Madrid is set to offer a crucial helping hand to Spain’s troubled financial sector by allowing banks such as Santander, BBVA and Banco Sabadell to reclassify billions of euros in deferred tax assets as tax credits, in a move that will make their balance sheets look much stronger. The country’s banks have been lobbying the government for months on the issue of DTAs, arguing that other eurozone countries such as Italy have already made similar changes.

While Spanish manufacturing and services expanded in August for the first time in more than two years, falling bank lending threatens small companies in a country where only 2 percent of businesses employ more than 20 people. That is overshadowing the recovery Prime Minister Mariano Rajoy forecasts after a two-year recession, Bloomberg reported. “Spanish companies are most often small family-run operations,” said Nathalie Gianese, director of studies at Informa D&B, the research arm of Spanish risk insurer CESCE S.A.

As Spaniards endure the worst economic crisis and deepest austerity measures in their country’s democratic history, start-up companies are proliferating, Bloomberg reported. Over the first seven months of the year, registrations of self-employed people increased by 21,992 while they fell by 6,826 over the same period a year earlier. The number of companies created increased by 8.2 percent in the first half as a 26 percent unemployment rate spurs entrepreneurship in a country where the government still accounts for one in six jobs.

Is Spain really on the brink of a remarkable recovery? It's a question with a significance that goes well beyond the troubled Southern European country, The Wall Street Journal reported.

Spanish banks may have to swallow more losses to shake off the legacy of a property crash, real estate experts warn, as they struggle to sell plots of land that have ended up on their books and which are now worth less than many have accounted for, Reuters reported. Lenders were forced by the government to take billions of euros in provisions against losses last year after property values collapsed in 2008, with the steepest writedowns destined to cover land they were saddled with as developers went bust.

Spain’s cuts to renewable energy subsidies will leave many project developers facing bankruptcy, four industry lobby groups said, Bloomberg News reported. Spanish Industry Minister Jose Manuel Soria’s decision to curtail profits for power generators by 2.7 billion euros ($4.1 billion) this year “will lead many installations to bankruptcy because they won’t be able to repay the credit that financed them,” the Spanish Photovoltaic Union (UNEF) said yesterday.

Indebted Spanish media company Promotora de Informaciones SA has weighed filing for Chapter 11 bankruptcy protection in the U.S., according to several people familiar with the matter, the latest indication of the troubled financial state of Spain's largest media company, The Wall Street Journal reported. The possible move by Prisa, as the company is known, comes as it seeks to refinance about $3 billion of debt, the people said. The discussions of different restructuring options are still fluid and nothing has yet been decided, they added.

The debts of Spanish fishing firm Pescanova were more than double what it stated when it entered insolvency proceedings in April, the company said on Wednesday citing a KPMG audit, making it one of Spain's biggest ever bankruptcies, Reuters reported. Pescanova's debt was 3.3 billion euros ($4.2 billion) at the end of December, the company said. This compares with the 1.5 billion euro debt mentioned in the company's insolvency filing. The former management of Pescanova acted to conceal the company's true debt position for many years, the audit said.

A Spanish government investigation into the public offering of a struggling bank that saddled investors with huge losses questions the independence of the Spanish unit of Deloitte Touche Tohmatsu Ltd. and says that auditing work it did may have been faulty. The findings, part of a preliminary report by the Spanish Accounting and Audit Institute on the auditing of Spanish lender Bankia SA ahead of its ill-fated €3 billion ($3.92 billion) IPO two summers ago, could result in sanctions and tens of millions of euros in fines for Deloitte, the report says.

Spain's bank-bailout fund will try in the coming months to sell two loss-making lenders the government nationalized last year, a senior official at the fund said Monday, four months after a previous attempt to sell one of them failed, The Wall Street Journal reported. He said the bailout fund, known by its Spanish acronym FROB, will soon hire two investment banks to analyze the balance sheets of NCG Banco SA and Catalunya Banc SA and open discussions with would-be buyers.