Headlines

Abu Dhabi has discussed a £10bn investment into Royal Bank of Scotland, as part of a complex transaction that would help pave the way for the government’s eventual exit, the Financial Times reported. The investment has been debated in the course of long-running talks between UK government officials and potential investors in both RBS and Lloyds, Britain’s two big part-nationalised banks. The discussions have taken place at regular intervals over the past three years, according to people close to the discussions.

The European Union took a big step on Monday toward building a financial firewall strong enough to prevent the spread of fiscal contagion to major economies like Spain after Germany dropped its opposition to bringing the Continent’s total bailout capacity to more than 690 billion euros, or $916 billion, the International Herald Tribune reported. Angela Merkel, the German chancellor, said on Monday at a news conference in Berlin that her government remained determined that a permanent European rescue fund should be capped at 500 billion euros.

When EU finance ministers meet in Copenhagen on Friday, banks - and their reluctance to lend - will be high on the agenda as Europe looks to its economies at a time of austerity. Blamed four years ago for triggering the global financial crunch and Europe's ensuing debt crisis, banks are now being criticised for being too cautious. The European Central Bank points to a steady rise in the cost of borrowing and says access to finance has become one of the most pressing concerns of small business.

Asked in 2008 for his favourite piece of business advice, Conor Foley, chief executive of the spreadbetting group Worldspreads, replied: “Look after the downside and the upside will look after itself.” Four years later, the failure of Mr Foley’s company to “look after the downside” has left it in the hands of administrators from KPMG, who are faced with a £13m gap between the company’s cash balance and the amount that it owes clients, the Financial Times reported. The company’s demise happened quickly. Mr Foley and Niall O’Kelly, financial director, resigned abruptly on March 14.

Residential property prices fell by almost 18 per cent in the year to February, new data from the Central Statistics Office showed today, the Irish Times reported. Over the month, prices were 2.2 per cent lower than in January. The decline of 17.8 per cent showed an increase in the pace of decline from the previous month, when the annual decline registered 17.4 per cent, and the monthly decline was 1.9 per cent. In Dublin, property prices were 20.3 per cent lower year-on-year, and 1.2 per cent down on the month.

British video games retailer Game has collapsed into administration, the latest household name to fall by the wayside in the consumer downturn, Reuters reported. The loss-making company, which employs 10,000 staff in 1,270 stores in nine European countries and Australia, said on Monday it had appointed PwC as administrator after failing to find a buyer. PwC immediately closed 277 of Game's 609 stores in Britain and Ireland, making 2,104 of 5,521 staff redundant.

DP World, the Dubai government-controlled port operator, said Monday it will reach into its cash reserves to pay back $3 billion in debt half a year early, the Associated Press reported. The move will shrink the company's debt load by nearly 40 percent while still leaving it with more than $1 billion in cash on hand, according to company figures. DP World's ability to borrow billions to fund an aggressive overseas expansion helped it become the world's third largest port operator.

Euro zone finance ministers are moving closer to agreeing a combined rescue fund of around 700 billion euros (582 billion pounds) in Copenhagen next week and anything higher would probably be too ambitious, euro zone diplomats said on Friday, Reuters reported. The EU's top economic official, Olli Rehn, is pushing for a big fund capable of bailing out indebted euro zone countries such as Italy and Spain, should they be cut off from the markets, despite resistance in Germany, the bloc's paymaster.

The Central Bank has unveiled plans to strengthen how it protects client assets after a new report into its handling of failed Dublin investment firm Custom House Capital criticised its inspections of the firm, finding that the regulator lacked sufficient powers, the Irish Times reported. The report, by two of the Central Bank’s risk advisers, found that the regulator would have preferred to change senior management at the firm but only had the power to either withdraw its authorisation or put the company into liquidation.

Across Europe, banks, households and governments are pulling in their horns at the same time. It is a depressing recipe for a classic "balance-sheet recession" as the public and large parts of the private sector try to repair the excesses of the boom and rebuild balance sheets, The Wall Street Journal Brussels Beat blog reported. One part of the economy, however, is an important exception to the rule: companies, particularly large ones. Across Europe, corporations are sitting on a mountain of cash. The trouble is, they aren't spending much of it.