UniCredit SpA Chief Executive Officer Andrea Orcel moved to more than double the lender’s stake in Commerzbank AG, in a dramatic development that’s likely to escalate tensions with the German government.

This summer, the German government appeared ready to finally reduce its stake in Commerzbank AG. It was a moment Andrea Orcel, chief executive officer of UniCredit SpA, had also been anticipating. Most Read from BloombergHow Americans Voted Their Way Into a Housing CrisisAfter a Record Hot Summer,

BERLIN (Reuters) -A merger of Italy's Unicredit and Germany's Commerzbank would add value for all stakeholders and create a much stronger competitor in the German banking market, Unicredit CEO Andrea Orcel told Handelsblatt in an interview published on Monday.

UniCredit SpA Chief Executive Officer Andrea Orcel used Barclays Plc to help quietly build up a stake in Commerzbank AG, a move that has shaken European finance and triggered a backlash from the German government.

UniCredit on Monday said it’s reached an agreement to further increase its stake in Commerzbank as the German government increasingly attempts to ward off an Italian acquisition of its number-two bank.

UniCredit announced it had increased its stake in German lender Commerzbank to 21% and submitted a request to boost the holding to up to 29.9%.

Some of UniCredit SpA’s main investors support a full takeover of German rival Commerzbank AG, saying such a move would add value for shareholders.Most Read from BloombergHousing’s Worst Crisis in Decades Reverberates Through 2024 RaceFrom Louisville,

Italian bank UniCredit (OTCPK:UNCFF) (OTCPK:UNCRY) said Monday it increased its stake in Commerzbank (OTCPK:CRZBF) (OTCPK:CRZBY) to around 21% through financial instruments and submitted an application to own up to 29.