Spain

Top European Central Bank officials offered a skeptical appraisal of Europe's latest plan to solve its debt crisis, suggesting that the central bank may be forced to maintain the emergency measures it has adopted to keep the problems from spreading, The Wall Street Journal reported.

The Spanish government Thursday said it will use the country's deposit-guarantee fund to cover losses resulting from its banking industry clean-up, a move aimed at protecting its efforts to slash a gaping budget deficit, The Wall Street Journal reported. Spain has three separate deposit-guarantee funds, financed by annual contributions from the country's financial institutions but administered by the Bank of Spain.

With little fanfare, Spanish taxpayers have become substantial bank proprietors since the collapse of Lehman Brothers three years ago marked the start of Europe’s financial and economic crisis. The Fund for Orderly Bank Restructuring, known as the Frob from its Spanish initials, has seized control of six groups of cajas or savings banks and is threatening to take stakes in two more if they fail to find private investors in the next month, the Financial Times reported.

Spain will announce further austerity measures Friday aimed at fending off debt market attacks while avoiding drastic cuts which may damage the ruling Socialists' chances in November's general election, Reuters reported. The government aims to save around 5 billion euros (4.3 billion pounds) with measures that include front-loading tax payments from large businesses and cutting drug costs for regional governments with a new bill on generic medicines.

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition, the Financial Times reported. The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.

Investor concerns over Italy and Spain are complicating efforts to deliver Greece its next chunk of rescue aid, underscoring the increasing difficulty Europe faces in reining its more than year-old credit crisis, The Wall Street Journal reported. Greece is due to receive the next installment of its original, €110 billion ($158 billion) bailout in September. But Italy and Spain, both of which committed to extend bilateral loans to Greece with other euro-zone countries, have seen their own borrowing costs rise recently.

Spain and Italy paid a high price to sell short-term debt on Tuesday, compounding investors' concern that last week's bailout package for Greece left the euro zone's debt crisis unresolved, Reuters reported. Spain's short-term cost of borrowing hit three-year highs and demand fell at its Treasury bills auction while yields at a sale of six-month Italian paper hit their highest since November 2008.

Spanish savings bank Caja de Ahorros del Mediterraneo (CAM) secured EU regulatory approval on Monday for 5.8 billion euros ($8.3 billion) in state aid and must submit a restructuring plan within six months, Reuters reported. State-backed bank restructuring fund FROB will provide a 2.8 billion euro capital injection to CAM, one of five Spanish banks which this month failed a European Banking Authority stress test. The fund will also give CAM a 3 billion euro liquidity facility, the European Commission said.

Spanish banks' bad loans, a major source of concern to the financial markets, surged to the highest level for 16 years in May, the Bank of Spain said Monday. RTÉ News reported. Bank loans considered to carry a risk of non-recovery amounted to €117.59 billion, or almost 6.5% of total assets, in May - the highest ratio since June 1995, the central bank said in a report. That compared to a bad loan ratio of 6.36% in April.

Spain's central bank could offer asset protection schemes for bank takeovers at a later point in the restructuring of the country's ailing savings banks, the central bank's governor, Miguel Angel Fernandez Ordonez, said Friday, The Wall Street Journal reported. "Right now it doesn't make sense," Mr. Fernandez Ordonez, a member of the European Central Bank governing council, said, adding the Spanish central bank is trying to establish a market value for the ailing unlisted banks known as cajas without protection schemes for investors.