The German government is probing the possibility of a tie-up between Commerzbank and ING Groep as one option to forge a European financial heavyweight, according to people familiar with the discussions.
Dutch Finance Minister Wopke Hoekstra and German Deputy Finance Minister Joerg Kukies discussed the matter earlier in May in Berlin, said the people who asked not to be named because the talks were private. Among the issues discussed was Berlin's intent that any new bank be headquartered in Germany.
Commerzbank jumped 4% after Bloomberg published news of the talks. ING gained as much as 2%. Both banks declined to comment.
The German government owns about 15.5% in Commerzbank, making it the lender's biggest shareholder by far. The German finance ministry declined to comment and a spokeswoman for the Dutch government wasn't immediately able to comment when contacted by Bloomberg.
ING and UniCredit SpA have already shown interest in the lender, lining up advisers to explore a potential takeover.
Following the collapse of merger talks between Deutsche Bank and Commerzbank, German Finance Minister Olaf Scholz changed his message from supporting a national champion to backing a cross-border merger.
"We need large European banks operating in Germany," he said April 30 in Erfurt, only days after the talks between Deutsche and Commerzbank failed.
While Germany is sounding out investor appetite for Commerzbank, it has ruled out a merger this year because it first wants to see improved European banking regulations and integration, according to a person with knowledge of the government's strategy. There are no talks under way yet, only preliminary reconnaissance, the people said.
ING chairman Ralph Hamers was at the economic council linked to Angela Merkel's ruling party this week, showcasing the bank's ambitions and its digital platform, one of the weaknesses of some of Germany's leading banks.
ING — whose CEO has been buffeted by a money laundering scandal and disputes over his pay — recently held its investor day in Frankfurt, further highlighting the country's importance for the bank. It offered to relocate its headquarters to the German city from Amsterdam and pledged to cut fewer jobs than the Commerzbank-Deutsche Bank deal would have required, according to Manager Magazin.
UniCredit Chief Executive Officer Jean Pierre Mustier has sought to downplay any interest in Commerzbank in recent weeks, saying in an interview that there are too many hurdles to European banking consolidation. At the same time, the bank has cleaned up its balance sheet and pledged to bring down its holdings of Italian sovereign debt, reducing risk and making itself more attractive as a potential acquirer.