Spain

The Spanish government will on Friday present an ambitious plan to reverse the fragmentation of the country’s internal market by taking aim at the web of business rules and regulations imposed by Spain’s autonomous regions, the Financial Times reported. Madrid hopes the proposal will give a much-needed boost to the country’s economy, and improve Spain’s lacklustre reputation as a business destination.

Spanish and Irish funding costs continued to ease at debt auctions Thursday, with investors increasingly confident that both euro-zone countries may be over the worst of their financial problems, The Wall Street Journal reported. Spain sold its maximum targeted €4.5 billion ($5.98 billion) worth of bonds amid signs that it doesn't currently need financial support offered by the European Central Bank to meet its funding needs.

There's a glimmer of hope for the euro zone's fourth largest economy, even though the International Monetary Fund expects Spain to remain in recession through much of 2013, Reuters reported in an in-depth report. As domestic demand has slumped, some companies have converted themselves into exporters. Latin American markets have been a prime target for Spanish companies because of their language advantage, and giants such as Telefonica and Banco Santander have increased their exposure there to compensate for problems in their domestic market.

The Spanish government may remove a clause from its bailout fund for cash-strapped regions that gives it first claim on their revenue, according to two people familiar with the matter, Bloomberg reported. The move is intended to placate creditors who have told officials that the introduction of the regional bailout fund in July 2012 changed the terms of their bond holdings and gave them the right to call in the debts, one of the people said. Legislation may be approved as early as this month to clarify seniority, said the two people who asked not to be named because the talks are private.

Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds, raising questions about the fund's role as guarantor of future pension payouts, the Wall Street Journal reported today. At least 90 percent of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.

Local governments across Spain, facing a steep drop in revenue and largely unable to borrow from banks or financial markets, have been paying suppliers of goods and services months behind schedule, the Wall Street Journal reported on Saturday. By the end of October, regional governments had accumulated bills in 2012 for providers, interest payments and other obligations totaling €13.7 billion ($18.1 billion), more than 1 percent of Spain's gross domestic product, a government report found.

Despite the economic gloom that has enshrouded it since the onset of the global financial crisis, Spain has at least one industrial bright spot: The country and its skilled, if underemployed, work force have once again become a beacon for European carmakers, the New York Times reported today.

Investors in Spain's embattled Bankia can take some comfort from the prior experience of shareholders at Ireland's largest retail bank, Allied Irish Banks, according to an Reuters analysis yesterday. Bankia now has a negative equity value of 4.2 billion euros ($5.6 billion), according to Spain's bank rescue vehicle. But the previous treatment of AIB's shareholders suggests Spain is likely to be successful in convincing the European Union to allow Bankia's existing shareholders to retain a tiny stake in the recapitalised, and newly valuable bank.

Spain's Banco Mare Nostrum and three other banks secured EU regulatory approval on Thursday for their restructuring plans which include cutting their balance sheets by between 25 to more than 40 percent over the next five years and halting dividend payments, Reuters reported. The European Commission imposed the measures in return for approving the bailouts of savings banks BMN, Caja Espana-Caja Duero, Caja 3 and Liberbank which were hit by the collapse of a long property boom in 2008.

Spanish house prices plummeted in the third quarter, a sign that the five-year-long property bust at the core of the country's economic crisis will continue to pose problems for the government, banks and households, The Wall Street Journal reported. In an indication that the market isn't yet bottoming out, Spanish housing prices are now falling at the fastest pace on record, after double-digit falls over the past year.