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 on Thursday, will see Commerzbank give up the core of its commercial property lending business as well as Eurohypo’s role in public sector finance.