FRANKFURT, Germany, Sept 30, 2024 (BSS/AFP) - UniCredit's interest in Commerzbank has raised hackles in Germany but a leading economist who chairs a panel advising Chancellor Olaf Scholz's government said Monday the arguments against a potential tie-up were "unconvincing".

"In principle, there is no objection to a German bank being acquired by a foreign bank," Monika Schnitzer told AFP by email.

Italy's UniCredit has taken Germany by surprise by building a position in Commerzbank equivalent to about 21 percent since the start of September, fuelling speculation of a potential takeover.

German unions and politicians have voiced fears that an acquisition of the country's second-largest lender could lead to job losses and curtail lending to Germany's small- and medium-sized businesses.

Scholz himself has warned UniCredit against "unfriendly" acts.

But Schnitzer, who heads Germany's council of economic experts, downplayed the concerns.

"The objections raised by some regarding job losses and reduced financing for German SMEs are unconvincing," she said.

"An increase in productivity is necessary to become more competitive internationally. And a foreign bank would also want to do business, which includes granting loans," Schnitzer said.

Responding to concerns that UniCredit could become too large and pose a systemic risk, Schnitzer said: "It's not the German government's task to prevent this."

It was up to the European Central Bank to assess the systemic risk and the European Commission to examine the impact on competition, she said.

Commerzbank has vowed to fight any takeover attempt and the German government has pledged support for the bank's strategy to remain independent.

The Frankfurt-based lender last week raised its profit forecasts and announced plans to better reward shareholders, hoping to boost its share price and make a takeover more expensive.

The German government for its part still holds a 12-percent stake in Commerzbank, after selling off 4.5 percent earlier this month that was snapped up by UniCredit.

Berlin has since said it would not sell any further shares for the time being.

Proponents of a tie-up between UniCredit and Commerzbank argue that it has the potential to create a European champion in a sector that needs more consolidation to keep up with global rivals.

"The European financial market is not sufficiently integrated and German banks in particular are not competitive enough (internationally)," Schnitzer wrote on X earlier this month.

"Consolidation and increased productivity are necessary," she added.