Spain's Economy Ministry declined to comment on the report.

Spain was granted up to 100 billion euros of aid in June as part of a euro zone rescue fund to clean up a banking sector hit by a burst property bubble five years ago.

El Pais said the government will use 37 billion euros for its four nationalised banks (Bankia, Novagalicia, CatalunyaCaixa and Banco de Valencia ) and 2.5 billion to capitalise the recently-created bad bank, known as Sareb.

An additional 2 billion to 3 billion euros of European Union funds would be used for other banks that may need public money, the newspaper said.

On Sunday, El Pais said European authorities would transfer 35 billion euros to Spain's state bank rescue fund on Dec. 15 in exchange for massive lay-offs at the four nationalised banks.

This followed comments by Spain's deputy economy minister Miguel Temboury last week that the country would probably tap less than 40 billion euros of aid from the euro zone rescue fund.