BERLIN, Sept 16 (Reuters) - A merger of UniCredit

and Commerzbank could add value for all

stakeholders and create a stronger bank, UniCredit CEO Andrea

Orcel told a German newspaper on Monday, adding a decision was

in the hands of Commerzbank stakeholders.

Italy's second-largest bank took a 9% stake in Commerzbank

last week, catching German authorities off guard and getting a

hostile reception from local management, who want to fend it

off.

The Italian banking chief said a merger with the smaller

Commerzbank could "create a much stronger competitor on the

German banking market", better supporting retail customers and

German medium-sized companies, known as the Mittelstand, that

play an important role in the economy.

"For the moment, we are only a shareholder. But a merger of

the two banks could lead to considerable added value for all

stakeholders," he told the Handelsblatt newspaper.

"There are very few overlaps" between the banks, he said.

Now he has laid out the case, Orcel said it was up to

Commerzbank to decide.

"The decision lies with Commerzbank's stakeholders," he

said.

Commerzbank declined to comment.

Asked when UniCredit would hold further talks with

Commerzbank, Orcel told Handelsblatt that there was no firm

timeline.

If "we come to the conclusion that a merger is best for both

of us, that would be great, but ... as a major shareholder I

must first ensure that our investment develops well," he said.

In an apparent effort to reassure Commerzbank employees

worried about their jobs, Orcel said the potential for savings

was in central functions, and not in areas of customer business,

products, or the geographical network.

"I believe that many banks have neglected to make their

central functions more efficient," he said.

(Writing by Friederike Heine and Tom Sims

Editing by Shri Navaratnam, Kim Coghill and Barbara Lewis)