Commerzbank's stake in UniCredit increases to 28% as Orcel intensifies pursuit.

• On Wednesday, UniCredit, Italy's bank, announced that it had increased its potential stake in Commerzbank to 28% through the use of additional derivatives.
• UniCredit's decision to either acquire a German lender or bid for Italy's Banco BPM is being closely monitored by investors.
• The German government has so far opposed UniCredit's courtship of Commerzbank.

On Wednesday, UniCredit of Italy announced that it had increased its potential stake in Deutsche Bank to 28% through the use of additional derivatives, prompting market speculation about a possible buyout of the German lender.

This marks an increase from a 21% holding previously.

The second-largest bank in Italy now has a 9.5% direct stake and approximately 18.5% ownership through derivative instruments.

The German bank has received an application from UniCredit for a stake of up to 29.9%, while CEO Andrea Orcel is also pursuing a bid for Italian peer Banco BPM.

"UniCredit's acquisition of a stake in Commerzbank is a move that emphasizes the bank's belief in the value of Germany's banking sector and its communities, and its role in driving the country's economic growth."

UniCredit's lender emphasized that its position in the deal remains solely an investment and does not affect its 10-billion-euro offer on Banco BPM. Analysts believe that Orcel could still improve his bid and include a cash component to pursue domestic consolidation. In November, UniCredit stated that such a merger would help it consolidate its competitive position and expand its presence in Italy, where it is second to Intesa Sanpaolo.

UniCredit has not yet convinced its German takeover target or the Berlin administration of a potential deal. Commerzbank, on Wednesday, stated that it has noted the announcement but did not provide any further comment, referring to its strategy, which is currently being upgraded and will be disclosed on February 13.

Despite opposition from the German government, Commerzbank's courtship with Orcel is gaining momentum. However, the German administration's own turmoil, following the collapse of the ruling coalition and Chancellor Scholz's loss of a no-confidence vote, may pave the way for elections in February. The German government currently holds a 12% stake in Commerzbank, after selling off a 4.5% stake in September in an attempt to divest from the lender it bailed out during the 2008 financial crisis.

The potential merger between UniCredit and Commerzbank in Germany could result in synergies in capital markets, advisors, payments, and trade finance activity, as previously indicated by analysts.

At 9:44 a.m. London time, Commerzbank stock rose 3.1%, while UniCredit shares increased by 1.1%.

— CNBC's Greg Kennedy contributed to this report.