Any funds for Spain will be tied to reforms of its banking sector, German Chancellor Angela Merkel said on Tuesday, adding the situation was different for previous bailouts of Portugal, Ireland or Greece.
"There will of course be conditionality for Spain, when the application comes, namely a restructuring of its own banking system to make it fit for the future," Merkel told the economic council of her conservative party here.
"But this conditionality is of course different from the conditionality in force when a whole country comes under the bailout fund with its entire economic programme," Merkel said.
At the weekend, Spain clinched a rescue loan of up 100 billion euros ($125 billion) to come to the rescue of its embattled banking sector.
Amid some confusion as to the extent of European supervision for the aid, German Finance Minister Wolfgang Schaeuble confirmed that a "troika" of officials from European institutions and the International Monetary Fund would oversee reforms to the banking system required of Spain.
The difference with previous bailouts is that the troika would not be assessing the government's economic policies, as this bailout applies purely to the banking sector, Schaeuble explained.