Following the merger of Commerzbank with Dresdner Bank and the subsequent takeover of a 30% share in Deutsche Postbank by Deutsche Bank the German banking market seems to enter the long awaited consolidation. The Business Brief analyses the consequences of these transactions and shows that they are merely first steps. Only the reform of the public sector banking system - with the dominant savings banks and the Landesbanken - will provide Germany's banks with a chance to remain market driving generalists in a consolidating European market.