Eurozone to lend Spain up to 100 bil. euros

The eurozone has announced an intention to provide Spain with financial aid of up to 100 billion euros, or 125 billion dollars, to bail out its troubled banks.Eurozone finance ministers issued a statement to this effect on Saturday following their emergency telephone conference.

The statement came after Spain's Economy Minister Luis de Guindos requested assistance from other countries in Europe.De Guindos told reporters in Madrid that Spain will ask for a European bailout to stabilize its banking system. He said Madrid will specify how much it needs by the end of the month.

The Spanish government initially said it would decide on the matter after an independent audit report of the banks' balance sheets comes out in late June.But the country is facing growing credit uncertainties, with a major credit ratings agency recently downgrading Spanish sovereign bonds by 3 notches.

The United States has supported the move. US Treasury Secretary Timothy Geithner said in a statement on Saturday that the US welcomes Spain's action to recapitalize its banking system and the commitment by its European partners to provide support.

He said these are important for the health of Spain's economy and as concrete steps on the path to financial union, which is vital to the resilience of the euro area.

The International Monetary Fund also welcomed the move.

IMF Managing Director Christine Lagarde said in a statement that the eurozone's decision is consistent with the IMF's recommendation of capital injection of at least 40 billion euros for Spanish banks. She said the scale of proposed financing gives assurance that the financing needs of Spain's banking system will be fully met.