EURO zone finance ministers gave their final nod of approval for a 100-billion-euro (US$121.57 billion) bailout deal for troubled Spanish banks Friday. The agreement to backstop the Spanish banking sector was unanimous among the 17 members of the euro zone.

    After months of dithering as its borrowing costs soared to unsustainable levels, Spain formally requested aid June 25.

    The bailout will provide funding of up to 100 billion euros for the recapitalization of Spanish banks, as agreed last month. In the beginning, 30 billion euros will be set aside for use in case of “urgent unexpected financing needs,” the Eurogroup said in a statement after a conference call. The first tranche is likely to be made available by the end of this month.

    “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 recapitalization 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 the euro zone, will provide the aid, until the permanent European Stability Mechanism (ESM) comes into force. The financial assistance will be transferred to the ESM “without seniority status.”

    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 finalized in September. An independent audit in June showed the banks may need up to 62 billion euros in total.(SD-Agencies)