The risks posed by hosting a large financial industry became a flash point on Wednesday as the Cyprus bailout trained the spotlight on other small euro nations that depend on the sector for jobs and economic growth, The Wall Street Journal reported. The issue has become a sore spot mainly for Luxembourg and Malta after the debate over Cyprus prompted European ministers and politicians to question the viability of housing a large financial center in a small country.

France, Belgium and Luxembourg, which own Dexia, the lender that is being broken up, have agreed to boost state guarantees to the ailing bank by €10bn to €55bn, it was disclosed on Wednesday, the Financial Times reported. The decision followed Monday’s meeting between Pierre Moscovici, France’s new finance minister, and his Belgian counterpart, Steven Vanackere, in Brussels. The European commission “temporarily approved” the €10bn increase in guarantees “in order to preserve financial stability”.

Hellas Telecommunications Luxembourg II SCA filed for Chapter 15 bankruptcy to put on hold certain lawsuits pending against the company in New York State Supreme Court, Bloomberg Businessweek reported. The company, based in London, listed both debt and assets of more than $100 million in documents filed today in U.S. Bankruptcy Court in Manhattan. Chapter 15 protects foreign companies from U.S. lawsuits and creditor claims while a company reorganizes abroad. Hellas Telecommunications Luxembourg is asking the U.S.

Probes by the U.K. and Icelandic authorities into the failure Iceland's Kaupthing Bank hf have widened to include Luxembourg, The Wall Street Journal reported. Luxembourg police on Tuesday morning raided the premises of Kaupthing's former premises in Luxembourg at the request of British and Icelandic officials, according to authorities. In total, the searches covered three business premises and two residential properties and were continuing as of early afternoon Tuesday. They involved more than 70 investigators from Luxembourg, the UK and Iceland. U.K.

The trial of a lawsuit by Lyondell Chemical Co. creditors against billionaire Len Blavatnik that claims a 2007 merger drove the company into bankruptcy is set to begin in New York next month, Bloomberg reported. Summonses were filed yesterday in U.S. Bankruptcy Court in Manhattan listing Blavatnik and 41 other people and companies that allegedly played a role in Lyondell’s takeover by Luxembourg-based Basell AF SCA. A pretrial conference is set for Sept. 13.

Developer Orco Property Group said on Wednesday a Paris court approved a plan exiting the group from its more than year-long creditor protection period, Reuters reported. Orco said the plan's implementation and debt rescheduling will allow it to re-invest in real estate projects. It added the plan includes the repayment of 100 percent of the company's admitted claims over 10 years. Read more.

European finance ministers laid the groundwork for a financial lifeline to debt-stricken Greece, breaking a taboo against aid to cash-strapped governments in order to avert a crisis for the euro, Bloomberg reported. Officials from the 16 countries using the currency worked out a strategy for emergency loans in case Greece’s plan for 4.8 billion euros ($6.6 billion) in tax increases and wage cuts fails to stave off fiscal disaster.

A court ruled Thursday that investors who lost money in Bernard Madoff's Ponzi scheme through funds set up by UBS AG can't sue the Swiss bank and its adviser Ernst & Young for the losses they incurred, The Wall Street Journal reported. In a test case before a chamber of judges specialized in hearing commercial cases, the Luxembourg court found the investors had no grounds for individual claims against the bank. Instead, they must rely on the fund liquidator to obtain compensation for them from UBS.

Greek Prime Minister George Papandreou said that European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker see “no possibility” of a Greek default. Papandreou was speaking to reporters at a European Union summit in Brussels, Bloomberg reported. “There is no possibility of a default for Greece,” Papandreou said today. He also said there was no possibility of Greece leaving the euro area.

The European Commission, the EU's executive arm, says Belgian-French financial services group Dexia's restructuring plan could distort competition and does not guarantee recovery for the group, Reuters reported. The Commission said certain measures the group had proposed could distort competition, and questioned whether Dexia would be able to obtain sufficient long-term funding.