Deutsche Bank AG and Commerzbank AG have mandated U.S. lenders to advise them on their potential merger, which could create an entity with an equity market value of more than €25.6 billion, unnamed sources told Reuters.

Deutsche Bank, which is also using its in-house team, is working with Citigroup and law firm Freshfields, while Commerzbank has tapped Goldman Sachs and Rothschild and law firm Hengeler Mueller, the March 18 report said. New York-based firm Centerview Partners is also advising Deutsche Bank, the Financial Times reported.

The two German lenders recently confirmed that they are in discussions over a possible combination amid pressure from investors and from the German government over their lackluster performance. Deutsche Bank CEO Christian Sewing, however, said there was no certainty that the talks would lead to a deal.

Should a straight takeover occur, Deutsche Bank would have to offer a premium on Commerzbank's stocks, Reuters noted. This would entail a €5 billion capital increase or a sale of DWS Group GmbH & Co. KGaA, unnamed investment bankers told the newswire. A deal could also create a new holding company that could take on both lenders, or Commerzbank could merge with Deutsche Bank's private and commercial banking business, the report added.

The potential tie-up, however, has been met with criticism as it would entail a large number of job cuts. Germany's second-largest trade union, Verdi, has estimated the potential job cuts at about 10,000 in the short term and 30,000 in the long term.