The European Commission said on Wednesday it had approved Austrian financial bailout plan which will cost billions of euros in guarantees, capital injections and loans to banks.

"After intensive negotiations, the Austrian scheme has become a comprehensive tool for stabilizing the financial sector," European Union (EU) Competition Commissioner Neelie Kroes said in a statement.

Austria adopted last month the financial bailout plan worth 90 billion euros (116.8 billion U.S. dollars), but the Commission had certain reservations about the plan.

Kroes said the Commission gave green light in accordance with its new state aid rules on financial rescues which were released on Monday.

Bowing to pressure from France and other EU member states, the Commission swiftly loosened it's state aid rules on financial rescue plans, opening new possibilities for state aid in current financial crisis to boost credit flows to real economy.