Headlines

A top European Union official signaled his support Monday for relaxing Europe's austerity drive, in what could be a significant break for countries struggling to hit tough budget targets amid persistent economic weakness, The Wall Street Journal reported. In a speech, European Commission President José Manuel Barroso said the policy of austerity pursued by the EU in recent years no longer has the public backing needed to work. "While I think this policy is fundamentally right, I think it has reached its limits," Mr. Barroso said.

At least one of Britain's major banks should be broken up into smaller regional lenders, the Archbishop of Canterbury, who sits on an influential banking reform committee, said on Monday, Reuters reported. Justin Welby, spiritual head of the Anglican Church, spoke in a personal capacity, but his comments offer insight into the thinking of the Parliamentary Commission on Banking Standards which has the role of cleaning up Britain's banking culture.

An Australian Federal Court Justice has ordered an inquiry into the fees and expenses incurred by PPB Advisory while the insolvency group investigated the 2010 collapse of Burrup Fertilisers, SmartCompany.com.au reported. But PPB has defended its handling of the case, claiming the inquiry is narrow in scope and the court threw out nine of the 10 claims brought against the firm by Burrup founder Pankaj Oswal. The collapse of Burrup Fertilisers has dragged on for years. The business was originally placed in receivership in 2010, amid a dispute between Burrup and Norwegian part-owner Yara.

Public servants should move away from the current final salary pension scheme and all private sector workers should be forced to invest in private pensions under recommendations in a report on pension provision in Ireland, the Irish Times reported. In the most radical review of the Irish pension system to date, the OECD says the “simplest, less costly, and most effective way to increase coverage” is through the introduction of mandatory pension savings. It also suggests that “healthy” employers should not be allowed to walk away from pension liabilities.

Troubled German regional lender HSH said it had cut its exposure to bad shipping loans by persuading struggling debtors to transfer ownership of some vessels to U.S.-listed shipping company Navios, Reuters reported. The deal, unveiled on Monday, may provide a blueprint for the financing of ships that are insolvent and a way for the Hamburg-based lender to cut its 9 billion euro ($11.7 billion) portfolio of bad ship loans, which has already forced it to seek state aid.

NordLB's, one of the world's top ten ship financiers, expects the shipping industry to have passed its darkest hour, though provisions will remain high this year as the sector's recovery is slow, Reuters reported. "There are signs that we have passed the cyclical low point in shipping markets," Chief Executive Gunter Dunkel said at the state-owned lender's annual press conference on Tuesday, adding that he did not expect the crisis to end in the near term.

Flaws found last week in an academic treatise on the effect of high public debt on economic growth have heaped pressure on governments to relax austerity, above all in crisis-stricken Europe, long seen as an incubator for austerity-driven policies, the Financial Times reported. But even before the arguments among economists over the merits of expansionary fiscal contraction reached a new pitch, policy makers in the eurozone had begun to ease up – with the tacit approval of disciplinarian Germany.

Russia wants to play a bigger part in talks over solving Cyprus' financial problems but will only restructure its loan to the island if its interests here, especially those related to VTB Bank, are protected, Moscow's finance minister said, CyprusMail reported. Russian banks and companies have poured money into Cyprus since the 1990s, taking advantage of low taxes and relaxed business regulations.

Lenders from around the world are fueling a boom in short-term loans across Asia, helping push debt to record levels as a burgeoning middle class strives for a better lifestyle and banks look to diversify away from the slow-growing West, The Wall Street Journal reported. Companies ranging from Citigroup Inc. to Japan's big banks to a Dutch consumer-finance provider that built its business in Central and Eastern Europe are issuing credit cards or stepping up lending for cars, motorcycles and home appliances from India to Indonesia.

Britain launched legal action against Brussels on Friday in an aggressive move to block an EU levy on financial transactions, which traders fear could have a devastating impact on the City of London, the Financial Times reported. George Osborne, the UK chancellor, said London would challenge the levy at the European Court of Justice on grounds that the tax to be implemented in 11 EU member states would be unfair to countries unwilling to take part.