FRANKFURT/LONDON (Reuters) – UniCredit has stepped up preparations for a potential bid for Germany’s Commerzbank by drafting in investment bankers including a former top German official, three people familiar with the matter said.

The Italian bank had engaged Lazard and its banker Joerg Asmussen, the former German deputy finance minister, along with JP Morgan for a possible takeover, the sources said, raising the prospect of a deal that could allow UniCredit to pivot away from its struggling domestic market.

UniCredit said in statement responding to the Reuters report that it wanted to clarify that no banking mandate had been signed in relation to any potential market operation.

The bank reiterated that its current business plan is based on organic growth and a new plan will be unveiled on Dec. 3.

Although it is unclear whether and when a bid could be made, UniCredit has long been interested in expanding in Germany, said several sources familiar with management’s thinking. It already owns HVB, a large German lender based in Munich.

But the Italian bank, which has been concentrating on its own turnaround plan, had been waiting on the outcome of merger talks between Commerzbank and its larger Frankfurt neighbour, Deutsche Bank.

Those talks unravelled in recent weeks, placing Commerzbank back on the agenda for UniCredit Chief Executive Jean Pierre Mustier, who will be running the rule over a target worth about 9.3 billion euros ($10.4 billion) compared with UniCredit’s market capitalisation of 24.4 billion euros.

Commerzbank shares rose on the news, climbing 4.7% by 1400 GMT, with UniCredit shares down 2.4%.

UniCredit’s advances come as Dutch bank ING Groep has also shown interest in Commerzbank, sources familiar with the matter said. One person with knowledge of those informal talks described them as “intensive”.

Mustier has hired Lazard in the hope that Asmussen can lobby for the deal with finance minister Olaf Scholz. Both have roots in the German Social Democrat Party.

Asmussen, who studied business administration at Milan’s Bocconi University, has previously served on the executive board of the European Central Bank (ECB) and as state secretary at the Federal Ministry of labour and social affairs.

UniCredit, JPMorgan, Lazard, Commerzbank and Germany’s finance ministry declined to comment while Asmussen did not immediately respond to a request for comment.

ING also declined to comment.

JOB FEARS

The success of any approach will hinge in part on the German government, which owns a 15 percent stake in Commerzbank, stemming from a bailout during the financial crisis. Some officials had hoped to keep Commerzbank in German hands, which is why they pushed for a deal with Deutsche Bank.

One German official said the government would be open to a merger between Commerzbank and a foreign European rival, such as UniCredit.

But a deal that would tie one of Germany’s biggest banks to debt-laden Italy could ultimately prove hard to sell in Berlin.

If a takeover does emerge, it would be one of the largest deals involving banks across European borders since the financial crisis. Such mergers are still hard to pull off because laws and regulations still vary from country to country despite the single market, bankers say.

However, any initiation of talks is sure to ruffle feathers at Commerzbank, where employees – fearful for their jobs – had overwhelmingly opposed a tie-up with Deutsche Bank. Unions had forecast as many as 30,000 lost jobs.

Analysts at Citi said that any tie up with UniCredit could make it cheaper for the bank to refinance its operations and trigger other cost savings.

UniCredit last week announced that it was reducing its exposure to Italy to boost its financial strength, with measures including cuts to its portfolio of Italian government bonds.

That move could strengthen prospects for an acquisition in Germany, where UniCredit’s high exposure to Italy is seen as a barrier to a deal, several bankers said.

UniCredit had 54 billion euros of Italian government bonds at the end of March.

Italian UniCredit shareholders are in favour of any deal that can boost its market value, but some want the bank to retain its Italian identity, a person close to the matter said.

Mustier last week said that the bank was very proud of being listed and headquartered in the euro-zone’s third-biggest economy.