(BRUSSELS) - The European Commission approved on Wednesday a state-backed rescue for German regional public bank WestLB, hit by its exposure to the US market for subprime home loans.

The German state of of North-Rhine Westphalia said at the end of March it would back a five-billion-euro (7.8-billion-dollar) rescue package for the bank, in which it holds direct and indirect stakes totalling around 38 percent.

Although the commission deemed the "risk shield" to amount to state aid, it said the support was "in line with EU rules on rescue aid because strict conditions ensure that the aid is limited in time and reversible."

It added that its approval of the rescue package did "not prejudice" its review of a restructuring plan Germany is supposed to present by August 8.

On April 2, WestLB posted a 2007 net loss of 1.6 billion euros as a result of the global financial turmoil and stock trading losses.

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