Spain

Spain’s economy shrank by the most in more than 15 years in the fourth quarter, as what may be the worst recession in half a century pushed the unemployment rate to the highest in Europe, Bloomberg reported. The economy contracted 1 percent from the previous three months, the National Statistics Institute said Wednesday, compared with a median forecast of 1.1 percent in a Bloomberg News survey. The economy entered its first recession since 1993 after shrinking a revised 0.3 percent in the third quarter. From a year earlier the economy contracted 0.7 percent.

Spanish industrial production fell by almost a fifth during December, the largest decline on record, and data showed debt defaults soaring as the global crisis tipped Spain into deep recession. The 19.6 percent slump in output at Spain's credit-starved factories and businesses dwarfed slowdowns in other major European economies. A separate data release on Thursday from the National Statistics Institute showed 1,082 Spanish firms filed for bankruptcy protection between October and December, almost four times as many as in the same period of 2007.

The number of registered unemployed people in Spain swelled by nearly 200,000 in January, the fastest monthly increase in more than a decade, as companies struggling with declining sales and liquidity problems laid off workers or declared bankruptcy, the International Herald Tribune reported. The Labor Ministry said Tuesday that the number of people out of work rose to 3.33 million, a 6.4 percent increase over December and a jump of 47 percent since January 2008.

Banco Santander SA’s €1.38 billion ($1.8 billion) offer to compensate clients hit by Bernard Madoff’s alleged fraud may leave them with preferred shares they can’t trade and that the bank might not buy back, Bloomberg reported. That’s a risk Santander clients will have to weigh along with the strings attached to the offer of stock paying a 2 percent annual yield. They include foregoing any legal action and keeping Spain’s biggest lender as their “preferred” bank as long as the shares stay in circulation, which may be indefinitely, according to a proposal seen by Bloomberg News.

Some Spanish television companies are facing bankruptcy and the government should not slash advertising prices for state-owned channels, Spanish media group Telecinco's chief executive said in an interview published on El Mundo's website on Monday. "The television sector....is facing bankruptcy and all the alarm bells are ringing," Paolo Vasile was cited as saying. Telecinco has been hit by Spain's sharp economic slowdown, which has meant advertisers are cutting budgets.

A creditor of Spain's Nozar has asked a judge to put the privately held property company into administration, court documents showed on Tuesday, a move that would lead to Spain's second biggest corporate default, Reuters reported. Last year creditor Avalatransa twice asked the courts to put Nozar into administration over unpaid debts, which in total exceed 4 billion euros, but both attempts were unsuccessful. Nozar, owned by the Nozaleda family, has five days to respond to Avalatransa's filing.

If one euro-zone country, such as Spain or Portugal, appears poised to default on its debt, the currency union would likely still survive, SmartBrief reported on a story in The Wall Street Journal. While the European Central Bank cannot rescue a member country by directly lending to it, there are other options, such as having the bank buy debt of the struggling nation on the secondary market. Read more. (Subscription required.)

Herbert Smith has won the lead role on the administration of the UK subsidiary of telecoms manufacturer Nortel, a deal which will see the UK firm representing the company throughout 18 jurisdictions, Legal Week reported. The firm was appointed by administrators Ernst & Young after it had been advising Nortel on pre-administration matters. The administration order includes entities from across Europe and the Middle East, including France, Germany, Spain and Sweden.

Austrian automotive warp and weft knit fabric producer Eybl International AG announced that it was filing for administrative receivership after recent talks about a takeover by the Slovenian Prevent Group failed to lead to a positive conclusion, the trade journal Knitting Industry reported. Eybl International, which specialises in textile production, fabrication and components for automotive interiors, operates eight production sites in Austria, Hungary, Romania, Germany and Slovakia as well as four distribution sites in Germany, France, Spain and Britain.

European countries still deal with insolvent firms far more harshly than America does, and most such firms end up in liquidation, a recent Economist analysis found. They often treat creditors badly too, meaning that neither side ends up satisfied. Observers worry that Europe will cope with the coming flood of defaults far less effectively than America, meaning a slower recovery. In recent years several European countries have tried to change their systems so that companies have a better chance of survival.