Euro zone finance ministers are expected to approve an agreement on Friday to lend up to 100 billion euros to Spain so it can recapitalize its banks, but the exact size of the loan will probably only be determined in September.
Ministers are expected in a conference call to sign off on a lengthy memorandum of understanding (MoU) with Spain spelling out the terms of the aid, which will be fully disbursed by the end of 2013.
But before Spain can decide exactly how much money it needs, it must first see the results of in-depth audits of its banking sector, which is riddled with bad property loans.
"The plan is to formally endorse the draft as it stands," one euro zone official said of the conference call, which is due to begin at 6 a.m EDT.
"All the rest will come later in the year, with the results of the bank-by-bank stress tests in September clarifying recapitalization needs and paving way for restructuring plans to be drawn up in October, as set out in the timeline annexed to the MoU."
The bank bailout, together with fresh austerity measures and looser fiscal targets agreed with Madrid, are aimed at avoiding a full sovereign bailout that the euro zone can barely afford.
There are signs of growing discontent at the economic pain being heaped on the Spanish public. Hundreds of thousands of Spaniards marched against the center-right government's latest measures on Thursday evening, following more than a week of demonstrations across the country.
Read more: http://www.reuters.com/article/2012/07/20/us-eurogroup-spain-idUSBRE86I1LS20120720
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