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MADRID - After winning the eurozone's agreement to rescue its banks, Spain must now scramble to come up with the price tag within days and if possible, before Greece's June 17 elections.
Spain has in its hands a deal from its eurozone partners to "respond favourably" to a formal request from Madrid for loans to salvage banks exposed to a collapsed property market.
Madrid's partners in the 17-nation eurozone agreed to extend up to 100 billion euros, providing immediate cover for the banks' losses and a backstop as well in the hope of easing the pressure on its strained public finances.
"It is a maximum figure," stressed Economy Minister Luis de Guindos at a news conference announcing the accord, which his government had repeatedly denied was needed.
"Very clearly, there is a safety margin," the minister said, adding that borrowing costs would now be less than open market rates.
Leading daily El Pais said the loan would cost three percent a year, citing officials with knowledge of the talks. Financial markets now demand more than six percent for Spain's benchmark 10-year bonds, an unsustainable level.
"The experience of previous crises and what we have learned since 2008 is that it is better to do too much than not enough," European Commission vice president Joaquin Almunia told El Pais.
The International Monetary Fund, in a report released three days early on Friday, estimated the Spanish banks need 40 billion euros but also warned they would require 60-80 billion euros to satisfy markets.
"One hundred billion, that seems like an absurd amount," said Daniel Pingarron, analyst at brokerage IG markets.
"(But) I think it is the best option for Spain: we will have almost unlimited resources and in one go very quickly can resolve a problem that we have not resolved in four years."
Spain's banking sector has been struggling since the 2008 collapse of a property bubble which it had helped stoke by providing easy loans.
To fix the situation Spain has long said it can manage by itself but finally, it had to cave in and accept outside aid.
To come up with a precise request, Madrid is waiting for the results of an audit being carried out by consultants Roland Berger of Germany and Oliver Wyman of the United States.
Their report, formally due by June 21, is now expected "within days," said the economy minister.
Spain is accelerating the pace as Europe scrambles to to batten down the hatches for the eurozone's fourth rescue, after bailouts for Greece, Ireland and Portugal failed to tame the debt crisis.
The storm ahead is the Greek election, where European leaders fear a victory for parties opposed to the austerity measures agreed in return for its bailout, could lead to an exit from the eurozone.
"If Spain fixes the problem before the Greek elections, that would be better," said Rafael Pampillon, economy professor at IE Business School in Madrid.
Furthermore, "Spain needs to have a cheque ready as soon as the figures are known," a diplomatic source told El Pais.
Time is pressing for Spain, which is being bullied on the financial markets where investors have been demanding high rates of return for fresh funding.
"We have to see how the programme is defined and then what the investors' reaction is," said Intermoney economist Jose Carlos Diez.
"If it goes the same way as for other rescued countries, where instead of things getting better the investors left and the risk premium rose, then I think the situation will get worse instead of improving."
The risk premium, the extra cost for Spain to borrow on the open market when compared to safe-haven Germany, has hovered around five full percentage points on 10-year bonds in the past 10 days, an unprecedented gap.
The Madrid stock market picked up slightly at the end of the week in anticipation of the banking rescue but it is still close to the lowest levels since 2003.
The opening of financial markets Monday will be crucial, therefore, for the country to see if the bank fix will do the job and hold the line.
Over the longer term, the banking rescue places the nation under strict surveillance by its eurozone partners to make sure it hits deficit reduction targets.
Eurozone ministers said in a statement Saturday that Spain's progress on reducing the public deficit and implementing structural reforms would be "closely and regularly reviewed."
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