Speaking at an industry conference in Berlin on Thursday, the German chancellor said the takeover effort was destroying trust.
Merz said Europe needs large banks for complex financing and IPOs, but warned that not every takeover should be welcomed without restriction.
His remarks signal political resistance in Germany to UniCredit's pursuit of Commerzbank, potentially complicating any cross-border banking deal involving the lender.
Why did Germany's government help UniCredit invest in Commerzbank, only to now fiercely oppose its takeover?
Could UniCredit's takeover threaten the financial lifeline for Germany's vital mid-sized companies?
Is UniCredit's €35 billion bid a hostile attack or a necessary step for European banking's future?