This follows media reports on Tuesday that Commerzbank had been approached by Dutch bank ING about a possible merger, prior to commencement of talks with Deutsche. Commerzbank shares climbed 3% on Wednesday morning as markets reacted to the news.
Both ING and Commerzbank declined to comment when approached by CNBC.
Patrick Armstrong, CIO of Plurimi Investment Managers told CNBC's "Street Signs" on Wednesday "The only way (a merger) makes sense for those two banks is massive job cuts, and whether the German government wants to force together something that's going to create a lot of job losses."
'I think the government would like to put them together to get rid of some risks, but I don't think they want the job losses that will come with it. So these banks have too many employees. If you look at American banks, if you look at the well-run European banks - much higher revenue per employee than the German banks are generating.'
Announcement of the merger was followed by reports Deutsche was looking to raise up to 10 billion euros ($11.2 billion) in fresh equity to support the merger.
Armstrong, said ING would be a 'great partner' for Commerzbank, but suggested job cuts were the only way Germany's second-largest bank would be attractive as a takeover candidate.
He revealed his big weights in European banks are allocated to ING and BNP Paribas, adding: 'They pay out 50% of their earnings in dividends. We think those dividends are sustainable for these companies - they've got a 12% tier one capital ratio.
'Those are relatively safe banks that are cheap, the German banks are not safe banks that are very cheap, and I prefer the higher quality of the ING and BNP to the German banks.'