Top-level management from Deutsche Telekom and Deutsche Bank are to meet this week to discuss Deutsche's sell-off of 44 million Telekom shares last week that wiped €20 billion (£15.7 billion) off the market value of the German telecoms giant.
Telekom chief Mr Ron Sommer called the transaction "a serious professional error" and German stock market regulators have opened an inquiry into the sell-off.
"This transaction was completely unexpected and may have legal consequences ... it has deeply shaken the confidence of small shareholders," said Mr Sommer.
Deutsche Bank management will this week explain their "motivation behind the deal" and it is expected the two companies will try to "answer the question about how they are to co-operate in the future", a source at Deutsche Telekom told the Financial Times Deutschland.
Mr Sommer was so annoyed by the action that he was considering severing Telekom's long-standing ties with the bank.
He told news magazine Der Spiegel that there would "certainly be consequences for our future business with Deutsche Bank". Deutsche took the unusual step of selling the 44 million shares on behalf of an anonymous seller last week only a day after the bank had reiterated its "buy" recommendation on Telekom shares.
On news of the sale, Telekom shares plunged 20 per cent in value to their lowest level since November 1998. This may be a violation of stock market rules, according to the German stock market regulators.
Deutsche Bank says its actions did not breach investment banking regulations, and its actions were the result of so-called "Chinese walls" that separate its research and investment banking operations.
Opposition politicians have called on the government to compensate small shareholders for their loss. "People trusted the government when it sold the shares, so it has to contribute towards restoring shattered confidence in the company," said Mr Rainer Bruederle of the Liberal party to the Handelsblatt newspaper.
However, a spokesman for the finance ministry rejected the suggestion saying the goverment, which still owns a 33 per cent stake in the company, "could not react to such stock market situations with gifts".
As two of Germany's biggest companies, Deutsche Telekom and Deutsche Bank have a long and successful business relationship. Deutsche Bank managed the flotation of Europe's largest telecoms company in 1996 and has remained a key financial adviser to the company.
