Commerzbank on Tuesday reiterated it was reviewing options to strengthen its capital on a standalone basis and has no plans to ask for public funds, even as analysts said another bailout was increasingly inevitable.

We stand by our intention not to make use of additional public funds, the bank reiterated, adding it would seek to bolster its capital cushion by shedding risky assets and other measures.

German lender Commerzbank and the government have been in talks for several days over possible state aid, five people familiar with the matter told Reuters on Monday.

Commerzbank, which has a market value of 6 billion euros (5 billion pounds) has been forced by the European Banking Authority to find an extra 5.3 billion euros in capital by mid-2012.

The likelihood that Commerzbank needs additional state aid after all to make up for the capital shortfall has risen, Ingo Frommen, analyst at LBBW, said in a note on Tuesday.

The current market environment makes it close to impossible for the bank to pull off another capital increase, Frommen said. In June Commerzbank raised 5.3 billion euros from shareholders.

Commerzbank shares dipped 4 percent in early trading and were down 1.8 percent at 1.20 euros at 1218 GMT, trading near an all time low.

The bank reiterated it plans to shed around 30 billion euros worth of risk weighted assets, a move that will free up around 2.7 billion euros in capital.

Commerzbank received two bailouts worth a total 18.2 billion euros in the aftermath of the collapse of Lehman Brothers, and had repaid around 14.3 billion by August 2011.

Since then writedowns on Greek sovereign debt and tougher capital rules have eroded its capital position.

The bank wants to avoid a direct capital injection and would rather bolster its balance sheet by shedding liabilities, people close to Commerzbank told Reuters on Monday.

One option is transferring parts or the whole of its problematic Eurohypo unit to a bad bank within Germany's bank rescue fund SoFFin, these people said.

By unloading the risky assets from its loss-making real estate finance unit to the government rescue fund, Commerzbank could free up 5 billion euros.

Spinning off Eurohypo would be positive. It would get rid of a problem, Equinet analyst Philipp Haessler said on Tuesday.

Germany is already preparing legal work to reinstate the SoFFin bank rescue fund.

German ruling coalition sources said the question of whether Commerzbank could be forcibly recapitalised remained open.

Commerzbank's core tier one capital ratio was 9.4 percent at the end of the third quarter, although its definition differs from that of the EBA, which has demanded banks meet a core tier one ratio of 9 percent by mid-2012 in a bid to shock-proof them against a worsening of the financial crisis.

(Reporting by Edward Taylor; Additional reporting by Hakan Ersen and Tom Koerkemeier)