Headlines

Spain's new central bank chief said the bank failed to act swiftly after the country's housing market crashed half a decade ago, a rare show of self-criticism of national institutions that comes as Spain enters the last stretch of negotiations on the details for a banking bailout, The Wall Street Journal reported. Bank of Spain Gov. Luis Maria Linde's speech in Parliament on Tuesday was his first significant statement since he was appointed by conservative Prime Minister Mariano Rajoy a month ago, replacing Miguel Ángel Fernández Ordóñez , a Socialist appointee.

Britain's banks have been told to test how they would cope if several euro zone countries exited the single currency, the UK's Financial Services Authority watchdog said on Tuesday, Reuters reported. FSA Chairman Adair Turner said Britain's banks needed to think about problems arising from their assets and liabilities being redenominated into another currency, even though the likelihood of this happening was still small. "We've certainly encouraged them to run those scenarios for Greece, Spain, Italy, Portugal and Ireland," Turner told parliament's Treasury Select Committee.

Italian Prime Minister Mario Monti expressed serious concern on Tuesday over a possible default by Sicily, an autonomous region long criticized for its wasteful public administration and bloated government payroll, Reuters reported. Monti said in a statement there were "grave concerns" that the southern island could default and he said he had written to the governor Raffaele Lombardo seeking confirmation that he would resign by the end of the month.

A key measure of German investor confidence fell unexpectedly in July in another sign that the eurozone financial crisis is weighing on Europe's largest economy, Bloomberg Businessweek reported on an Associated Press story. The ZEW institute said Tuesday its index fell for the third month in a row to minus 19.6 points from minus 16.9 in June. Market analysts foresaw a small increase to minus 15.0. Germany is the largest economy in the 17-country eurozone and has an outsized impact on the currency union and its efforts to dig out of a crisis over too much government debt.

Greece’s coalition government has stripped the bosses of the lossmaking state electricity producer of a monthly €3,500 allowance paid on top of their salaries, in a move signalling their intention to slash wasteful spending in the public sector, the Financial Times reported. The “family” allowances, deemed illegal in a recent high court ruling, have highlighted continuing public sector resistance to change, despite Greece’s economic situation. Affected in this case were Arthuros Zervos, the chief executive of Public Power Corporation, and Costas Theios, his deputy.

The Brazilian central bank, concerned by a deepening scarcity of funding for small- and mid-sized lenders, is considering creating a fund to invest in sales of loan-backed receivables, O Estado de S. Paulo newspaper reported on Monday. So-called mid-cap banks are responsible for about 220 billion reais ($108 billion) in loans, or about 10 percent of Brazil's total outstanding lending, the report said. Banks in that segment are facing a dearth of funding in the wake of the central bank's seizure of Banco Cruzeiro do Sul for alleged accounting irregularities.

As Madrid and the euro zone get ready to pump as much as €100 billion into Spain’s struggling savings banks, one of the biggest questions is whether taxpayers yet again have to pick up the whole tab for saving failing lenders, The Wall Street Journal Brussels Beat blog reported. The answer to this question has come out in small slices over the past week, and it seems that the final word on the issue may still be out.

Polish builder Polimex, stretched by debt after cut-throat bidding on infrastructure projects for the Euro 2012 soccer tournament, hopes to offload its Energomontaz and Sefako units for at least 200 million zlotys ($58 million), Reuters reported. Chief executive Konrad Jaskola told broadcaster TVN CNBC on Monday the units had been offered to state restructuring agency ARP and other potential bidders. Polimex has 100 million zlotys in bonds maturing in July and a further 195 million due in October. It also has to repay a loan of 150 million zlotys by the end of July.

More than a quarter of shops and a fifth of hotels are at serious risk of going out of business in the next year, according to the trade body for insolvency professionals, DailyRecord.co.uk reported. Research by R3 found 274 retail businesses and 30 hotels had a high risk of going bust within the next 12 months. Analysis showed there are a further 1238 retailers and 137 hoteliers who are vulnerable to failure over the same period. This means that 26.15 per cent of retail businesses and 17.99 per cent of hotels in Scotland are at some risk of failure.

Britain's growth prospects for the next two years have worsened more than those of any other big advanced economy over the past three months, the International Monetary Fund said on Monday, Reuters reported. The sharp downgrade chimes with other economists' darkening assessments, and the IMF said it was too soon to say if a recent flurry of official measures to stimulate growth would be enough, or if the government will have to ease back further on its fiscal austerity plans.