Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives, as markets watch whether it will take the leap with a buyout of the German lender.

This marks an increase from a 21% holding previously.

Italy’s second-largest bank said its ownership now consists of a 9.5% direct stake and around 18.5% through derivative instruments.

UniCredit has applied to the European Central Bank for permission to acquire a stake of up to 29.9% in the German bank, as CEO Andrea Orcel simultaneously pursues a bid for Italian peer Banco BPM.

“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystalized,” UniCredit said in a press release Wednesday. “It reflects the belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany’s economic development.”

The lender stressed its position remains “solely an investment” at this time and does not impact its offer on Banco BPM.

Commerzbank said it has “taken note of the announcement” but declined to comment beyond pointing to its strategy, which is currently being upgraded and will be disclosed on Feb. 13.

This breaking news story is being updated.

— CNBC’s Greg Kennedy contributed to this report.