Headlines

As Spain became the fourth euro zone country to accept an international bailout, investors turned their nervous gaze Monday to Italy, selling Italian stocks and bonds on worries that Rome could be the next victim of Europe’s financial infection, the International Herald Tribune reported. Italian officials are now privately expressing concern that even a €100 billion, or $125 billion, bailout for Spanish banks may not stop the troubles from spreading.

An adviser to former minister for finance Brian Lenihan has said the format of the bailout deal for the Irish banks was a mistake, which is being repeated again in the rescue package for Spain, the Irish Times reported. Alan Ahearne of NUI Galway said funds should have been injected directly into the Irish banks rather than given to the State.

British house prices fell at a slower pace in May, although outlook worsened as the euro zone crisis intensified and sales took a temporary hit from the expiry of a tax holiday, a survey showed on Tuesday, Reuters reported. The Royal Institution of Chartered Surveyors' (RICS) seasonally adjusted house price balance rose to -16 from -19 in April, beating economists' forecasts for a -18 reading. London was again the only part of the country where house prices rose.

Parts of bankrupt Dutch aluminium producer ZALCO will be bought by a Dutch and a U.S. company, which will continue casting and anode production but smelting operations will cease, the Dutch buyer and an administrator said on Monday, Reuters reported. ZALCO, which had a production capacity of 275,000 tonnes per year of aluminium, filed for bankruptcy in mid-December. Its plant at the port of Vlissingen in the southwest of the Netherlands, which employed 600 people, was shut a few days later due to a lack of funds to pay energy suppliers.

Euro zone finance ministers have agreed to lend Spain up to €100 billion to shore up its teetering banking system, the Irish Times reported. Madrid said it would specify precisely how much it needs once independent audits report in just over a week. After a conference call of the 17 finance ministers yesterday afternoon, which several sources described as heated, the Eurogroup and Madrid said the amount of the bailout would be sufficiently large to banish any doubts.

Massive Spain was forced to ask for a bailout to keep its banks afloat this weekend. But it was tiny Greece that pushed Spain over the brink, The Washington Post reported. This Mediterranean nation’s 11 million people head to the polls next Sunday with a stark choice between leaders who accept the harsh terms of the bailouts that have kept their country afloat and those who reject them, potentially at the cost of Greece’s future on the euro. Fears that a Greek rejection would panic markets about the euro zone’s future pushed Spain to seek the aid ahead of Greece’s election.

Britain's banking regulator could be handed new powers to enforce government recommendations on how the country's largest banks should ring fence their retail and investment operations, The Sunday Telegraph reported. UK finance minister George Osborne will signal a more accommodating tone on regulation at an annual dinner for bankers this Thursday, hosted by The City of London, where he is due to outline how the government will implement the Vickers report.

Chinese auto firm Zhejiang Youngman Lotus Automobile has made an improved 5 billion crown ($700 million) bid for bankrupt carmaker Saab, Swedish media reported on Friday, Reuters reported. Daily Svenska Dagbladet quoted Youngman's representative in Sweden saying the Chinese firm had raised its bid for all of Saab's assets from an offer of 3 billion crowns it made in February. "Our revised bid includes all parts of Saab's bankruptcy estate, including the spare parts unit," the paper quoted Johan Nylen, Youngman's representative saying.

The European Commission began the mammoth task of trying to strip out state support from senior bank debt this week, finally releasing its much-anticipated Crisis Management Directive, International Financing Review reported. The legislative proposals will give regulators across Europe a wide range of tools to prevent and resolve bank failures, including the power to impose losses across the bank capital structure - even on senior debt.

Insolvency practitioners have been accused of mis-selling vulnerable debtors into unsuitable bankruptcy agreements that leave them at risk of even greater difficulties, Scotsman.com reported. Scotland’s personal debt crisis is being exacerbated by unscrupulous insolvency practitioners (IPs) raking in huge fees from selling protected trust deeds (PTDs) without explaining the often serious long-term consequences, a leading credit union has claimed.