The capital increase gives the state a 25 per cent stake in Commerzbank and comes two months after the bank received an €8.2bn injection from the government's financial sector bailout fund. It is less than six weeks since Commerzbank renegotiated the terms of the takeover deal with Allianz, the insurance giant that controls Dresdner.

The move underlines the extent to which the global economic and financial crisis has undermined the creditworthiness of large banks even after western governments have taken far-reaching steps to restore financial sector confidence. It will likely be a further blow to investors' tentative hopes of a recovery in European bank shares.

The government's shareholding in Commerzbank – actually 25 per cent plus one share – means the bank is effectively nationalised. At Thursday's closing share price, Commerzbank's market value was just €3.8bn, less than a quarter of the value of the government's investment.