Deutsche Bank AG is exploring options to make it harder for UniCredit SpA to buy Commerzbank AG as it considers how - or whether - to react to a potential deal that would create a huge competitor in its home market, people with knowledge of the matter said.

Chief Executive Officer Christian Sewing and his lieutenants have been analyzing the situation over the past few days, the people said. Options that have come up included buying part or all of the German government’s remaining 12% stake in Commerzbank, according to the people, who asked not to be identified because the information is private. 

The German government and Deutsche Bank’s leadership have discussed UniCredit’s ambitions regarding the country’s second-largest listed lender Commerzbank, people familiar with the matter said. Representatives from the ruling coalition and the lender held conversations by phone over the weekend, they said, adding that no concrete steps were discussed.

Deutsche Bank is currently opposed to a takeover of Commerzbank, the people said. Deutsche Bank may also end up up doing nothing in response to the potential Commerzbank acquisition by UniCredit, they said.

A Deutsche Bank spokesperson pointed to a comment Sewing made at a conference two weeks ago where the executive said he’s focused on the lender’s profitability when asked about plans by the German government to sell down its Commerzbank stake.

A representative for the German government declined to comment.

UniCredit CEO Andrea Orcel last week revealed a 9% stake in Commerzbank and subsequently said in a Bloomberg TV interview he’s open to a full-blown takeover. The move stunned the German government, which was selling parts of its holdings in the German lender but wasn’t expecting a strategic investor to swoop in, Bloomberg has reported.

Shares in Deutsche Bank dropped as much as 2.5%. Commerzbank pared earlier declines, falling 0.2% at 16:19 p.m. in Frankfurt. Commerzbank is still up more than 20% since UniCredit bought into it last week.

The potential combination of UniCredit and Commerzbank would create a European banking giant that would rank ahead of Deutsche Bank in terms of German revenue. It would also exceed Deutsche Bank in total assets.

Deutsche Bank and Commerzbank held formal takeover talks in early 2019 in a plan that was supported by the German government, Bloomberg reported at the time. The discussions ultimately fell apart.

Commerzbank has started working on a defense strategy since the Italian bank bought a stake, Bloomberg has reported. Commerzbank CEO Manfred Knof over the past year unsuccessfully tried to find an anchor investor in the Middle East or Asia to help protect Commerzbank from an unsolicited takeover, Bloomberg reported at the time. 

  - Bloomberg