UniCredit will only move forward with a deal with Commerzbank if it gains support from all stakeholders and the conditions are favorable, CEO Andrea Orcel stated on Wednesday, adding that the Italian lender could alternatively opt to sell its stake.

UniCredit angered the German government this week by raising its holding in Commerzbank close to 21%, conditional on European Central Bank (ECB) approval, using derivative instruments. Chancellor Olaf Scholz slammed the move as "an unfriendly attack."

"Commerzbank, for us at the moment, is an investment, nothing else. There is no offer, there is no bid," Orcel told a Bank of America investor conference in London.

"We're indeed a large shareholder, a strategic shareholder now, but it is an investment ... and people should comment and think about that as an investment and nothing else," he said when asked about Scholz's response.

In the latest ratcheting up of pressure, German Finance Ministry State Secretary Florian Toncar on Wednesday criticized UniCredit's surprise swoop as "aggressive" and "unwise."

Toncar cautioned of the risk posed by a hostile takeover and reiterated the government's determination to fend it off.

"It is not wise to proceed too aggressively with a large, highly regulated, complex bank," he said after a closed-door meeting with lawmakers explaining the government's role.

"You always need the stakeholders in the end," he told journalists as the German government faced growing criticism over its handling of a partial sale of the state's stake in the lender that triggered the Italian bank's move.

"The approach chosen, with its strong focus on surprise, concerns many stakeholders who are important for Commerzbank," Toncar added.

While a tie-up would be the best outcome, Orcel said, UniCredit has room for maneuver because the financial derivatives contracts it has employed limit any losses.

"We are in an investment and we're floored. We don't need to do something together. We think it will add a lot of value. We think it will be best for both banks," he said.

"But do we need to do that? Are we going to be dragged to do that at terms that don't make sense? Absolutely not," he added.

Commerzbank's shares have risen sharply since Orcel's move to build a stake in the bank as investors bet on a full takeover bid by the Italian group.

UniCredit this month emerged as Commerzbank's biggest investor after the German state, when it outbid rivals to secure a 4.5% holding from the government, having built a similar-sized stake on the market.

After Germany said last week it would pause selling any more of its residual 12% Commerzbank stake, UniCredit this week unveiled having secured an 11.5% holding, pending ECB approval.

Orcel said UniCredit's Commerzbank move should not come as a surprise because it was a strategic fit, and the investment could generate a return of more than 15%, the threshold that UniCredit had long set to consider any investments.

Commerzbank, with more than 25,000 business customers, almost a third of German foreign trade payments and more than 42,000 staff, is a linchpin of the German economy, Europe's industrial motor.

Kay Gottschalk, a lawmaker from the ultra-conservative Alternative for Germany (AfD) party who attended the meeting with Toncar, said the government had been naive and mishandled the stake sale.

"The government bears full responsibility. To cause such a disaster for the sake of just 700 million euros ($783 million) has to carry consequences," he told Reuters.

UniCredit was "very keen" to resume conversations with Commerzbank's stakeholders it had held before being invited to bid at the state tender, Orcel said, an invitation which UniCredit had assumed was a consequence of those conversations.

But UniCredit is also aware any deal requires broad support.

"Do not underestimate how disciplined we are. It doesn't meet our metrics? We won't do it," Orcel said.

The turnaround UniCredit has achieved at its German unit HVB since Orcel arrived in 2021 provides "a blueprint" to push through similar changes at Commerzbank and improve returns even before any merger of the two businesses, he said.

Veteran dealmaker Orcel has walked away from negotiations with the Italian government to buy Monte dei Paschi and dropped a takeover offer for rival Banco BPM at the eleventh hour.