The European Commission said on Thursday it had approved a German plan to recapitalize the country’s second-largest bank Commerzbank.
The commission, the European Union’s competition guardian, said it was satisfied that Commerzbank’s long term viability has been demonstrated, and that the aid is kept to the minimum and will not lead to undue distortions of competition.
Commerzbank is the second largest private German bank. It ran into serious financial difficulties as a result of the global credit squeeze.
The German government injected €8 billion ($10.7 billion) of state money into Commerzbank in December and plans to grant it a further €10 billion ($13.4 billion) of capital.
The aid is granted to ensure financial stability under a German financial crisis scheme, approved by the commission in December.
Berlin has gone impatient with Brussels over the slow approval of the aid. The commission gave its green light only after presented a business plan setting out a number of measures aimed at keeping the aid to the minimum necessary.
In addition, to allay further concerns related to potential distortions of competition, Commerzbank will be subject to a general ban for three years on acquisitions of financial institutions or other businesses which potentially compete with it.
And the bank will not be allowed to do business under more favorable price conditions than its top three competitors in markets where it has a market share above 5%. (Xinhua)