MILAN (Reuters) – UniCredit said on Wednesday it had increased its potential stake in Commerzbank to 28%, increasing pressure on the German bank as the Italian group continues its bid for compatriot BPM at the same time.

UniCredit requested the green light from the European Central Bank (ECB) in September to take a 29.9% stake in Commerzbank, just below the threshold triggering a mandatory takeover bid (OPA).

UniCredit’s interest in Commerzbank is raising concerns in Germany due to opposition to a takeover by an Italian bank which would lead to job cuts and expose the group to Italy’s sovereign risk.

In response to this new development, the German government said on Wednesday it was trying to find a solution for Commerzbank and rejected UniCredit’s “uncoordinated and hostile approach”.

“The federal government also views UniCredit’s plans critically because the integration of two such large and important banks carries considerable risks, particularly for employees,” added a government spokesperson.

The increase in the stake in the German group also comes at a time when UniCredit is under pressure in Italy to improve the surprise public purchase offer launched last month for its compatriot Banco BPM.

Banco BPM’s board said in November that UniCredit’s 10 billion euro offer did not reflect the bank’s profitability or its potential to create value for shareholders.

“The position (in Commerzbank) remains to date only an investment and has no impact on the public exchange offer with Banco BPM,” UniCredit said in a statement on Wednesday.

Italy’s second-largest bank said that while a tie-up with Commerzbank seemed the best solution, it could also remain a simple investor and contribute to Commerzbank’s performance, or even sell its stake and pocket the proceeds.

“This decision reinforces UniCredit’s view that there is substantial value within Commerzbank that needs to be crystallized,” UniCredit said.

A Commerzbank spokesperson said the group remains focused on its strategy, which it plans to present to investors on February 13.

In Frankfurt, Commerzbank shares rose 3.2% on Wednesday at 12:55 GMT, while in Milan, UniCredit shares rose 2%.

The ECB’s authorization process is ongoing and can take up to 90 working days from the moment Frankfurt receives the application, UniCredit said.

The ECB declined to comment.

The Italian group claims to hold a direct stake of 9.5% and an 18.5% stake through derivatives in Commerzbank.

UniCredit had previously increased its stake, also through derivatives, to almost 21%.

(Written by Valentina Za, with Andreas Rinke, Diana Mandia and Pauline Foret, edited by Blandine Hénault)

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