Caja Madrid may be the first Spanish bank to stop interest payments to mortgage-backed bond investors as loan defaults soar, according to Standard & Poor’s. Homeowners lagged behind on repayments on 72 billion euros of mortgages as of January, Bank of Spain data show, after the credit crisis halted a real-estate boom. “A number of deals” may have to defer interest, said Dipesh Mehta, an asset-backed debt analyst at Barclays Capital in London. “Unemployment is the biggest risk” to Spanish mortgage bonds, he said.

Qimonda, the insolvent German memory-chip maker, yesterday entered formal bankruptcy proceedings as its search for an investor dragged on, the Financial Times reported. The company said 915 of just under 3,400 employees would keep their jobs as it shuttered more sites--including its main plant in Dresden. Michael Jaffé, the insolvency administrator, said he remained in talks with "potential interested parties", and with governments in Germany and Portugal about supporting any new owner.

German Chancellor Angela Merkel may be losing valuable time that General Motors Corp.’s Opel business doesn’t have as she holds out against taking a stake in the unit. Merkel says U.S. President Barack Obama’s rejection of GM’s recovery plan gives European leaders a 60-day breathing space to help save Germany-based Opel. Unions and analysts say governments need to take control of the division now or risk it falling victim to a restructuring focused on the U.S. business.

The German economy will shrink 6% to 7% this year, Commerzbank forecast on Monday, result that would put the country in the deepest recession of any major European economy this year. The German government currently forecasts that 2009 gross domestic product will fall only 2.25%. But the deluge of gloomy data from German industry is prompting more analysts to cut expectations, adding fuel to the debate over whether the country should adopt a more aggressive fiscal-stimulus policy.

Policy makers in the U.K. and Germany set out plans to place a much heavier regulatory burden on banks and other financial institutions in a sign of how rules throughout Europe are likely to change in the wake of the financial crisis, The Wall Street Journal reported. In the U.K., Lord Adair Turner, chairman of the country's financial watchdog, laid out recommendations for what he called a "profound" overhaul of banking supervision that, if adopted, will mark the end of more than a decade of light regulation in one of the world's financial centers.

German carmaker Opel and its U.S. parent General Motors have, to the knowledge of the German government, sufficient financing to see them through into April, a junior economy minister said on Wednesday. "What is positive is that money is apparently still there for them to carry on," Dagmar Woehrl told reporters in Berlin. Woehrl added that Economy Minister Karl-Theodor zu Guttenberg's visit to the United States earlier this week had moved the Opel issue "a step forward." She added, however, that some questions remained open.

Liechtenstein's largest bank said it is abandoning its tradition-rich trust business, seeking to distance itself from accusations from officials in Germany and the U.S. that it helped rich foreigners evade taxes, The Wall Street Journal reported. The move by LGT Group, which is owned by the tiny Alpine principality's royal family, marks a move away from a mainstay of Liechtenstein banking: the formation of secretive foundations as tax shelters.

Struggling U.S. carmaker General Motors denied a weekend newspaper report its German unit Opel was preparing for insolvency. "This scenario is currently not on the agenda," a GM Europe spokesman told Reuters on Sunday. German newspaper Die Welt had reported on Saturday, citing no sources, that GM and Opel seemed to be preparing for an insolvency at Opel, having hired three law firms with renowned insolvency experts.

The crisis at General Motors threatens to drag down Opel, a storied German brand that GM bought 80 years ago on the eve of the Great Depression, the International Herald Tribune reported. Many in the industry believe Opel has a future only if it can get a temporary helping hand from the German government.

German carmaker Opel should consider entering insolvency, the country's interior minister has said. Modern insolvency law was "not set up for the destruction but for the preservation of economic assets", said Wolfgang Schaeuble. The comments came as executives from Opel and its parent General Motors (GM) met government officials and promised more details on a restructuring plan, the BBC reported.