German Chancellor Angela Merkel on Sunday said Greece doesn't need financial support and European Union leaders shouldn't make the question of aid for Greece the focus of their summit later this week, The Wall Street Journal reported. In an interview with Deutschlandfunk radio, Ms. Merkel warned other European leaders against unsettling financial markets by raising "false expectations" that there will be a decision on aid for Greece this week.

Greece and Europe's other intensive-care economies face a threat that can't be solved by cutting public spending or raising taxes: a loss of competitiveness, The Wall Street Journal reported. And in the eyes of those struggling economies, the villain is Germany—the euro zone's largest economy—which has emerged in recent years as the region's most competitive.

Greek Prime Minister George Papandreou is racing to secure an explicit pledge of European aid and cut his country’s borrowing costs as €20 billion ($27 billion) of debt comes due in the next two months, Bloomberg reported. With investors still demanding Greece pay 3 percentage points more than Germany on its 10-year debt, Papandreou says Greece can’t afford to hold out much longer at current market rates. His government still needs to raise another €10 billion to repay bonds maturing on April 20 and May 19.