European leaders reach deal on Spanish bailout

Eurozone leaders agreed to radically restructure Spain’s €100bn (US$124bn) bank recapitalization plan, allowing EU bailout funds to eventually be injected directly into teetering Spanish financial institutions, meaning Madrid can sweep the burden of the bailouts off its sovereign books.

The change, agreed as part of a deal struck in the early hours of Friday morning, will not happen immediately, however. Instead the leaders agreed it would come only after the eurozone set up a single banking supervisor to be run by the European Central Bank.

Ireland, which suffered a similar bank meltdown to Spain, would be considered for similar treatment. The euro gained as much as 1.5% against the dollar in Tokyo trading after the agreement was reached.