Deutsche Bank bought almost 30 per cent of Deutsche Postbank yesterday for E2.79 billion (£2.21 billion) and left the door open to a bid for the rest of Germany's biggest retail banking network.

In doing so, Deutsche Bank managed to keep Santander, its ambitious Spanish peer, from the German market. Santander said yesterday that it had made an offer for half of Postbank and was interested in a full takeover.

Deutsche Bank will raise E2 billion from shareholders to cover part of the cost of the deal.

Analysts were puzzled by the acquisition. Josef Ackermann, Deutsche Bank's chief executive, had declined to buy Postbank before its 2004 flotation at half yesterday's price. The German bank has since taken an $11 billion (£6.1 billion) hit from the credit crunch. According to Dirk Becker, a Landsbanki Kepler analyst: “It doesn't fit...it all seems to have been pretty spontaneous.”

Dr Ackermann argued that the deal gave him a dominant position in Europe's biggest economy, in return for very little capital.

With writedowns at its investment bank and the prospect that it will be leapfrogged in the German retail market after Commerzbank's E9.8 billion takeover of Dresdner Bank last month, Deutsche has been under pressure to beef up its retail operations. It has more than 900 branches and 9.7 million private and business banking customers in Germany, compared with Postbank's 14.5 million customers and 850 branches. Postbank's customers also have access to thousands of post offices, where bank products are sold over the counter.

Deutsche Bank will spend E57.25 a share buying 29.75 per cent of Postbank from Deutsche Post, Germany's postal service, which owns 50 per cent plus one share of Postbank. The price values the whole Postbank business at E9.3 billion.

The bank was granted an option to buy a further 18 per cent of Postbank from Deutsche Post at E55 a share. The option must be exercised between 12 months and 36 months after the acquisition of the first stake. Deutsche Bank will also have the first right of refusal over the remainder of Deutsche Post's remaining 2.25 per cent stake in Postbank.

Deutsche Post is known to be keen to leave the banking market. As part of the deal, it has been granted a put option to sell its rump stake of 20.25 per cent to Deutsche Bank for E42.80 a share. This means that it can offload the stake, albeit at a much lower price, if absolutely necessary. Deutsche is permitted to settle the option in cash or shares.

Deutsche Post has to exercise this option between 21 and 36 months after the original stake sale. Deutsche Bank is not immediately interested in taking its stake above 30 per cent, which would force it to issue a takeover offer.

The bank's shareholders were unenthusiastic about the deal yesterday. Deutsche Bank's shares closed down 2.5 per cent at E57.90. Earlier in the day the stock had been down by up to 5 per cent.

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