Italian bank UniCredit said Monday  it had formally increased its stake in Germany's Commerzbank, bringing it closer to a possible takeover that has provoked uproar in Germany.

UniCredit has since last year been building up a holding in its German rival, seeking a merger to create a pan-European banking giant, despite fierce opposition from Berlin. 

In a statement, UniCredit said it had increased its direct stake in Commerzbank to 26 percent by converting derivatives into shares. 

That is up from a previous level of 20 percent in July. 

The lender said it intended to convert a further tranche of derivatives to Commerzbank stock in due course, which would take its direct stake to 29 percent.

Under German law, shareholders must make a bid for the entire company if their stake exceeds 30 percent

UniCredit's initial holdings in Commerzbank were in large part indirect, and converting them into physical shares increases the pressure on Commerzbank.

Commerzbank has strongly resisted UniCredit's advances and insists it will remain independent. 

Following news of UniCredit's increased direct stake, the German lender said it "does not change the fundamental situation and our stance".

It has sought to cut costs to make itself more attractive to shareholders, with 3,900 jobs to be axed by 2028.

The German government, which has backed Commerzbank's efforts to fend off UniCredit, reiterated its opposition to a takeover Monday.

"The government supports a strategy of independence for Commerzbank and has made this very clear to UniCredit several times," a finance ministry spokeswoman said at a regular press briefing.

"It rejects UniCredit's unilateral and hostile approach."

In May, Chancellor Friedrich Merz told Commerzbank's employees in a letter that UniCredit's moves were "unacceptable".

Berlin still holds a 12.1-percent stake in Commerzbank, the legacy of a 2008 bailout during the global financial crisis.