FRANKFURT (Reuters) - Commerzbank said on Thursday it would cut 3,900 jobs and unveiled more ambitious financial targets as part of a strategy revamp designed to head off UniCredit's advances for a tie-up between the German and Italian lenders.

The job cuts, mainly in Germany and expected to take place by 2028, will be accompanied by hiring outside the country, meaning the bank's full-time positions will remain steady at 36,700, the bank said.

For months, Commerzbank's management, under the leadership of CEO Bettina Orlopp, has been working on the strategy update that she has said would reveal the "significant value potential" of the bank.

The battle for Commerzbank, pitting one of Italy's biggest banks against the German establishment, has become a test case of the country's ability to fend off foreign suitors and prevent its financial centre from losing one of its few remaining big commercial banks.

Commerzbank is hoping that its raft of announcements on Thursday will convince its investors that it can thrive as an independent company.

Commerzbank, which is partly state-owned and has labelled UniCredit's moves as hostile, said it would incur 700 million euros ($730 million) in restructuring charges in 2025.

It also said it would raise some of its 2027 targets.

It now targets net profit of 3.8 billion euros in 2027, up from a previous goal of 3.6 billion euros. In addition, it now aims for a cost-to-income ratio of 53% in 2027, up from a previous goal of 54%.

Commerzbank's strategy update follows a better-than-expected 20% increase in full-year net profit, a result the bank believes illustrates the success of its turnaround in recent years.

"This provides us with a strong basis for the years to come," Orlopp said.

($1 = 0.9584 euros)

(Reporting by Tom Sims and Patricia Weiss; Editing by Rachel More, Ludwig Burger and Subhranshu Sahu)