Headlines

Italy's largest bank, Unicredit, on Monday highlighted the obstacles faced by prime minister-designate Mario Monti when it sent out a plea to shareholders for extra funds to protect against bad loans to Greece and losses on subsidiaries in eastern Europe, The Guardian reported. Unicredit, which operates in 22 European countries with more than 168,000 employees, said it needed to boost its reserves by €7.5bn after it plunged into loss, was forced to ring-fence €48bn of toxic assets, and told staff that 5,200 of them would be made redundant.

Greece's new prime minister said Monday his interim government would focus on implementing a European debt rescue deal, warning that failure to do so could force the country out of the eurozone, Agence France-Presse reported. In his first parliamentary address since taking office at the head of a national unity government on Friday, Lucas Papademos said progress had been made on tackling Greece's debt crisis but more was needed to keep it in the single currency.

Thousands of British civil servants have voted in favour of a national strike at the end of the month over pension reform, two unions said on Monday, bringing the prospect of a national stoppage involving millions of workers a step closer, Reuters reported. The FDA union, representing 19,000 senior government workers, including diplomats, prosecutors, economists and tax professionals, said that on a turnout of 54 percent, 81 percent had voted in favour of a walkout.

Since the beginning of the financial crisis, the central bank has been lending euro area banks as much money as they want, trying to maintain the liquidity — or continual flow of money — that is the lifeblood of the global financial system, the International Herald Tribune reported in an analysis. But because the central bank has refused to offer the same easy lending service to countries like Italy and Spain, it is not confronting the euro area’s most fundamental problem — a sell-off of debt from the troubled countries that is pushing their borrowing costs to dangerous levels.

The black/ shadow economy may be worth as much as €2trn in Europe, ranging from 10% of gross domestic product (GDP) in the United Kingdom, to 14% in Ireland and up to 40% in some Central and Eastern European countries, Finfacts reported. Despite terms such as clandestine, black, shadow, underground, or hidden, an informal economy can have some positive features. In Spain, the ease of doing business is ranked by the World Bank at 133rd, behind Kenya. So informal systems to circumvent a stifling bureaucracy can be welcome.

Political crises in Greece and Italy have ebbed, but the euro zone's work is far from done. Those countries' financial troubles remain, of course, as does fundamental discord among euro-zone countries over the scope of their shared commitment and great uncertainty about their ability to create a stronger bailout fund to combat the debt crisis's spread, The Wall Street Journal reported.

Diplomatic deadlock is curbing China's will to provide cash to help end the euro zone crisis after Europe spurned the simplest of Beijing's three key demands, two independent sources have told Reuters. China had offered help in return for European support to grant it either more influence at the International Monetary Fund, market economy status in the World Trade Organization, or the lifting of a European arms embargo, said the sources, both of whom have direct knowledge of the matter, including one who has ties to the leadership in Beijing.

Technocrat leaders in Italy and Greece rushing to form governments will face a critical test of their ability to limit the damage from the euro zone debt crisis when financial markets open on Monday, Reuters reported. Italy's president asked former European Commissioner Mario Monti on Sunday to form a government to restore market confidence in an economy whose debt burden is too big for the euro bloc to bail out.

Italy spends almost a third of its annual budget on pensions and as a ratio of gross domestic product (GDP), the spending is the highest in the world. Not even 37% of the 55-64 age cohort are gainfully employed, Finfacts reported. If Ireland extended the same pension benefits that are available to its politicians and the rest of the public service, to the rest of the citizenry, the costs would be similar to Italy's. Ireland's annual pension costs of €7.5bn amount to over 15% of total annual revenues and 5% of GDP.

Sean Quinn, once one of Ireland's richest business leaders, voluntarily applied for bankruptcy in the Belfast High Court Friday, marking one of the most spectacular business failures amid the country's property and banking crash, Dow Jones Daily Bankruptcy Review reported. But Dublin-based Anglo Irish Bank Corp.---the nationalized lender now renamed the Irish Bank Resolution Corp.---said it will question the right of Quinn, its largest debtor, to have applied for bankruptcy in Northern Ireland because he is resident in the Irish republic.