The eurozone’s finance ministers have approved an agreement to lend up to 100 billion euros to Spain so it can recapitalise its battered banks.
In a conference call, the 17 ministers agreed a lengthy memorandum of understanding. That detailed the terms of the aid, which will be fully disbursed by the end of next year. The exact size of the loan will not be determined until September.
The bank rescue is aimed at avoiding a full sovereign bailout for Spain which the eurozone would have difficulty affording.
It goes hand in hand with fresh austerity measures – 65 billion euros of spending cuts and tax hikes – and Spain is also being given more time to get its financial house in order.
Madrid expects a first instalment of 30 billion euros to be made available immediately for state-rescued banks that urgently need funds.