UPDATE 1-Deutsche Bank, Commerzbank favour takeover rather than holding company structure -sources

Deutsche Bank and Commerzbank, in talks to merge, currently favour a straightforward takeover over more complex ways to structure a deal, three people close to the matter said.

In their base case scenario, a transaction would be organised as a share offer from Deutsche Bank for Commerzbank, they said. That structure is preferred over the creation of a new holding company, which is viewed as too difficult to execute. "The holding structure is dead," one of the people said, referring to setting up a holding company that would buy Deutsche and Commerzbank in return for shares of the new bank.

Sources said last year that Deutsche Bank was examining creating a holding company structure amid speculation at the time that it could merge with Commerzbank. Last month the two banks confirmed they were in talks about a merger.

The people cautioned that no decision has yet been taken on a potential deal structure and there is still no certainty that a deal will be struck at all. Deutsche Bank and Commerzbank declined to comment. (Reporting by Arno Schuetze; additional reporting by Kathrin Jones and Tom Sims; Editing by Riham Alkousaa and Susan Fenton)