Eurozone finance ministers agreed on Monday (Jul 11) to officially declare Spain and Portugal in breach of the EU public spending rules, a key step to possibly imposing unprecedented penalties against members of the currency bloc, Channel News Asia reported on an Agence France-Presse story. The ministers took the rare step despite fears that too much austerity by Brussels will further stoke anti-EU populism after the Brexit vote.

The European Commission said Thursday that Spain and Portugal didn’t take sufficient measures to bring their 2015 budget deficits within European Union limits, triggering a process which could eventually lead to financial sanctions, The Wall Street Journal reported. Whether, and by how much, the two countries will eventually be fined is a decision the European Commission—the EU’s executive arm—will make later in the summer and after the bloc’s finance ministers endorse its opinion at a meeting next week.

Spain and Portugal are on course to become the first ever eurozone countries to be sanctioned for breaching EU fiscal rules, in a move set to inflame political tensions over how dogmatic Brussels should be in policing national budgets, the Financial Times reported. The European Commission on Tuesday concluded that the two countries had failed to take “effective action” to meet EU deficit rules, according to people briefed on the talks.

Spanish authorities have searched Santander's headquarters in Madrid as part of a probe into alleged money laundering and tax evasion triggered by leaks from HSBC's Swiss private bank, Economia reported. Spanish police were seeking documents related to a number of accounts during the visit on Friday, a High Court spokesperson confirmed. Reuters said the Spanish High Court is investigating 40 cases of suspected tax evasion. It follows the leak of sensitive documents exposing HSBC’s Swiss private bank by Hervé Falciani.

Banco Popular Español SA will launch a €2.5 billion ($2.8 billion) share sale in an effort to ease investor concerns about its massive pile of soured property loans, The Wall Street Journal reported. Banco Popular, one of Spain’s weakest major lenders, said Thursday it will issue around 2 billion shares at €1.25 each to boost provisions for losses on real-estate loans and assets. The bank’s stock closed at €2.36 on Wednesday. The sale will be a rights issue, with shares offered to existing shareholders at a discount, a common practice in Europe.

Spain’s acting prime minister Mariano Rajoy is planning to implement new austerity measures if he remains in government after a June election, in a bid to avoid a European Commission sanction for failing to control the public deficit, the Irish Times reported. Earlier this month, Mr Rajoy wrote to EC president Jean-Claude Juncker, requesting leeway on the deficit issue in return for introducing new cuts later in 2016. El País newspaper published the letter on Monday. “In the second half of the year, once there is a new government, we are prepared to adopt new measures,” it said.

The European Commission has put off a contentious decision on imposing financial sanctions on Spain and Portugal for failing to bring their budget deficits within European Union rules, saying it would revisit the issue in July, after Spain had held a general election, The Wall Street Journal reported. The commission, the EU’s executive arm, said Wednesday the two Iberian countries should take more measures to reduce their budget deficits in 2016 and 2017, and gave them an extra year to get their deficits within 3% of gross domestic product, the bloc’s ceiling.

Spain’s unemployment rate rose slightly in the first quarter, to 21 per cent, but job losses were less severe than usual in what is traditionally a weak period for the labour market, the Financial Times reported. The number of out-of-work Spaniards rose by 11,900 in the first three months of the year, to 4.79m. The total number of employed workers fell by 64,400 to 18.03m, still more than 2m below the jobs levels achieved before Spain’s protracted recession.

Spain will overshoot its deficit target again this year, the caretaker government said Tuesday, as the country struggles to adhere to budget agreements reached with European Union authorities, The Wall Street Journal reported. Spain is projected to report a 2016 budget deficit of 3.6% of gross domestic product, caretaker Finance Minister Luis de Guindos told lawmakers on Tuesday in Madrid. The European Union’s executive arm had set a target for this year of below 3%. In 2017, Spain is expected to have a budget gap of 2.9%, Mr. De Guindos said.

The Spanish lender CaixaBank is set to proceed with a takeover offer for BPI, a Portuguese bank, after reaching an 11th-hour agreement with an Angolan investor who had blocked its bid, the International New York Times reported. BPI announced late on Sunday that a deal had been reached between its two main shareholders, CaixaBank and Isabel dos Santos, the daughter of Angola’s longstanding president, after a yearlong dispute.