ROME, March 14 (Xinhua) -- Italy's banking group UniCredit has been authorized by the European Central Bank (ECB) to increase its stake in German Commerzbank up to 29.9 percent, the Milan-based lender said on Friday.

The green light could open the door to a possible takeover, although UniCredit specified the decision timeline on any move is likely to extend well beyond the end of 2025.

"While the approval underscores UniCredit's financial strength and regulatory compliance, there are still many factors that will determine any further steps and their associated timeline," it said.

The Italian multinational banking group warned further approvals would still be needed before its 18.5 percent shares held through derivatives could be converted into physical shares.

According to the bank's data up to December 2024, UniCredit's shares in the German rival total around 28 percent, of which 9.5 percent through a direct stake and 18.5 percent through derivative instruments.

The German federal government is also a major stakeholder in Commerzbank, holding 12 percent of shares, a legacy from the 2008 financial crisis bailout.

Commerzbank reacted to the announcement on Friday, stating the ECB's authorization will not change Commerzbank's fundamental situation and the group will remain focused on its strategy, Reuters cited a spokesperson of Commerzbank as saying.

In UniCredit's statement on Friday, the group said it was awaiting the opportunity "to initiate a constructive dialogue with the new German government, once formed."

"As a shareholder, we are pleased that our investment has driven some positive change at Commerzbank, which, together with the recent more optimistic view on German macro, has driven a substantial increase in the bank's share price," UniCredit said.

"However, only significant time will reveal if the plan is executable and hence determine whether such price appreciation is justified and sustainable," it said.

It's reported that UniCredit has submitted the required regulatory filing in September 2024 for acquiring a stake in Commerzbank in excess of 10 percent up to 29.9 percent. Enditem

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