Wednesday 28 September 2016 10:24am
Jake Cordell
German media reports Angela Merkel could be willing to take a 25 per
cent stake in Deutsche Bank (Source: Getty)
Just hours after insisting there would be no state-backed bailout of the bank, German newspaper Die Welt has revealed the government is undertaking contingency planning to assess how it could step in to save the bank from financial collapse - an event which could trigger shockwaves through Europe's financial system and wreak more havoc than the demise of Lehman Brothers in 2008, analysts have warned.
The newspaper said the government hopes it will not be called upon, though it is undertaking rescue planning in the event it is needed. Under the "worst case scenario", the government could take a 25 per cent stake in the bank, if the lender is unable to raise funds from the private sector.
Deutsche Bank's share price has crashed to fresh record lows this week, and its market capitalisation has shrunk to a paltry £15bn, raising speculation the bank will be forced into a rights issue to raise cash.
Assuming it paid the current going rate, a 25 per cent stake would set Germany back less than €4bn (£3.5bn). The UK's 2008 rescue of RBS, in which it took a controlling stake in the business, cost the government £45bn in total.
Less extreme support packages could include helping Deutsche Bank sell assets to other banks.
Shares in the bank are up 2.5 per cent this morning to €10.82 on the news although the lender has hit back forcefully at rumours it has asked the German government for support.
http://www.cityam.com/250270/angela-merkel-might-considering-deutsche-bank-bailout-
