Greek deal approved: Up to 86B euros for bailout

Reuters with CNBC

Euro zone ministers reached an agreement to lend up to 86 billion euros ($96 billion) to Greece over three years.

The agreement to launch a third bailout program for Greece, confirmed by the European Commission, came after a roughly six-hour meeting of the Eurogroup in Brussels.

"This agreement is a success for Greece and for Europe," French Finance Minister Michel Sapin said in a statement after the deal was announced.

Greek Finance Minister Euclid Tsakalotos listens his French counterpart Michel Sapin (R) during a euro zone finance ministers meeting in Brussels, Belgium, August 14, 2015. Euro zone finance ministers will discuss whether to agree a third bailout package for Greece on Friday at their meeting in Brussels after the Greek parliament voted to approve the terms.
Francois Lenoir | Reuters

Eurogroup President Jeroen Dijsselbloem said Friday that the final issues on the bailout had been resolved, and that Greek legislative action had helped rebuild trust between the embattled nation and its creditors.

Assuming final approval next week by the German and some other national parliaments, an initial tranche of 26 billion euros would be approved by the European Stability Mechanism (ESM) next Wednesday. That first tranche will consist of two sub-tranches (10 billion immediately for bank recapitalization and resolution purposes, and 16 billion in installments), the Eurogroup said in a statement.

The 86 billion euro deal includes a 25 billion bank buffer, the group said.

Read MoreWill Greece be saved by… solar?

Van Overtfeldt said they had agreed to a Memorandum of Understanding drafted by institutional negotiators on Tuesday, "with some additional measures." He did not elaborate.

Dijsselbloem said the new accord dealt with issues concerning the Greek banks, and he added that there will be no bail-in of depositors for those banks—but there would be a bail-in of senior bondholders. The banks' need for capital will be assessed after stress tests later this year, he added.

The Eurogroup chief said it is possible for Greece to achieve debt sustainability without nominal haircuts, and that the euro zone will be ready to consider additional measures after the first successful review.

The finance ministers meeting ended after hours of talks following the endorsement of the loan conditions by the Athens parliament.

In its Friday statement, the Eurogroup said it considers the continued program involvement of the International Monetary Fund as "indispensable," and welcomed the organization's consideration of further financial support to Greece.

In a Friday statement, IMF Managing Director Christine Lagarde called the Greek "Memorandum of Understanding" a "very important step forward."

Read MoreKrugman slams Greece, Germany slams Krugman

"It not only reverses much of the policy backtracking that caused the previous program to run seriously off track, but puts in place wide-ranging policies to restore fiscal sustainability, financial sector stability, and a return to sustainable growth," Lagarde said of the deal. "I particularly welcome the authorities' efforts to overcome the serious loss of confidence in recent months through strong upfront actions."

Still, Lagarde said she remains "firmly of the view" that Greek debt is unsustainable and that the country cannot reach sustainability solely through its own actions. Therefore, it is "critically important" for creditors to make commit to "provide significant debt relief, well beyond what has been considered so far," she said in the statement.

—Reuters and CNBC's Everett Rosenfeld contributed to this report.