Deutsche Bank and Commerzbank are losing another major investor after US hedge fund Cerberus.
The investment bank Morgan Stanley offered two blocks of shares in the two major German banks, each with more than 5 percent, from the same investor.
They should bring him a total of 1.75 billion euros.
The billion-euro placement depresses the share prices of the two German banks.
116 million Deutsche Bank shares were allotted to institutional investors at EUR 10.98 each - a discount of 7.9 percent to the Xetra closing price on Monday.
72.5 million Commerzbank papers were sold at 6.55 euros each - a discount of 6.6 percent, as the commissioned bank announced.
Deutsche Bank shares fell 7.2 percent on Tuesday before the market, Commerzbank shares lost 6.5 percent, and in early trading prices fell by more than 10 percent and 8.5 percent, respectively.
The bank did not name the seller.
However, only the US asset managers Blackrock and Capital Group have reported stakes in Deutsche Bank and Commerzbank of this magnitude.
The seller is likely to be Capital Group, a Los Angeles-based asset manager.
Because Blackrock has to hold large shares in public companies in order to underpin its extensive activities in the business with exchange-traded funds (ETF).
As such, Blackrock is unlikely to sell larger blocks of shares.
A Deutsche Bank spokesman said the exit would not change the strategy.
The bank's business model and risk management have proven themselves in challenging times.
"As we said at Investor Day, we had a promising start to the year and our goals remain unchanged."
The billion-dollar placement of Deutsche Bank and Commerzbank shares meant that Deutsche Bank shares in the DAX collapsed by up to 9.6 percent on Tuesday, with Commerzbank shares falling by 8.6 percent at the top below.
The Dax fell below the psychologically important threshold of 14,000 points again on Tuesday.
The leading German index fell by 1.7 percent to 13,954 points at the opening.