DHAKA: Eurozone finance ministers have approved an agreement to lend up to $123bn to Spain so it can recapitalise its banks.
"We have formalised what we discussed in the past two Eurogroup meetings," Luc Frieden, Luxembourg`s finance minister, told reporters on Friday.
"We have formally approved the memorandum that lays out the conditions under which Spain can be lent money for the recapitalisation of its banks," Frieden said.
In a conference call, ministers signed off on a lengthy memorandum of understanding 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 see the results of in-depth audits of its banking sector, which is riddled with bad property loans.
"The approval of all 17 ministers is there, and that means that the programme can continue. Money will not flow immediately, because work on the analysis of the specific banks is ongoing."
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The bank rescue, and fresh austerity measures and looser fiscal targets agreed with Madrid, are aimed at avoiding a full sovereign bailout that the eurozone can barely afford.
BDST: 0830 HRS, July 21, 2012
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