The German state is planning to lower its stake in Commerzbank, a lender it rescued during the global financial crisis.
It currently holds a 16.5% stake worth around €2.5 billion.
Details of the sale are not yet public, although it's believed there are currently no plans to sell the entire stake.
"The Federal government's investment in the Commerzbank in 2008 and 2009 was important in order to protect financial market stability in the midst of the banking crisis," said the country’s finance agency on Tuesday evening.
"Commerzbank is a stable and profitable institution again. Consequently, the Federal government will sell its shares in the successfully stabilised institute step by step."
In the wake of the 2008 crisis, Commerzbank received a capital injection of €18.2 billion from the state - of which around €13.15 billion has been repaid.
Commerzbank has since reduced its workforce and restructured its operations to get back on its feet.
In 2023, the bank recorded its highest profits in 15 years, and the firm’s share price is up around 20% this year.
Related- Is part-time work fuelling Germany’s economic woes?
- Deutsche Bank settles 60% of claims in long-running legal dispute
Since 2022, Commerzbank has been reaping the benefits of high interest rates - although these benefits are nonetheless set to recede with another ECB rate cut on the horizon.
Some experts are also concerned about the effect of Germany’s economic turmoil on the bank's financial health.
If the risk of corporate defaults is higher, this means lenders must set aside more money to cover bad debts.
The German government has on numerous occasions expressed a desire to sell its stake in Commerzbank.
Reuters reported in January this year that Finance Minister Christian Lindner was open to the sale, which would provide some much-needed relief to the state coffers.
Several other European governments have sold stakes in banks they bought during the financial crisis.
In May this year, Ireland's AIB bought back state shares sold as part of a bailout strategy.
Commerzbank shares were down 2,41% at around 11am CET on Wednesday morning.