“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, according to Reuters.
In a conference call, ministers voted on a detailed memorandum of understanding with Spain spelling out the terms of the aid, which will be fully disbursed by the end of 2013, Reuters writes.
The full amount of money needed to shore up Spain’s banks will not be known until September, after individual banks have been assessed. The agreement calls for an initial disbursement of €30 billion ($36.9 billion) this month.
“The aim of this program is very clear: to provide Spain with healthy, effectively regulated and rigorously supervised banks, capable of nurturing sustainable economic growth,” Olli Rehn, the European monetary affairs commissioner said in a statement, according to AP.
But interest rates on Spanish debt continued to rise, suggesting financial markets are pessimistic about the country’s future, the Financial Times reported.
Parliament approved on Thursday a package of 65 billion euro ($80 billion) spending cuts and tax hikes which are likely to deepen the recession already gripping Spain.
The bailout memorandum of understanding follows Germany’s approval Thursday of the deal, which includes 3 percent interest for 15 years and a 10-year grace period.
The austerity vote prompted hundreds of thousands of Spaniards, led by public-sector workers, in more than 80 cities to take to the streets on Thursday, protesting Rajoy’s government.