MILAN (Reuters) - UniCredit's investment in German rival Commerzbank laid the basis for the Italian bank to engage in talks to explore a tie-up, Chief Executive Andrea Orcel said on Thursday.

Speaking to Bloomberg television a day after UniCredit unveiled a 9% stake in Commerzbank, Orcel said the investment had value regardless of whether it led to a merger, but added a combination could create further value and that Europe needed larger banks.

"It is very simple to engage with all the stakeholders and see if the basis for a combination is there," he said.

"We think there is space in Germany, given the fragmentation of the market, to add further value by consolidating," he added.

UniCredit has been present in Germany since 2005 when it bought Bavarian lender HVB.

The Milanese lender had looked at Commerzbank even before the HVB acquisition. Over the years it has repeatedly explored a combination given the cost savings it could reap thanks to its German footprint.

Orcel said UniCredit had started buying Commerzbank shares on the market over the summer as rumours intensified that the German government may sell down its 16% stake.

"When the government actually decided to do it, and we were part of the investors they called to buy their stake, we made an offer, the offer was accepted in full and we moved from 4.5% to 9% in one go," he said.