FRANKFURT Deutsche Bank (DBKGn.DE) said on Wednesday it was in advanced talks to take a stake in rival Deutsche Postbank DPBGn.DE.
Should Deutsche seize one of the final chances to boost its retail clout in Germany, it would be the second big bank deal in Europe's biggest economy this month after Commerzbank CBRq.F agreed to buy Dresdner Bank.
Deutsche Bank Chief Executive Josef Ackerman signaled earlier on in the day that he would buy into Postbank if the price was right.
Ackermann labeled Postbank -- with almost 15 million customers and a market value of more than $10 billion -- a good fit for Germany's biggest lender.
Sources with direct knowledge of the matter later told Reuters a deal had already been broadly agreed.
Deutsche then confirmed it was in advanced talks with Postbank's owner, Deutsche Post (DPWGn.DE).
Post has called a meeting of its supervisory board for Friday to decide on selling part of its 50 percent plus one share holding, the sources said.
If Deutsche Bank keeps its stake below 30 percent, it would not have to bid for the rest of Postbank's shares but would be in pole position to win control of the group later.
The Bonner-Generalanzeiger newspaper reported that Deutsche Bank plans to buy just under 30 percent of Postbank with a right of first refusal to buy the remaining Post-owned shares.
Post declined to comment.
Investor enthusiasm about a deal had sent Postbank's stock climbing as much as 5 percent on Wednesday. Deutsche Post nudged up about 1 percent while Deutsche Bank fell.
"It is great for Postbank and for Post too that they will finally be able to get rid of the bank either entirely or in parts," said one stock trader.
DEUTSCHE STRIKES BACK
Last week, Commerzbank unveiled a $14.5 billion takeover of Dresdner Bank, beefing up Germany's second-biggest lender and throwing down the gauntlet to Deutsche Bank.
Ackermann had been considering how he could strike back. His investment bank, which built its name on Wall Street and London, has long wanted to bolster its retail business.
There are, however, hardly any banks for sale in Germany, where most of the market is in the hands of state-backed lenders.
Postbank is one of the few remaining prizes after Deutsche was outbid by a French bank in July for Citigroup's (C.N) small-loans business in Germany.
Deutsche Bank has been stretched as its bill from the financial crisis swelled beyond $11 billion, putting it among the top 10 global casualties of the turmoil.
Ackermann said on Wednesday that he did not need to ask shareholders for a cash injection.
(Additional reporting by Matthias Inverardi, Philipp Halstrick and Patricia Uhlig)
(Writing by John O'Donnell and Jonathan Gould; Editing by Paul Bolding, Quentin Bryar and Ted Kerr)