Headlines

The European Commission said Thursday that Spain and Portugal didn’t take sufficient measures to bring their 2015 budget deficits within European Union limits, triggering a process which could eventually lead to financial sanctions, The Wall Street Journal reported. Whether, and by how much, the two countries will eventually be fined is a decision the European Commission—the EU’s executive arm—will make later in the summer and after the bloc’s finance ministers endorse its opinion at a meeting next week.

Zimbabwe is close to putting the final touches to a debt-arrears package that could see it receive an emergency injection of funds from the International Monetary Fund and other multilateral institutions into its cash-starved, drought-stricken economy, Zimbabwean officials said. The southern African nation — which has been treated as a pariah by the west for years — desperately needs money to pay civil service salaries, import food and alleviate a cash crunch.

Irish credit unions have seen their loan book shrink by 45 per cent in the past eight years, leaving their loans-to-assets ratio at a “dismal” level that raises serious questions about the movement’s future, according to a Government-commissioned report. The report by the Credit Union Advisory Committee, chaired by Donal McKillop, a financial services professor at Queen’s University Belfast, recommended a full review of Central Bank lending limits.

French government officials and bankers gathered in Paris Wednesday to promote the city as a financial capital of Europe that could take over from London after the U.K. vote to leave the European Union, The Wall Street Journal reported. In a rare moment of unity across the political and corporate divide in France, Socialist Prime Minister Manuel Valls addressed hundreds of bankers alongside Valérie Pécresse, the center-right head of the Paris region who has led the charge to lure financial services to the French capital in the wake of the U.K. referendum.

The three top executives at Greece’s bank rescue fund resigned on Wednesday as the country’s Syriza-led government buckled under pressure from the international creditors eager to accelerate a clean-up of the financial sector, the Financial Times reported. Aris Xenofos, chief executive of the Hellenic Financial Stability Fund, his deputy, Giorgos Koutsos, and a third team member, Anastasios Gagalis, were appointed less than a year ago by the leftwing Syriza-led government.

The Swedish Riksbank is increasingly nervous that its 16-month experiment with negative interest rates is yielding the kind of undesired byproduct that textbooks often predict: a real-estate bubble. Stockholm has become one of Europe’s hottest property markets, one where prices rose 14% last year and money keeps flowing thanks to the central bank’s ultraloose interest rate of minus-0.5%. To cool demand for mortgage loans, the Riksbank had been planning to start increasing interest rates by the middle of next year.

The Chinese government's call to the nation to build an innovation-driven economy from the top down has sparked a rush by local governments to construct new buildings in the name of supporting creativity, the International New York Times reported on a Reuters story. Innovation centres have been popping up around the country and are set to more than double to nearly 5,000 in the next five years, according to internet research firm iiMedia. The only problem for local governments; entrepreneurs are not moving in.

The price of a bond issued by Monte dei Paschi di Siena, Italy’s third-largest lender, plunged more than a tenth on Tuesday in the latest sign of growing investor alarm over bad debts within the country’s financial institutions, the Financial Times reported. Anxiety has spread from stock markets, where shares in the world’s oldest bank have fallen by more than a quarter this week to reach a record low, after the European Central Bank demanded it shed another €10bn in bad loans.

The Bank of England moved to boost the U.K. economy in the wake of Britain’s vote to exit the European Union, marking one of the first instances of a major central bank relaxing bank-capital requirements to mitigate a possible economic slowdown, The Wall Street Journal reported. The central bank said it agreed to ease regulatory restraints on U.K. banks in a push aimed at allowing them to lend an extra £150 billion ($199 billion) to U.K. businesses and households and to keep the economy flush with credit. The move reduced the amount of capital banks must hold against loan portfolios.

Spain and Portugal are on course to become the first ever eurozone countries to be sanctioned for breaching EU fiscal rules, in a move set to inflame political tensions over how dogmatic Brussels should be in policing national budgets, the Financial Times reported. The European Commission on Tuesday concluded that the two countries had failed to take “effective action” to meet EU deficit rules, according to people briefed on the talks.