The planned issue of 308.6 million new common shares also is aimed at "strengthening the bank's equity capital in light of expected regulatory changes," CEO Josef Ackermann said.

Deutsche Bank's move came as financial regulators met in Switzerland to finalize a deal that would require banks in future to hold more capital in reserve.

Deutsche Bank is Germany's biggest bank and currently owns 29.95 percent of Postbank shares.

As a result of the planned takeover, "we can expand our strong position in our home market, take a leading position in the European retail banking business and significantly enhance Deutsche Bank's revenue mix," Ackermann said in a statement.

Deutsche Bank's shares had dropped on Friday on reports that it planned a huge stock issue. They finished 4.6 percent lower in Frankfurt at ¤47.70.

Postbank shares went the other way — closing up 4.8 percent on Friday at ¤27.04.

Deutsche bank, based in Frankfurt, said it plans to offer Postbank shareholders a cash payment equal to the volume-weighted average share price over the last three months. It expects to offer between ¤24 and ¤25 per share.

Deutsche Bank first moved in 2008 to buy a minority stake in Postbank from Deutsche Post AG.

It said it hopes to fully consolidate Postbank this year if the capital increase is successfully implemented — and would need to revalue its existing investment in Postbank, leading to a prospective third-quarter charge of about ¤2.4 billion.

A syndicate of banks acting as joint bookrunners agreed to underwrite the new shares at a preliminary subscription price of ¤31.80, ensuring gross proceeds of at least ¤9.8 billion, Deutsche Bank said.

The final subscription price will be determined and announced Sept. 20 "and will depend on further market developments," it added.

Existing shareholders will be able to buy one new share for every two they already own. Deutsche Bank said it plans to buy back up to 3.1 million shares between Monday and Thursday in an effort to reduce the number of shares that carry subscription rights.

Deutsche Bank has said its tier 1 capital ratio, a key barometer of financial health, stood at 11.3 percent at the end of the second quarter. It reported a core tier 1 ratio, excluding hybrid capital instruments, of 7.5 percent.

Postbank had a tier 1 ratio of 7.3 percent.

Germany's Handelsblatt business daily wrote in a commentary before Sunday's decision that Deutsche Bank wanted to bolster its capital "before a queue forms in front of the stock exchange and the pipeline gets clogged." It noted that a capital increase also would allow Deutsche Bank to fully take over Postbank without seriously weighing down its own capital ratio — a move that would better balance its business model.

In the second quarter, Deutsche Bank reported net earnings of nearly ¤1.2 billion, a 9 percent year-on-year rise, as gains at its transaction banking and asset management operations helped counter a weaker investment banking performance.