Italian lender UniCredit said on Monday it has increased its stake in Commerzbank to around 21 percent, fuelling speculation that it could seek a takeover of its German rival.

The move makes UniCredit effectively the largest shareholder of Commerzbank ahead of the German state, which has shown no interest in allowing Germany's second-largest bank to be bought.

UniCredit, which surprised markets 10 days ago by revealing a nine-percent stake in Commerzbank, said on Monday it had taken another 11.5 percent through financial instruments.

Italy's second biggest bank added that it has requested European Central Bank permission to raise its stake to 29.9 percent, just short of the 30 percent threshold that would require it to make a public offer for the entire bank.

The bank said in a statement that it had "full flexibility and optionality to either retain its shareholding, sell its participation... or increase the stake further".

It would depend on the talks with Commerzbank, its management and supervisory boards, as well as with its wider stakeholders in Germany, it said.

Contacted by AFP, Commerzbank declined to comment.

- 'Stable and profitable' -

Last week, UniCredit boss Andrea Orcel ruled out a hostile takeover bid for Commerzbank, telling Italy's Il Messaggero daily that such a move "would be an aggressive act".

The German government said on Friday it had decided not to sell off any more of its Commerzbank shares "for the time being".

It added that the bank was "stable and profitable" and that its "strategy is geared towards independence".

"The federal government will accompany this until further notice by maintaining its shareholding," the government's finance agency said.

Berlin bailed out Commerzbank with billions of euros in 2009 after the global financial crisis pushed it to the brink of collapse.

Commerzbank has bounced back strongly since then, posting its best annual net profit for 15 years in 2023.

It is aiming for even better results in 2024 despite expectations of lower interest rates.

Before UniCredit took a stake in the German lender, Berlin had announced that it was looking to sell down its 16.5-percent stake in Commerzbank, citing the bank's improved economic situation.

UniCredit, which already owns Germany's HypoVereinsbank, acquired half of its initial nine-percent stake in Commerzbank from the German government and the rest on the open market.