COMMERZBANK yesterday moved to create Germany’s second-largest listed bank by buying Eurohypo, the country’s biggest mortgage lender, in a deal worth nearly €5 billion (£3.4 billion).

The takeover gives Commerzbank a strong position in the booming area of lending to governments for public work projects. It will be the biggest bank merger in Germany since Allianz, the German insurance company, paid €24 billion for Dresdner Bank in 2001.

The deal marks another milestone in the consolidation of Germany’s overcrowded bank market. Consolidation is gathering pace in Germany after UniCredito, the Italian bank, bought HVB, based in Bavaria, this year.

Investors and analysts welcomed the deal, which strengthens Commerzbank’s lending for big-ticket building projects such as shopping centres and roads. It also bolsters the bank’s exposure to Germany’s undervalued property market, which many investors believe has growth potential.

Shares in Commerzbank fell on fears that it would have to raise money to pay for the deal — its biggest since it took over the regional lender Schmidt Bank last year.

Analysts also said that the purchase made Commerzbank less of a takeover target, dampening the speculation that has boosted its stock by over a third over the past six months.

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