The Italian bank raised its stake to 28%, building on previous efforts to stock up its holding in its German rival and reigniting expectations it could launch a mandatory takeover offer.

MILAN (Reuters) -UniCredit CEO Andrea Orcel said his bank's investment in German rival Commerzbank and its bid for smaller domestic peer Banco BPM will test Europe's commitment towards greater integration,

Investors are watching whether UniCredit will proceed with a takeover venture of Germany’s Commerzbank or Italian peer Banco BPM.

Germany rejected UniCredit's latest Commerzbank stake increase as an "uncoordinated and unfriendly approach" on Wednesday, strongly rebuking the Italian bank. UniCredit, which angered Berlin when it emerged as Commerzbank's biggest private investor in September,

The German government strengthened its criticism of UniCredit SpA’s pursuit of Commerzbank AG and called on the Italian bank to reduce its stake hours after it announced the further use of derivatives to increase its control.

The Italian bank said it acquired additional financial instruments tied to Commerzbank shares after it was authorized to raised its shareholding to up to 29.9%.

Italy's UniCredit said on Wednesday it had raised its stake in Commerzbank to 28%, ratcheting up the pressure on the German lender while at the same time it pursues a bid for smaller domestic rival Banco BPM.