Commerzbank is trying to reach an agreement to buy Dresdner Bank by the end of this week, and is preparing to ask its supervisory board to sign off on the plans, people with direct knowledge of the deal said Monday.

The deal, if it goes ahead, would merge Germany’s second-largest and third-largest banks, creating a company to rival the country’s biggest, 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 sellers but angered investors as losses accumulated.

Commerzbank has been in talks about buying Dresdner since June, but there had been few public signs of life in the negotiations in recent weeks. Now, however, Commerzbank is planning to call a special meeting of its supervisory board in a sign that negotiations between the two have reached a critical stage.

The 21-member supervisory board is Commerzbank’s governing body and its approval is required for large deals like a merger with Dresdner. One personwith direct knowledge of the situation, who spoke on condition of anonymity, because of the sensitivity of the matter, said Commerzbank was already preparing to announce the takeover.

Agreeing to a deal by the end of the month means Commerzbank can avoid the complication of buying two banks instead of one. Allianz will formally separate Dresdner’s embattled investment bank from its retail branch business Monday.

Allianz, once seen as an unshakable financial powerhouse, has been suffering because of the Dresdner arrangement. The architects of the Dresdner takeover in 2001 had hoped to sell bank accounts to Allianz customers as well as products like car insurance over the counter at bank branches.

Instead,Dresdner racked up losses of almost ¤3 billion, or $4.4 billion, after the merger as the cross-selling floundered. By June 2007, Allianz had begun to weigh its options for Dresdner. A jump in the insurer’s share price that followed that report showed the degree of frustration about Dresdner.

On Monday, Allianz shares were up about 1 percent in early trading. Commerzbank shares were off 2 percent. Finding a buyer has not been easy, mostly because of Dresdner’s struggling investment bank. Its difficulties during the markets crisis threatened to derail the talks. A takeover would give Commerzbank a badly needed leg up in Germany.

Despite being one of the country’s biggest lenders, it is still a lightweight on the international stage, with a market value of about ¤13 billion, less than half that of Deutsche Bank, its Frankfurt neighbor.

Analysts estimate Dresdner’s retail business to be worth about ¤8 billion.