Eurozone agrees to prop up Spain's ailing banks

They said the first €30 billion (£24bn) in loans would be ready by the end of this month.

The meeting also approved a one-year extension of Spain's 2013 deadline for cutting its budget deficit to 3 per cent.

The finance ministers for the 17 countries will return to Brussels on July 20 to finalise the agreement, having first obtained the approval of their governments.

Last month, the eurozone's finance ministers agreed to offer Spain up to €100bn (£80bn) to prop up its stricken banking sector, which has been undermined by its gambles on the now-collapsed property market.

Dutch Finance Minister Jan Kees de Jager said the agreement should be finalised soon.

"We have a tentative deal on the bailout conditions," Mr de Jager said.

"The total will likely be €100bn. Some countries like the need to get parliamentary approval."

Mr de Jager said Madrid's partners agree that "financial-sector reforms in Spain must be ruthlessly implemented.

"These reforms include, notably, a cap on salaries of bank executives and a ban on bonuses."

But he said a system of EU-wide banking supervision still needed to be worked out.

Germany's top court met today to hear a case brought by the Left Party that the European Stability Mechanism is unconstitutional, as it prevents the German parliament from exercising its sovereignty over how taxpayer money is spent.

But on Monday - before the eurogroup meeting had begun - European Central Bank chief Mario Draghi said he was confident that a banking union in the EU would be achieved.

Greece also had its place on the meeting's agenda and ministers said the final decision on renegotiating the terms of the country's bailout will depend on the conclusions of the "troika" debt inspectors overseeing the Greek programme.

"Final decisions can only be made when the facts and figures from the troika are on the table - but, in general, it is clear that they will stick to the programme that Greece is now undergoing," Austrian Finance Minister Maria Fekter warned.

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