Brussels - The European Commission approved an 18-billion- euro (24-billion-dollar) government bailout for Commerzbank AG on Thursday after receiving government assurances that the money would not give Germany's second-largest bank an unfair edge over its competitors.

"On the basis of the notified plans, the Commission is satisfied that Commerzbank's long term viability has been demonstrated, and that the aid is kept to the minimum and will not lead to undue distortions of competition. It has therefore declared the aid compatible," the European Union executive said in a statement.

The German government injected 8 billion euros of state money into Commerzbank in December and plans to grant it a further 10 billion euros of capital.

Commerzbank, which is Germany's second-largest private bank with a pro-forma balance sheet total of 1,100 billion euros, ran into serious financial difficulties as a result of the global credit squeeze.

Its restructuring plan involves divestments of activities and the sale of subsidiaries such as Eurohypo, an important European player in the real estate and public finance business.

In addition, the bank will be banned from acquiring other potential competitors for three years.

"(EU) state aid rules ... ensure that banks receiving state aid do not benefit at the expense of their competitors," said EU Competition Commissioner Neelie Kroes.

At least three major German banks are tapping into the government's 470-billion-euro rescue fund in the wake of the world financial crisis.