The paper said on Tuesday that Commerzbank's retail banking business in particular, which has more than 11 million customers, could be of interest to Santander.
Santander and Commerzbank declined to comment on the report.
(Read More: Germany talked to UBS about major bank sale: Report)
Commerzbank is 17 percent-owned by the German government following a 2009 bailout when financial turmoil in the wake of the collapse of Lehman Brothers drove a number of major European banks to the brink of collapse.
Over the weekend, a German magazine reported that Finance Minister Wolfgang Schaeuble had approached the chairman of UBS about the possibility of the Swiss bank buying the government's remaining stake in Commerzbank.
(Read More: European Banks Set to Cash in on Subprime Sales )
Santander already has investments in Germany, having bought SEB's retail business and General Electric's GE Money Bank in recent years. It was also once interested in buying Deutsche Postbank, now owned by Deutsche Bank.
However, billions of euros of risks in Commerzbank's books related to shipping and real estate loans are expected to make the bank a tough sell to any potential buyers, including Santander.
(Read More: Bankers beware! This chart says it all)
Follow us on Twitter: @CNBCWorld