CHINA Development Bank is competing with Commerzbank AG to buy Allianz SE's Dresdner Bank, Germany's third-largest lender by assets, three people familiar with the matter said.

CDB, which funds the nation's public works projects, has conducted due diligence on Dresdner Bank in Frankfurt, said the people, who can't be identified because they aren't permitted to publicly discuss the matter.

Dresdner Bank may fetch as much as 9 billion euros (US$14 billion), according to Merck Finck & Co, making it the biggest-ever overseas acquisition by a Chinese company. Spain's Banco Santander SA is also interested in Dresdner, for which Allianz paid 23.3 billion euros in 2001, the people said.

"There is potential for a political backlash" if Dresdner is sold to a buyer outside of western Europe, said Tony Silverman, an analyst at Standard & Poor's Equity Research in London. "The price would have to make up for the absence of strategic upside for Allianz in other deals."

Chinese firms and funds spent US$19.3 billion buying stakes in Blackstone Group LP, Morgan Stanley, Barclays Plc, Fortis and Johannesburg-based Standard Bank Group Ltd since May 2007. Those investments are now worth about US$7 billion less on paper, according to data compiled by Bloomberg News.

CDB has a US$1.7 billion paper loss on its year-old investment in UK lender Barclays.

Commerzbank, Germany's second-biggest bank by assets, is the most likely buyer as it's already studied the company's books and held talks with management, the people said.