Deutsche Bank in a bid to boost its retail banking operations is all set to take a minority stake in Postbank from Deutsche Post, Europe's biggest postal service in a deal that could exceed $9.7 billion. In another transaction, it is acquiring a 40-percent holding in Russian investment management company UFG Invest to bolster its asset management business.

Deutsche Post was known to be looking for a buyer for Postbank and has been seen for several weeks as the most likely buyer.

Deutsche Bank confirmed that it was in advanced talks to take a stake in Postbank. If the deal does go through, then it would be the second largest deal in Europe's biggest economy this month after Commerzbank agreed to buy Dresdner Bank for € 9.8 billion, propelling it ahead of Deutsche Bank in terms of retail customers and branches. (See: Germany's No.2 bank Commerzbank acquires No.3 Dresdner for $14.4 billion) 

Deutsche Bank's interest in a total takeover lost its appeal when share prices of Postbank rose dramatically in the last few days on speculations of a takeover.

With an option to buy the remaining stake at a future date, Deutsche Bank at the moment are looking at acquiring a stake below 30 per cent so as to avoid having to make the obligatory takeover offer by buying the remaining shares listed on the stock market as required under German law.

By buying a low stake now, Deutsche Bank will also avoid having to raise capital to finance the deal and also will be able to shut the door on other rivals trying to buy a stake, such as Spain's Banco Santander who has also shown interest in the takeover of Postbank.

Deutsche Post, will decide on a sale of the Postbank stake at a supervisory board meeting tomorrow. Deutsche Post owns slightly more than 50 per cent of Postbank and the German government owns around a 30 per cent stake in Postbank and therefore could also have a say in any takeover.

Frankfurt-based Deutsche Bank has approximately €2 trillion ($2.8 trillion) in assets with 986 branches in Germany and 932 branches in 72 countries.

Postbank with total assets of €229 has 850 of its own branches plus thousands of Deutsche Post offices at which it sells selected services to its 14 million customers who are able to bank in any of the country's post offices.

In 2006 Postbank took over 850 Deutsche Post branches and acquired the majority of BHW Holding AG.

In another development, Deutsche Bank has announced that it is acquiring a 40-percent holding in Russian investment management company UFG Invest to bolster its asset management business.Deutsche Bank, through its Asset Management division, will acquire a 40 per cent stake in UFG Invest, the Russian investment management company of UFG AM, with an option to become a 100 per cent owner in the future.

Deutsche Bank's existing asset management business in Russia, DWS Investments (Russia), will be combined with UFG Invest. The combined business will be branded Deutsche UFG Capital Management. Both parties have agreed that financial terms will not be disclosed.

With assets under management exceeding EUR 400 m as of 30 June 2008, UFG Invest is ranked among the top 10 players in the Russian asset management industry. The product range includes investment funds and discretionary portfolio management for private and institutional clients.