UPDATE 1-Deutsche Bank sole German bid for Citi unit-sources

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By Philipp Halstrick and Patricia Nann

FRANKFURT, July 4 (Reuters) - Deutsche Bank (DBKGn.DE: Quote, Profile, Research) is the sole remaining German bidder for Citigroup's (C.N: Quote, Profile, Research) German retail operations after Commerzbank (CBKG.DE: Quote, Profile, Research) dropped out of the running, several sources with direct knowledge of the sales process told Reuters on Friday.

Commerzbank has chosen not to bid as the deadline for binding offers passes, which one source said was because Germany's No. 2 lender was concentrating on due diligence with Dresdner Bank (ALVG.DE: Quote, Profile, Research).

In contrast, Deutsche Bank made a firm offer and is also highly interested in Citigroup operations elsewhere in Europe that may be for sale, other sources familiar with the situation said.

Foreign banks have also been eyeing Citibank, whose retail business focuses on consumer lending. France's Credit Mutuel and Spain's Santander (SAN.MC: Quote, Profile, Research) are still involved in the race, the sources said.

Citibank, as the German retail operations are known, has about 3.3 million customers and is expected to fetch about 4-5 billion euros ($6.3-$7.9 billion), banking experts estimate.

"The sales process is heating up," said one source familiar with the sale, adding that concrete talks with bidders would start shortly, with a decision expected by the end of July.

Deutsche, Commerzbank and Citibank all declined to comment.