BERLIN (Reuters) -German government officials and UniCredit bankers have held talks after the Italian lender’s purchase of a 9% stake in Commerzbank (ETR:), a German government source said on Friday.

The talks, reported exclusively by Reuters, mark a significant development in the potential acquisition of one of Germany’s largest banks by a foreign institution.

Italy’s second-largest bank swooped to take a 9% stake in Commerzbank earlier this week, catching German authorities off guard and getting a hostile reception from local management, who want to fend it off.

The German government source said it was up to the banks to decide what they wanted and that the German government was not in principle against a tie-up, but acknowledged Commerzbank’s opposition.

“We must take Commerzbank’s wishes into consideration. There is obviously a strong rejection by the workforce,” the person said.

UniCredit and Commerzbank declined to comment.

UniCredit CEO Andrea Orcel has said that he would “engage with all the stakeholders and see if the basis for a combination is there”, flagging his interest in buying more of the government stake in the German bank should it be up for sale.

Orcel picked up a stake in the market before stepping in to buy Commerzbank shares the German government was selling via an overnight placing. This annoyed some officials in Berlin and was unwelcome at Commerzbank’s Frankfurt headquarters, sources have told Reuters.

Trade unionists too, fearing heavy job losses, also oppose a tie-up. Frank Werneke, chairman of the German Verdi labour union, has called on the government to stop selling any Commerzbank shares to prevent a takeover of the bank.

Berlin still owns a 12% stake in the lender.

Commerzbank, bailed out via a state rescue after the 2008 financial crash, is one of Germany’s few major privately-owned banks and a big lender to the country’s so-called Mittelstand of medium-sized companies that are the backbone of the Germany economy.