Commerzbank, Germany’s second largest bank, will be part-nationalised as part of a government bailout.

The German government is taking a stake of 25 per cent plus one share in the bank in return for an €10 billion (£9 billion) capital injection into the bank which will help it complete the acquisition of stricken rival Dresdner.

This will be the first time the German state has taken partial control of a bank. It will become Commerzbank’s largest shareholder.

Commerzbank also raised €5 billion yesterday through a state-guaranteed bond. The size of the bond issue was more than double what was originally expected.

The capital injection comes only two months after Commerzbank received €8.2 billion from the German financial sector bailout fund.

There will be two representatives of the German government on Commerzbank’s supervisory board as part of the deal, according to German newspapers.

Martin Blessing, chief executive of Commerzbank, said: “We are weatherproofing our bank for an economically stormy environment.

“This will enable us to fulfill our responsibility to offer loans to the German economy and to ensure we will continue to be a reliable partner for our clients."

Commerzbank is buying Dresdner Bank from insurer Allianz for €9.8 billion. Allianz will hold a 14 per cent stake in the bank after the deal completes.

The government will buy €8.2 billion worth of long-term bonds which do not carry voting rights, and 295 million new Commerzbank shares at €6 each.

This compares to yesterday’s Commerzbank market value of only €3.8 billion.

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