The European Commission has approved a scheme set up by the Italian government to guarantee a bond issue by Banca Carige that would help the troubled bank raise badly needed funds. 

"The Commission's assessment showed that the measure is targeted, proportionate and limited in time and scope. 

"The Commission has therefore concluded that this liquidity support is in line with EU rules," the commission said in a statement. 

The bonds that could be covered by the guarantee could be up to €3 billion, the commission said.

Carige will pay a fee to the Italian State for the guarantee.