Spain will put its bank rescue fund in charge of the bad assets separated out from the nation’s struggling lenders that are receiving a European bailout, Bloomberg Businessweek reported. The FROB fund will be the main shareholder in a so-called bad bank, according to a proposal that will be approved by the Cabinet on Aug. 24, Economy Minister Luis de Guindos told the Efe news agency in an interview Sunday. All the banks receiving loans from European rescue funds will have to transfer their non-performing assets to the bad bank, he said.

A Spanish mayor who became a cult hero for staging robberies at supermarkets and giving stolen groceries to the poor sets off this week on a three-week march that could embarrass the government and energize anti-austerity campaigners, Reuters reported. Juan Manuel Sanchez Gordillo, regional lawmaker and mayor of the town of Marinaleda - population 2,645 - in the southern region of Andalusia, said food stolen last week in the robberies went to families hit hardest by Spain's economic crisis.

More corporate storm clouds gathered over Spain, as two major European companies on Wednesday joined those that have said they are taking steps to reduce exposure to the recession-hit country, The Wall Street Journal reported. Dutch financial services company ING Groep NV said it has taken aggressive steps to reduce its exposure to Spain, as it seeks to tackle a funding imbalance that could pose a serious threat should Spain eventually exit the euro zone.

Last week’s signal from Spain’s prime minister that he may be prepared to request assistance from the eurozone’s €440bn rescue fund to drive down his country’s borrowing costs has shifted the debate back to where it was more than a month ago: what strings will be attached to such aid?

Senior Spanish officials are holding out the possibility that the government might need to ask Europe for a financial bailout, but gave no indication that such a decision was imminent, The Wall Street Journal reported. Finance Minister Luis de Guindos said in an interview published Sunday that Spain is in no rush to request a European bailout and can afford to wait until more information regarding a possible European assistance program comes to light. "When we know the details [of the aid program], we'll have a more precise calendar," Mr. de Guindos was quoted as saying.

Spain slid deeper into recession in the second quarter as a tough new round of austerity to head off the budget crisis that threatens the euro took effect both on overall demand and the price consumers have to pay for goods, the Irish Times reported. The first official numbers on gross domestic product showed the economy shrank 0.4 per cent from the previous quarter after contracting 0.3 per cent in the first three months of the year. The economy was 1 per cent smaller than a year earlier.

Europe’s quest to sever the link between Spain’s fiscal fate and its failing banks hinges on an obstacle-strewn race to hand greater powers to the European Central Bank, Bloomberg reported. Until euro-area leaders overcome German doubts, ECB concerns, and turf battles everywhere, Spain will remain on the hook for a bailout of its banks of as much as 100 billion euros ($121 billion). Policy makers want to protect taxpayers from losses so potentially big they risk bankrupting governments, as happened in Ireland and Iceland.

Concerns that Spain won't be able to meet its funding needs helped to spark a global selloff in financial markets Friday, as the government warned the country's economic contraction would drag into next year, and one of its most indebted regional administrations asked the central government for help refinancing its debt, The Wall Street Journal reported. The market slump underscored fears that Spain's finances are spiraling out of control and could require the country to seek a full rescue from the European Union.

Tiny Murcia was on course on Sunday to be the second Spanish region to request help from the central government to keep it afloat, as media reported half a dozen local authorities were ready to follow in the footsteps of Valencia, Reuters reported. How Spain's 17 indebted autonomous regions, locked out of international debt markets, refinance 36 billion euros in debt this year has been a major source of concern for investors ever since they missed deficit targets last year. Spain's central government set up an 18 billion euro ($22 billion) fund earlier this month to ease their funding pain.

German lawmakers on Thursday resoundingly backed the latest European rescue, a package of loans from the euro-zone bailout fund to prop up weakened Spanish banks, handing Chancellor Angela Merkel a victory as doubts about the euro rise in Germany, The Wall Street Journal reported. The vote did little to reassure jittery financial markets about Madrid’s economic recovery or its ability to repair its beleaguered banks.