MADRID--Spanish lenders tapping the EUR100 billion worth of finance the European Union is stumping up to shore up the country's troubled banking sector could be forced to go through a painful restructuring program as a condition for the bailout.

With few details so far made public, it could be weeks before the market gets a true sense of which Spanish banks will have to make use of the emergency funds.

The Spanish government and EU authorities agreed at the weekend to provide a massive loan to support ailing banks through Spain's Fund For Orderly Bank Restructuring, or FROB. But the euphoria in markets was short-lived as Spanish government bonds turned south again and bond investors fretted over the implications for the Spanish state's finances, while Spanish banking shares reversed strong early gains.

Some analysts said mass layoffs, branch closures, dividend suspensions, asset disposals, more bank mergers or even closures could be the price of any FROB funding, accentuating an economic downturn that has left Spain with the developed world's highest jobless rate.

"It's difficult to believe that there will be no conditionality, one way or another, at least for those institutions that receive the funds," said one London-based bank analyst, who declined to be named.

Since the beginning of the economic downturn, Spain has bailed out eight lenders, the latest one being Bankia SA (BKIA.MC) and its parent company Banco Financiero y de Ahorros SA, which needed EUR19 billion of public funds.

Some savings banks, such as state-controlled savings banks Catalunyacaixa and Novacaixagalicia will each need EUR4.5 billion to cover new capital and provision requirements, according to people familiar with the situation.

A formal Spanish request for the EU funds is expected later this month. On June 21, a detailed report will be issued by two Spanish government-appointed independent advisors on the capital needs of Spain's banks. The government had previously insisted it wouldn't ask for help until the publication of these reports, which are expected to inform the government's banking recapitalisation strategy.

The focus will be on the impairment charges banks are forced to take and the time they are given to adjust to those, analysts say.

Spain's big two global banks, Banco Bilbao Vizcaya Argentaria SA (BBVA) and Banco Santander SA (STD), are expected to get by without official funding, by selling shares at a discount if need be or by leveraging off their huge Latin American operations.

Santander is planning a stock market listing of its fast-growing Mexican unit later this year. The bank is seeking to launch an initial public offering of 25% of Banco Santander (Mexico) SA and raise some $3.75 billion.

"We maintain our view that BBVA and Santander should be able to avoid any capital shortfall," said Daragh Quinn, a bank analyst at Nomura in London.

Meanwhile, Banco Popular Espanol SA (POP.MC) said last month it is negotiating the sale of a majority stake in its profitable Internet bank and credit card operations, part of an effort to free up cash to cover more stringent capital requirements set by the Spanish government.

Spanish savings banks, or cajas, were particularly hard hit by the implosion of the country's real-estate market more than four years ago. Since it took power in December, the conservative Popular Party government has advocated mergers in the sector in an attempt to create fewer and bigger groups that, in theory, would have better access to funding in bond markets.

But Spanish banks have been shut out of funding markets in recent months because of concerns about the country's fragile fiscal situation, leading to an unhealthy reliance on liquidity from the European Central Bank.

Beyond Spain's regional savings banks, some of the country's medium-sized listed banks are also seen by analysts as likely contenders for FROB assistance.

"For domestic Spanish banks almost all should be facing some level of recapitalisation need," said Quinn. "The implications for the majority of Spanish banks will be a dilutive capital injection from the state, with additional conditions from the EU," he added.

Catalan lender Banco Sabadell SA (SAB.MC) may be one possible exception, Quinn said. The bank itself declined to comment in the wake of the Spanish government's weekend deal.

Analysts at Societe Generale said they expected Banco Popular to seek support from FROB, despite its assertion to the contrary earlier Monday.

They also didn't rule out Caixabank (CABK.MC), Spain's third-biggest bank, needing help. Caixabank said it was too early to comment on the latest developments but was well placed to comply with the additional provisions imposed on it in May.

"The listed banks will try to avoid getting any FROB money at all costs and if they are forced to get any will try to pay it back quickly. Getting FROB money can stigmatize them and the cost is likely to be very high," said Ignacio Moreno, a London-based bank analyst at Citigroup.

Write to William Kemble-Diaz at djmadrid@dowjones.com

(Pablo Dominguez and Santiago Perez contributed to this article.)

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