BRUSSELS, Belgium (AP) — European Union regulators on Thursday cleared Germany's euro6.7 billion ($8.65 billion) guarantee for a banking industry program to cover deposits at private banks and at the German branch of collapsed U.S. investment bank Lehman Brothers.

The European Commission said that the government subsidy was necessary to keep the banking sector stable and prevent a serious disturbance in the German economy.

The German Special Fund for Financial Market Stabilization, or SoFFin, will give the money as collateral for a euro6.7 billion bond issued by the banking industry's Deposit Protection Fund, or SdB, to a group of German private banks.

This will secure all customer deposits at private banks up to 30 percent of their liable capital.

It will also compensate depositors of Lehman Brothers Bankhaus AG, the German subsidiary of the U.S.-based investment bank which collapsed in September. The bond issue will allow the deposit protection fund to pay compensation before it manages to sell off Lehman's assets.