According to the ministry of finance, the funds will be used to 'correct financial imbalances' and get the country's banks out of the red.

Although the government confirms that it has applied for the funds to 'recapitalise' financial institutions in Spain, it refuses to recognise the move as a 'bail-out'.

The plan will be supervised closely by the International Monetary Fund, although the money is coming entirely from the Central European Bank (BCE).

Assessments revealed that Spain's banks needed a total of 90,000 million euros to wipe out their debts, but the extra 10,000 million euros are being supplied as a buffer zone.

The money will mostly go to the Fund for Orderly Restructuring of Banks (FROB) which will channel the cash into the financial institutions that most need it.

Interest on the debt paid back by the FROB will be considered as 'public deficit'.

Spain now joins Greece, Ireland and Portugal – the country group tagged as PIGS – as the fourth European nation to have applied for a bail-out.