In what would be the third mega-deal for Germany's normally calm banking sector in two months, Deutsche Bank has confirmed it is in "advanced discussions" on buying a stake in Postbank.
Deutsche's possible multi-billion euro (dollar) purchase, which may be agreed as soon as Friday when the board of Postbank's parent Deutsche Post meets, would represent a big push to grow its high street banking business.
As a unit of the former postal monopoly in Europe's biggest economy, Postbank has Germany's biggest retail banking network with a branch in every post office and some 13.5 million customers.
Deutsche Bank is set to be leapfrogged as Germany's biggest bank in terms of branches and customers by Commerzbank's announcement on August 31 that it has agreed to buy the rival Dresdner Bank for 9.8 billion euros (13.7 billion dollars).
It remains the country's biggest lender measured by assets and market value, however, and its investment banking arm makes it the only German bank with a major presence on Wall Street and London's Square Mile financial district.
After years of inertia, a deal between Deutsche and Postbank would be the latest in a recent flurry of consolidation in Germany's retail banking sector.
Before the Commerzbank/Dresdner merger, it was France's Credit Mutuel that made waves in July when it announced it was buying Citibank's German network for 4.9 billion euros to get its hands on 3.3 million clients.
Deutsche Post has been looking for a buyer of its 50-percent-plus-one-share stake in Postbank and with Commerzbank having Dresdner to integrate, Deutsche Bank was already widely seen as the most likely buyer.
If Deutsche Bank agrees to buy more than a 30-percent stake in Postbank it would be obliged under German law to make an offer to buy the remaining shares listed on the stock market.
Based on Postbank's current share price that would mean Deutsche Bank would have to fork out up to eight billion euros, meaning it might have to raise fresh capital to fund the acquisition.
But press reports have indicated that Deutsche Bank intends to avoid having to make a full offer by buying less than 30 percent. The General-Anzeiger daily reported Thursday that the bank was eyeing a stake of 29.75 percent.