THE EUROPEAN Commission is investigating Germany's € 8.2 billion capital injection into Commerzbank, in the first public dispute between Brussels and state authorities over an individual bank's participation in a national rescue scheme.

Antitrust regulators are questioning whether Germany's second-largest bank is set to pay too low a price in exchange for the € 8.2 billion of capital the government has agreed to inject.

Brussels has been keen to ensure some basic consistency between the national bank bail-out packages. Before approving these under European Union (EU) state aid rules, officials have insisted that minimum remuneration terms for funds and guarantees provided to banks are clearly set out, as well as some behavioural conditions - such as restrictions on staff remuneration - and time limits on the schemes.

Yesterday, officials in Brussels were angered to learn of the Commerzbank terms through newspaper articles, and find that these appeared to be well below the minimum capital remuneration threshold agreed in the German national package when it was approved last week.

Officials said that the arrangement did not "appear to be in line with the German rescue scheme that was approved".

Germany's government is disputing the Commission's view of the deal.

"What has been done for Commerzbank is in full compliance with the financial market stabilisation law," Peer Steinbrück, Germany's finance minister, said.

"I have no doubt that we will provide the necessary information." Commerzbank said it would not comment on what was now a political matter between Berlin and Brussels.

The dispute could have implications for other German banks that want to use the government-backed bail-out money. Some analysts had said the terms revealed by Commerzbank were less onerous than expected, which could reduce the reluctance of other German banks to use Berlin's help.

It may also be watched closely by other member states yet to reach final agreement with Brussels.

- ( Financial Timesservice)