The European Commission is questioning whether a massive capital infusion for German bank Commerzbank was in line with the terms of a bank bail-out package it approved last week.
Commerzbank on Monday became the first private German bank to tap into a government rescue fund by seeking a capital injection of €8.2 billion in exchange for preferred shares.
However, the spokesman for competition issues Jonathan Todd said that the preferred shares had been reported by the press to pay a lower yield to the state than the minimum 10% required by German bail-out package.
'We now have some various basic information...from the German authorities, but at first sight these figures don't appear to be in line with the German rescue scheme that was approved last week,' Todd said.
'Therefore, this particular capital injection for Commerzbank will need to be examined by the commission,' he added.
Yesterday the commission approved German plans to support the financial sector, judging that aid provided under the scheme would not distort competition as it was drafted.
'It's the commission's duty to ensure a level playing field and to ensure that low remuneration of capital does not give rise to distortions of competition,' Todd said.
'We expect the German authorities to provide us with full information so that we can conduct a full assessment of the measures for Commerzbank,' he added.
