Madrid said it would detail exactly how much it needs following an independent audit report in a little over a week.
The decision to aid Spain came after a two-and-a-half-hour conference call with the finance ministers of the 17-member bloc. The substantial size was settled on to dispel any lingering doubts that the bailout wouldn't be big enough.
But a fix for Spain's banks may not be enough to save the whole country.
"This year is going to be a bad one, growth is going to be negative by 1.7%, and also unemployment is going to increase," Spanish Prime Minister Mariano Rajoy said Sunday.
Eurozone Debt Crisis: Can Spain Survive?Spain is the fourth country to seek aid since the Eurozone debt crisis began. Greece, Ireland, Portugal, and now Spain have forced the European Union and the International Monetary Fund to commit some $625 billion (500 billion) euros to finance European bailouts.
Spain's banks have struggled since a property bubble burst and left the institutions with bad debts. Saving Spanish banks became a bigger priority Thursday when Fitch Ratings cut Spain's sovereign credit rating by three notches to "BBB." Fitch cited the banking sector's exposure to bad property loans and the ripple effects from Greece's debt crisis.
As Money Morning Chief Investment Strategist Keith Fitz-Gerald signaled last month, the banking sector wasn't going to be able to save itself.
"Spain's strategy is nothing more than "delay and pray,'" Fitz-Gerald said late last month. "The only reason Spanish banks are not yet bankrupt is that they are extending new loans to debtors that are being used to pay interest and principle on existing debt that's coming due. This creates the illusion that they're still viable businesses when everybody knows they're not."
Tempering hope and enthusiasm that the new bank bailouts would work is the fact that details of Spain's bank bailout program have yet to be finalized.
"There's still neither a growth plan nor Europe-wide structural reform," Kit Juckes, a foreign exchange analyst at Societe Generale, said in a note to investors. "Spain's economy remains in depression, even if they have much better weather than London does this morning."
And then there is Greece, which is set to hold crucial elections Sunday. The lingering worry is that opposition political parties will win enough seats in parliament to disrupt the bailout program Greece agreed to earlier this year.
That could mean the end of Greece's run with the euro - but a whole new chapter in the Eurozone debt crisis.
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