Commerzbank's tie-up with Italian lender UniCredit would be "extremely difficult," causing it to lose customers and harm its credit score, the new boss of the German bank warned on Monday.
Italy's second-biggest bank surprised markets last month by building up a stake of about 21% in its German rival, fuelling speculation that it could be gearing up to launch a takeover bid.
The approach has sparked anger in Germany, with unions fearful it could lead to job losses and politicians – led by Chancellor Olaf Scholz – speaking out against a merger.
Commerzbank bank has vowed to fight any takeover, and Bettina Orlopp – who became CEO last week – told financial daily the Handelsblatt that the "integration of two large banks is extremely difficult."
In her first media interview since taking up the post, she noted that after taking over a bank in 2008, Commerzbank was occupied for several years to merge the lenders' systems.
"We cannot afford such a standstill in today's world, which is characterized by so many technological upheavals and very intense competition," she said in the interview published Monday.
Orlopp, who is the German bank's first female CEO, also raised concerns about the impact on the creditworthiness of Commerzbank, whose rating with agency S&P is currently several notches above UniCredit's.
"Our rating would deteriorate, probably significantly," she said.
"We would lose customers who have certain rating requirements and only do business with banks with very good credit ratings."
Despite the opposition in Germany to a tie-up, some European policymakers – including European Central Bank (ECB) chief Christine Lagarde – have spoken out in favor of cross-border mergers.
Creating bigger European banks will help integrate eurozone financial markets and build up institutions that can better compete with large American and Chinese rivals, they argue.
But Orlopp said that a tie-up between the Italian and German lenders would "not advance" capital markets or banking union in the eurozone.
"At its core, it would be a consolidation within Germany. This will not make Europe more European," she said.
"Instead, we would first need harmonized rules in many areas, such as insolvency or consumer law."
Commerzbank's shares were up around 1.5% in Frankfurt at around 0900 GMT, while the whole blue-chip DAX index was down 0.3%.
UniCredit bought 4.5% of its Commerzbank stake from the German government itself, which Berlin had built up during the global financial crisis. Berlin still has a stake of around 12%.