BNP PARIBAS "I think it's very good news," said Fabrice Theveneau, head of global equities at Lyxor Asset Management, which is the 13th biggest shareholder in Commerzbank.
"While there was a rationale for Deutsche Bank, we didn't see the rationale for Commerzbank because there would have been a small premium and significant execution risk, all for limited upside," Theveneau told Reuters.
He said he is holding onto his Commerzbank shares partly because he expects the bank to pursue an alternative deal with another European lender.
The most likely suitors are Italy's UniCredit as it has a large presence in Germany through HypoVereinsbank, and BNP Paribas due to the French bank's strong investment banking position which could generate synergies, Theveneau said.
Dutch bank ING, which sources say has also expressed interest in Commerzbank, is a less obvious candidate, he said, citing its less complementary geographical footprint.
"We didn't think Deutsche Bank was the right partner for Commerzbank," he said.
Theveneau added that the pace of mergers across the European banking sector should accelerate in order to improve lenders' low profitability.
"Banking is very late [on M&A]," he said. "It is high time for it to change."
Lyxor Asset Management owns 6.71 million shares, or 0.54 percent, in Commerzbank worth 50.8 million euro (£43.9 million) at current prices, according to Refinitiv Eikon data.
(Reporting by Helen Reid; editing by Josephine Mason and Alexandra Hudson)
