Commerzbank is to divest its Eurohypo property finance subsidiary as part of a deal with European competition authorities to compensate for the €18.2bn ($24.2bn) of state aid given to Germany's second largest bank.

The agreement, set to be announced by the European Commission today, will see Commerzbank give up the core of its commercial property lending business as well as Eurohypo’s role in public sector finance.

Under the deal with Brussels, Commerzbank will be able to retain its core activities in central European countries such as Poland but might have to divest one or two smaller subsidiaries as well as Eurohypo.

Financial Times