Headlines

European Union member states can use public funds to help struggling banks dispose of soured loans, but only within the limits of laws put in place since the financial crisis, according to an EU report. While EU law normally stipulates that the need for “extraordinary public financial support” means a bank is failing and should be wound down, an exception is made for temporary state aid, known as a precautionary recapitalization, to address a capital shortfall identified in a stress test, Bloomberg News reported.

A Greek debt relief scenario that put back interest payments until 2048 would mean the nation's euro zone creditors deferring receipt of up to 123 billion euros (£106.8 billion), according to a forecast by Germany's Finance Ministry. The ministry's calculations, which were contained in a letter to a member of parliament seen by Reuters on Friday, contemplated the various restructuring scenarios laid out by the euro zone bailout fund, the European Stability Mechanism (ESM), the International New York Times reported on a Reuters story.

A failure to find a solution to a crisis gripping Italy's Veneto-based banks would result in consequences similar in impact to a default by Greece, the head of one of the banks was quoted as saying on Friday. Banca Popolare di Vicenza and Veneto Banca have requested a state bailout to help fill a combined capital shortfall of 6.4 billion euros ($7.2 billion), the International New York Times reported on a Reuters story.

The eurozone’s bailout fun has increased its fundraising plans for this year by €4.5bn due to debt alleviation measures needed by Greece, the Financial Times reported. The European Financial Stability Facility and the European Stability Mechanism will raise a combined €61.5bn in financing this year, they said on Thursday – more than originally expected despite an early loan repayment from Spain. The ESM board this week approved a €1bn early loan repayment from Madrid, which is experiencing an impressive economic recovery after receiving a €40bn banking system rescue in 2012.

Brussels and Italy have agreed on a rescue of Monte dei Paschi di Siena bank, outlining a draft plan that involves significant cost cuts, some investors taking a hit and executives facing a cap on pay, the Financial Times reported. The announcement brings the long-running saga over the future of Italy’s oldest lender towards a close, with Rome signing off on an investor bail-in and the kind of deep restructuring MPS fiercely resisted for more than a year.

Shares in Spanish lender Banco Popular have shed over 8 per cent this morning to at least a 28-year low, following reports that senior EU officials have warned the bank could be wound down if it fails to find a buyer. Yesterday, Reuters reported that Elke Koenig, the head of the eurozone body that winds up failing banks, issued an “early warning” on the state of the lender’s fate if it fails to complete a merger. Earlier this month, Spain’s sixth largest bank said it had received several approaches about a merger.

Venezuela’s opposition is turning up the heat on Wall Street banks by alleging that some of the proceeds from a recent bond sale will be used to purchase weapons and help keep President Nicolas Maduro in power, Bloomberg News reported. In a letter dated June 1, Julio Borges, the president of the opposition-controlled National Assembly, said that at least $300 million in proceeds from the central bank’s “fire sale” of bonds to Goldman Sachs Group Inc. and Nomura Holdings Inc. will be used to purchase weapons from Russia.

Level, the new budget airline from IAG SA, may start flying across the Atlantic from Rome in the latest bid by a low-cost carrier to capitalize on Alitalia SpA’s insolvency, Bloomberg News reported. Level, which will lift its fleet of two Airbus SE A330 jets to five in 2018, will initially focus its expansion on Italy and France, IAG Chief Executive Officer Willie Walsh told reporters ahead of Level’s inaugural flight on Thursday. Rival Norwegian Air Shuttle ASA this week said it’s adding U.S. routes from Rome as bankruptcy proceedings force Alitalia to scale back.

Australian investment bank Macquarie has been hired to find an investor for insolvent German solar panel maker SolarWorld, the company's insolvency administrator said on Thursday, Reuters reported. SolarWorld, once Europe's biggest solar power equipment group, last month said it would file for insolvency, overwhelmed by Chinese rivals who had long been a thorn in the side of founder and CEO Frank Asbeck, once known as "the Sun King".

German shipping group Rickmers said it would file for insolvency after bondholder HSH Nordbank rejected its restructuring plan a day ahead of a last-ditch bondholders' meeting, Reuters reported. Rickmers had proposed a revamp plan under which the equity stake of owner Bertram Rickmers was to be reduced to 24.9 percent, while bondholders, HSH Nordbank and potentially another bank would hold 75.1 percent. But HSH "highly surprisingly" rejected that plan, Rickmers said in a statement on Wednesday.