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BERLIN -- Plagued with a major shareholder angling to fob off its stake to a foreign predator for a pretty premium, Germany's


apparently now has even more reason to hope merger talks with domestic rival

Dresdner Bank

pan out.

According to a report in the German business daily


, Italian insurer

Assicurazioni Generali

, Italian bank

Banca Intesa

and Spanish bank

Banco Santander Central Hispano

( STD), which together hold more than 11% of Commerzbank, are preparing to step in, takeover and carve up Germany's fourth-largest bank should the talks with Dresdner fail.

While the potential complexity of the three-way deal could nix it, the prospect likely holds appeal for the Amsterdam-based


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investment group, which controls 17% of Commerzbank via its


holding vehicle. Rebon has been pushing for a cross-border merger for Commerzbank, in hopes of garnering a fatter price for its stake.

Commerzbank declined to comment on the report, but in Frankfurt its shares climbed 1.03 euros, or 2.8%, to 38.72 ($36.25) on the news.

Although Rebon, Generali, Banca Intesa and Banco Santander subsequently denied they have discussed hacking up Commerzbank, the report highlights the incentive Commerzbank Chairman

Martin Kohlhaussen

has to make a deal with Dresdner work. While a merger with Dresdner might not be ideal, he likely believes such a merger would certainly be preferable to a deal that is not at all on his terms.

Dresdner is Germany's third-largest bank and a merger with Commerzbank would leapfrog it over


to create the country's second-biggest after

Deutsche Bank

. However, Dresdner's recent failed merger attempt with Deutsche means officials from Dresdner and Commerzbank likely want any deal to be watertight before moving ahead, as both would probably find it hard to survive another such debacle.

To prevent things from falling apart at the last minute, the two banks have set up lower-level working groups to hammer out details, according to Handelsblatt. Such caution increases the chances that Kohlhaussen and his counterpart at Dresdner,

Bernd Fahrholz

, will be able to cobble together a deal, but they will have to ignore outside calls for action.

"Obviously, after the Deutsche-Dresdner thing, they don't want to be pressured into anything and will want to dot the I's and cross the T's before they go public with something," says Kiri Vijayarajah, an analyst with

Schroder Salomon Smith Barney

in London.

However, another hurdle will have to be cleared should Commerzbank and Dresdner decide to eventually merge. Although Italy's Generali may not yet be planning to pick up the pieces of a failed merger, Commerzbank will have to try and placate the insurer with a guarantee that its products will continue to be offered after any deal with Dresdner. That's because 21.5% of Dresdner is owned by Gernerali's archrival


. Whether the German insurance giant would sign off on any deal is also unknown at the moment, as the company is staying particularly quiet about its intentions.

Rebon could also try to play the spoiler if it doesn't feel it will see the premium it desires from a merger with Dresdner. Officials from the group have threatened to increase its Commerzbank stake to 25% in order to block any deal it found unacceptable. "They managed to get 17%, so they most likely would have little trouble obtaining another eight," said one London-based investor who declined to be named.

Amid all the uncertainty, management at Commerzbank has also reportedly begun offering bonus packages to its investment banking staff to keep them from defecting to other institutions prior to and after any deal with Dresdner. Perhaps the prospect of increased business trips to Italy and Spain might convince employees to stick around.