Eurozone finance ministers unanimously agreed the bailout deal for Spanish banks on Friday during a conference call, the Eurogroup said in a statement.
The bailout will provide funding up to EUR 100 billion, as agreed last month. In the beginning, EUR 30 billion will be set aside to be used in case of 'urgent unexpected financing needs'.
"Ministers concur with the assessment of the Commission, in liaison with the ECB, the EBA and the IMF, that providing a loan to Spain for the purpose of the recapitalisation of financial institutions is warranted to safeguard financial stability in the euro area as a whole," the statement read.
The European Financial Stability Facility (EFSF), which is the temporary rescue fund of euro area, will provide the aid, until the permanent European Stability Mechanism comes into force. The financial assistance will the transfered to the ESM 'without gaining seniority status', the Eurogroup said.
The Memorandum of Understanding which will carry the policy conditionality accompanying the bailout deal will be signed in coming days, the group said. The financial sector-focused conditions includes bank-specific measures such as indepth bank restructuring plans and sector-wide structural reforms that embrace segregation of bank's problematic assets, and the governance, regulation and supervision of the banking sector.
"Restructuring plans will have to comply fully with EU state aid rules, to ensure that the banks that emerge at the end of the process will be viable entities that will not need further public support," European Commission Vice President Olli Rehn said.
The specific loan amount will be determined based on a thorough audit of capital needs for individual banks. The process has already started and is expected to be finalised in September.
The loans to be used for bank recapitalisation will have an average maturity of up to 12.5 years, with any individual disbursement having a maximum maturity of up to 15 years, the Eurogroup said.
by RTT Staff Writer
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