The European Union's bailout fund is working on a 100 billion euro ($120 billion) package to prop up Spanish banks, according to a report by German news weekly Der Spiegel.

A confidential draft plan by senior officials at the European Financial Stability Facility proposes an initial 30 billion euro payment to Spain at the end of July, the magazine said.

Of that, some 20 billion euros would go toward shoring up Spanish banks' short-term finances while another 10 billion euros would be reserved as a longer-term emergency buffer.

Three further payments totaling €45 billion would be made in November and December of this year, and in June 2013, Der Spiegel said. A Spanish Economy Ministry spokeswoman declined to comment on the report.

According to the report, up to 25 billion euros would also be made available to create a "bad bank" to buy up hard-to-sell debt.

This would be in line with a draft memorandum of understanding agreed by finance ministers from the 17 eurozone countries, which suggests that part of Spain's bank bailout should involve the segregation of billions in problematic assets to an "external asset management agency" to clean up Spanish banks' balance sheets.

Investors are becoming increasingly wary of placing money in Spanish banks, which are having to turn to the European Central Bank for financing. In June, Spanish bank borrowing from the ECB rose 17 percent from May. The accrued total as of the end of that month was 337 billion euros, 77 percent of all the money owed to the ECB and seven times the figure from June 2011.

The government on Friday approved its latest package of measures aimed at cutting 65 billion euros ($79 billion) off the budget deficit through 2015, the biggest deficit-reduction plan in recent Spanish history. The sweeping austerity measures include wage cuts and tax increases for a country struggling under a recession and an unemployment rate of near 25 percent.