Analysts have welcomed the move by UniCredit, particularly because a tie-up between the two banks might spur more M&A activity in Europe's banking sector.

Opposition within the German government to a potential takeover of Commerzbank by UniCredit is solidifying, amid anger at the way the Italian bank acquired its 9 per cent stake and concern over potential macroeconomic risks a merger might pose to the German economy.

Germany will not sell any more shares in Commerzbank for now and the bank's strategy is "geared towards independence," the country's Finance Agency said on Friday, in the clearest sign yet that the government doesn't currently favour a takeover of the nation's No.

The German government has decided not to sell any more shares in Commerzbank AG for the time being. “At its meeting on Sept. 20, the interministerial steering committee responsible for key decisions of the Financial Market Stabilisation Fund decided that the FMS will not,

The government said it won’t offload any additional shares in the bank following the sale to UniCredit for €702 million. The move marks an U-turn for the government.