Commerzbank is racing to reach agreement on a deal to buy Dresdner Bank by the end of this week as it prepares to ask its supervisory board to sign off the plans, sources close to the matter have told Reuters.

The deal, if it goes ahead, would fuse Germany's second- and third-biggest banks, creating a group to rival the country's flagship Deutsche Bank.

It would also let Allianz escape its unhappy marriage with Dresdner - a deal struck seven years ago that brought together investment bankers and insurance salesmen but which angered investors as losses spiraled.