Headlines

Spain's central bank said the country's lenders will need €15.15 billion ($21.07 billion) in new capital, but Moody's Investors Service published a far higher estimate that spooked markets and called into question the credibility of Spain's figures, The Wall Street Journal reported. The Bank of Spain's disclosure on Thursday, aimed at providing a new yardstick for the cleanup of the country's ailing banks and shoring up investor confidence, was overshadowed as Moody's downgraded its rating on Spanish government debt to Aa2 with a negative outlook, from Aa1 previously.

On Thursday, Reserve Bank governor Alan Bollard cut the official cash rate to 2.5% from 3%. But the cut, which was widely anticipated following the Christchurch earthquake last month, may be a relatively short-lived one, The National Business Review reported. The Reserve Bank’s forecasts accompanying the decision suggest the economic recovery has been pushed back to the latter part of 2011 but also highlight increased inflationary pressures compared to the previous outlook.

All Saints looks set to change hands after liquidators to two collapsed Icelandic banks put their stakes in the high street clothing retailer up for sale, The Telegraph reported. The liquidators of Kaupthing and Glitnir have appointed Ernst & Young to advise on the sale process. The accountancy and advisory firm is already in contact with a "select" group of interested investors, according to a source, with a deal likely to value the retailer at about £140m. All Saints said that the banks "are looking to exit and realise a return on their investment".

Ireland's new parliament elected soft-spoken Enda Kenny prime minister Wednesday to lead a coalition government that faces immediate pressure to revive the nation's debt-crippled economy, The Huffington Post reported. Kenny, 59, vowed to solve a bank-bailout crisis that has overwhelmed Ireland's finances and required an emergency rescue by the European Union and International Monetary Fund. He said terms of the EU-IMF loans must be renegotiated to make them more affordable for Ireland and enable the country's recovery from record deficits and double-digit unemployment.

It turned a few heads Tuesday when an analyst at Fitch was quoted saying that China has a 60% probability of experiencing a banking crisis by 2013, the China Real Time Report blog reported. The analyst, Richard Fox, a London-based senior director at Fitch, told Bloomberg News that Fitch sees risks of “holes in bank balance sheets” should a property bubble burst. The jarring assessment was based on the Macro-Prudential Risk Monitor, a sort of analytical tripwire system that Fitch developed in 2005 to flag potential bank crises.

One in two leading businesses in recession-hit Greece will need to refinance their loans or debt obligations over the coming year, research by auditors Ernst & Young showed on Tuesday, Agence France-Presse reported. The study found that 48% of Greek firms will have to raise new loans amid deteriorating financial conditions in the country, which is itself laboring under a public debt of more than EUR300 billion ($420 billion). Some 34% of respondents said that access to funding will not be a problem for their organizations in the next 12 months.

Authorities in the U.K. and Iceland arrested nine men, including a pair of high-profile U.K. property moguls, in connection with the collapse of Iceland's Kaupthing Bank hf, the latest arrests connected to the failure of the island's banking system, The Wall Street Journal reported. The U.K.-led probe is examining the extent to which funds were withdrawn from the bank prior to Kaupthing's 2008 collapse and who was involved. The British investigation is being conducted in addition to a separate probe by Icelandic prosecutors. Among those arrested Wednesday were U.K.

Greece raised €1.625 billion ($2.28 billion) in an auction of treasury bills Tuesday, though the higher interest rate it has to pay showed investor unease a day after the country's credit rating was downgraded sharply, the Associated Press reported. In return for selling the 26-week bills, Greece had to pay an interest rate of 4.75 percent, the Public Debt Management Agency said. The rate was up from the 4.64 percent it had to pay in a similar auction last month, but lower than the 4.90 percent demanded in January.

Eircom workers have been told by their union leaders the heavily indebted telecoms group could be taken over by its lenders if they do not agree to implement the €92 million in labour savings outlined last week in its rescue plan, the Irish Times reported. The warning came from the Communications Workers’ Union (CWU), which represents the majority of Eircom’s 7,170-strong workforce.

Key parts of a stress test for European banks designed to raise investor confidence in the sector have been softened by regulators despite widespread derision of a similar exercise last year, which was seen by financial markets as too lax, the Financial Times reported. Some of the scenarios under which bank balance sheets will be tested are more benign than the tests that failed to gain investor credibility last year.