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  • Spanish Prime Minister Mariano Rajoy is said to be considering the creation of a bad bank to hold lenders’ toxic assets in an effort to avoid a bailout similar to those of Greece, Ireland and Portugal.
  • Standard & Poor’s has downgraded 16 Spanish banks, with Banco Santander and its Banco Espanol de Creditor unit hit the hardest, after gross domestic product figures for the first quarter indicated that Spain has fallen back into recession.
  • Italian lenders have acquired more government debt than any other of their peers in Europe and did so using inexpensive loans from the European Central Bank, according to the ECB.
  • National Australia Bank is exiting U.K. commercial property lending market and will shut many offices its Yorkshire Bank and Clydesdale Bank units and eliminate some 1,400 jobs.
  • Anders Borg, Sweden’s finance minister, said efforts by the European Union to reach a deal on bank capital rules will fail unless the E.U. allows countries to set their own higher requirements for their domestic banks.
  • Thomas Hoenig, one of the two newest directors of the U.S. Federal Deposit Insurance Corp., said he supports breaking up big banks and forcing them to separate from their investment banking and securities businesses.
  • The Federal Reserve Bank of New York purchased $7 billion in agency mortgage-backed securities this week, down from $7.7 billion the week before.
  • MetLife says it is exiting the reverse-mortgage business and is selling the unit to Nationstar Mortgage.
  • The Financial Stability Board has published a report that calls for tougher regulations on securities financing, including repurchase agreements, over concerns that such transactions could threaten market stability.