Headlines

Almost a year ago, as the euro crisis raged, Europe’s leaders boldly pledged a union to break the dangerous link between indebted governments and ailing banking systems, where the troubles of one threatened to pull down the other. Yet the agreement that seems likely to emerge from a summit later this month will be one that does little to weaken this vicious link. If anything it may increase risks to stability instead of reducing them, The Economist reported. Almost everyone involved agrees that in theory a banking union ought to have three legs.

The Live Register fell in May, but the number of long term claimants rose as Ireland’s unemployment rate remained high, the Irish Times reported. A total of 426,100 people signed on last month, seasonally adjusted figures showed. That represented a decrease of 700 month on month, and 11,000 year on year, with the register falling to its lowest level since August 2009. On an unadjusted basis, there were 421,737 on the register last month, falling by 2.6 per cent or 11,170 year on year.

Money-losing Alitalia said on Thursday it had signed a deal with unions to cut salaries, paving the way for launching a new strategic plan for Italy's flagship airline, Reuters reported.CEO Gabriele Del Torchio and board members have agreed to cut their pay by 20 percent, while 2,200 ground staff will work 5 fewer days per month under a state-backed scheme. The next step is launching a new strategic plan for Alitalia, he said. Alitalia, 25 percent-owned by Air France-KLM, said the deal will help it achieve its cost saving targets in the short-to-medium term.

STX Pan Ocean, the dry bulk carrier unit of Korea's STX Group, is likely to file for court receivership, following a couple of failed attempts by its parent to sell a stake. Receivership is similar to U.S. Chapter 11 bankruptcy, where the court takes a leading role in restructuring the company. A judge at the Seoul Central District Court told The Wall Street Journal that once a company files for receivership, the court freezes the firm's assets, including its debt. It typically takes four months for a court to set up a restructuring plan, he said.

Finland, one of the eurozone’s most ardent defenders of austerity, has entered its third technical recession since the start of the financial crisis, the Financial Times reported. The Nordic country’s economy shrank by 0.1 per cent in the first quarter compared with the previous three months and by 2.1 per cent versus a year earlier. Following revisions to earlier data, it emerged that Finland has been in recession for a year.

The International Monetary Fund has admitted to major missteps over the past three years in its handling of the bailout of Greece, the first spark in a debt crisis that spread across Europe, The Wall Street Journal reported. In an internal document marked "strictly confidential," the IMF said it badly underestimated the damage that its prescriptions of austerity would do to Greece's economy, which has been mired in recession for the last six years.

Ireland's Insolvency Service has launched a single gateway for stakeholders to file complaints against an insolvency practitioner, Accountancy Age reported. The gateway will remove the need for stakeholders, such as creditors involved in an insolvency process, having to lodge a complaint with one of the eight regulators, something which has previously been described as overly complicated. From today nearly all complaints about an insolvency practitioner will be made via a common complaints gateway hosted by the Insolvency Service - based in Leeds.

After German travel agency GTI Travel declared bankruptcy on Monday, its Polish unit has decided to suspend sales and declare insolvency, the Warsaw Business Journal reported. The Polish company has said it is looking for new flights for its clients as Sky Airlines, a member of the Kayi Group that also includes GTI Travel, has also gone bankrupt. Kayi Group, which is active mostly in Germany, the Netherlands and Russia, has been present in Poland since 1999.

Pay and bonuses in Britain's financial services sector remain excessive and encourage risk-taking, according to those working in it, undermining efforts by politicians and regulators to reform an industry blamed for its role in the financial crisis, Reuters reported. Britons struggling in the economic downturn have been infuriated by financial services companies, particularly banks rescued by the government at the height of the crisis, which continue to dole out rewards many times the average wage.

Bondholders in Iceland’s state-backed Housing Finance Fund are waiting for the nation’s biggest mortgage bank to change the terms of their investment as the government looks for ways to keep the lender afloat, Bloomberg reported. “It wouldn’t surprise me if they tried to push through changes to the terms of HFF bonds this summer,” Kari Arnor Karason, chief executive officer at Stapi Pension Fund, said in a phone interview. Stapi, which holds 77 billion kronur ($630 million) in HFF and government bonds, hasn’t yet been approached by the lender, he said.