FRANKFURT, Sept 19 (Reuters) - UniCredit, Italy's

second-largest bank, has taken a 9% stake in Germany's

Commerzbank and is seeking permission to potentially raise this

to 29.9%, sources told Reuters, while saying it would be open to

a full takeover bid.

For UniCredit to raise its Commerzbank

stake above 10% will, however, need approval from the European

Central Bank, the supervisor of the euro zone's biggest banks.

Here is a summary of the ECB's role in the process.

WHEN DOES ECB STEP IN?

ECB approval is required if a shareholder wants to acquire

10% or more in a supervised lender. There are additional

thresholds at 20%, 30% and 50%. A buyer, however, can apply to

acquire any stake, so it can skip interim reviews if it is

cleared already for a larger stake.

WHAT DOES THE ECB EXAMINE?

UniCredit will have to tell the ECB its ultimate aim and

supervisors will evaluate its proposal in light of this.

It examines factors such as the buyer's reputation, the

quality of board members it would appoint, the buyer's financial

health and the ability of the target to comply with supervisory

requirements.

The criteria give some leeway, but essentially the ECB would

have to decide if UniCredit could afford to buy Commerzbank and

remain financially sound, and if it would form a stronger group.

UniCredit is a capital-rich bank with plenty of cash and

solid profitability. It has a common equity tier 1 (CET1)

capital ratio of 16.2%, well above its target of 12.5%-13.0%

despite a generous dividend and share buy-back programme.

WOULD THE ECB SUPPORT A MERGER?

It is hard to say without knowing UniCredit's specific

objectives. But there are clues suggesting that if structured in

the right way, the ECB could support it.

The ECB has repeatedly said that cross border mergers are

desirable given inefficiency and high costs in the euro zone

bank sector. Euro zone banks are also falling behind their far

larger U.S. peers.

"Cross-border mergers have been hoped for by many

authorities, and it will be very interesting to see that process

unfold in the weeks to come," ECB President Christine Lagarde

said last week.

Bundesbank chief Joachim Nagel has so far been rather

neutral, but has outlined requirements for support.

"We need strong and robust banks so that companies can

tackle and finance their future tasks," Nagel said this week.

"In case of possible mergers, it is important that a

competitive institution is created which fulfils this task as

best as possible."

WHAT DO PREVIOUS MERGERS TELL US?

In the biggest bank deal so far this year, the ECB approved

a 12 billion euro ($13.4 billion) bid by BBVA to buy smaller

Spanish rival Sabadell, only to see the deal blocked

by Spain's government.

Winning over the ECB may not be the biggest hurdle that

UniCredit would face, a takeover of Commerzbank would have deep

political implications as it would see Germany, Europe's largest

economy, cede control of its second-largest bank.

HOW LONG IS THE PROCESS?

The ECB has 60 days to approve a request and this could be

extended by 30 days. The process usually takes the bulk of this

time, so no quick decision is likely.

WHO MAKES THE DECISION?

The ECB supervisory board, with representatives from all

euro zone members, must sign off on any deal and the

rate-setting Governing Council would also get to look in a

non-objection procedure.