The subscription price for new Commerzbank shares had been set at 4.50 euros ($5.85) apiece, Germany's formerly second-biggest private bank announced Tuesday, as it prepared to issue 555.5 million shares on Wednesday.

The subscription period would last from May 15 to May 28, and shares would be distributed in a so-called rights issue in which existing shareholders could apply for 20 new shares for every 21 shares they hold, the bank said in a statement.

Commerzbank also said it hoped to raise up to 2.5 billion euros which should be used to partly pay back state bailouts it had received during the 2008 financial crisis.

At the beginning of 2009, Commerzbank received 16.4 billion euros in direct state aid from German bank rescue fund SoFFin, of which it has so far paid back about 15 billion euros. In addition, German insurance group Allianz provided aid to the tune of 750 million euros, which Commerzbank now seeks to pay back. After the capital increase, the shareholding of the federal government in Commerzbank is expected to decrease from about 25 percent to 20 percent.

"The capital increase marks the beginning of the end of state ownership of Commerzbank," the financial institution said in its statement.

However, the struggling bank apparently needs to offer its fresh shares at a huge discount of 50 percent, compared with its current share price, in order to lure investor interest. Already in April, Commerzbank was forced to cut in 10 the number of its shares in issue to keep their price above one euro per share - the minimum price for any capital increase under the bank's rules.

uhe/dr (AFP, dpa)