Eurozone ministers set to approve Spanish bank aid

Eurozone finance ministers conferred on Friday to try and finalise an aid package for Spanish banks as opposition grows in the country against government plans to tighten budget discipline. The ministers were to begin their telephone conference at noon (1000 GMT), and work for an agreement on unprecedented backing of up to 100 billion euros ($122 billion) destined solely for Spanish banks. If an accord is reached, 30 billion euros could be released by the end of July, though the money would likely be held in reserve to recapitalise banks only if the need arose. The ministers are expected to outline the details of the bank rescue, including the rates charged for the loans, the timetable of the plan\'s implementation and the conditions attached to the bailout. Initial funds would be provided by the eurozone\'s temporary bailout fund, the European Financial Stability Facility (EFSF), which is to be replaced by a permanent European Stability Mechanism (ESM) later this year. On the Spanish side, money is to pass through the state\'s bank resolution fund Frob and be disbursed to banks on a case-by-case basis following an audit and stress test of the institution\'s ability to withstand unforeseen future shocks, to determine their precise funding needs. Results of bank audits are not expected until September. Several important European parliaments have approved the aid, including Germany, the biggest donor to the rescue funds, and Finland, which gave its stamp of approval on Friday following a heated debate. One of a handful of eurozone states to retain a top credit rating, Finland has struck a deal with Spain on collateral in exchange for Helsinki\'s contribution to the rescue package. Under the terms of a memorandum of understanding, eurozone creditors have obtained strict conditions in return for the funds, including closer scrutiny of Spanish banks by the European Commission. That has not gone down well with Spanish officials, who have worked hard to prevent the situation from infringing on national sovereignty or worsen the state of Spain\'s own finances. On Friday, sovereign debt market rates on Spanish 10-year debt surpassed the key seven-percent level, at which other eurozone countries have had to ask for bailouts of the national accounts. Meanwhile, opposition in Spain grew in response to government plans to save 65 billion euros as part of a programme to cut the country\'s public deficit. Spanish police fired rubber bullets and charged protestors in central Madrid early Friday at the end of a huge demonstration against economic crisis measures.