Merger talks between Germany's top two lenders, Deutsche Bank and Commerzbank, are expected to end in failure, a person with knowledge of the matter said on Thursday.
No final decision has been taken, the person added.
The banks declined to comment.
Shares in Commerzbank traded 1.6% lower at 0715, while share in Deutsche Bank were down 0.8%.
Deutsche Bank is expected to provide an update on the status of talks, now in their sixth week, by Friday at the latest, another official said.
The inability to craft a deal will increase pressure on Deutsche Bank to make more radical changes, such as cuts to its U.S. investment bank that regulators and some major investors have been advocating. Deutsche is currently looking at a deal for its asset management unit.
A failure of talks is also likely to make Commerzbank vulnerable to a foreign takeover. Both Unicredit and ING Groep have expressed interest in Germany's No. 2 lender, sources have said.
From the beginning, the talks have met fierce opposition from the banks' workforces, with unions fearing job losses could total 30,000 people.
Some major investors in Deutsche Bank have also questioned the deal's logic.
Both banks are currently in the process of restructuring and ratings agencies have warned of the risks of executing a deal.