FRANKFURT (Reuters) - Markets welcomed the prospect of a merger between Deutsche Bank and Commerzbank on Monday with shares in both lenders trading higher following reports that Germany's largest banks are exploring the feasibility of a merger.
Germany's Welt am Sonntag newspaper was the first to report on the early stage merger talks, and said Berlin politicians expect a decision in the coming weeks.
Deutsche Bank agreed to hold tentative talks with Commerzbank, a person with knowledge of the matter told Reuters on Saturday.
Deutsche and Commerzbank declined to comment on the prospects of a merger.
Deutsche Bank shares were up 1.6 percent higher while Commerzbank shares were 4.3 percent higher at 0820 GMT, outperforming Germany's blue-chip DAX index which was 0.4 percent higher.
Proponents of a merger say that a tie-up would give a combined entity -- which would have an equity market value of more than 24 billion euros (20.78 billion pounds) based on Friday's closing share prices -- a 20 percent share of the German retail banking market.
(Reporting by Edward Taylor; Editing by Keith Weir)