Spain’s banks to get €30bn by the end of July

Eurozone finance ministers have agreed to transfer to Spain €30bn by the end of July to help the troubled banking sector of the country.

The €30bn aid tranche is the first instalment of a bailout of up to 100bn, which was agreed in June.

“We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures, allowing for a first disbursement of €30bn by the end of the month to be mobilised as a contingency in case of urgent needs in the Spanish banking sector,” said Eurogroup President Jean-Claude Juncker.

Meanwhile, eurozone finance ministers have confirmed an agreement to extend to 2014 the deadline for Spain to cut its budget deficit to the EU limit of 3% by one year.

Yesterday, the yield on Spanish bonds rose sharply on Monday ahead of the meeting, with fears that no concrete action on Spanish banks would be reached.

Both Spanish and Italian bond yields rose, with Spanish 10-year yields reaching the critical 7.07%, considered unsustainable in the longer-term.

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