Germany preparing Deutsche Bank bailout plan, reports claim

The German government is working on an emergency rescue plan for Deutsche Bank, according to information obtained by newspaper Die Zeit, contradicting a statement from the bank’s chief executive that state aid is “out of the question”.

 

Angela Merkel’s government is preparing a two-stage plan for the “worst case scenario”, whereby the US justice department imposes a $14bn penalty on the bank for mis-selling mortgage bonds a decade ago, while Germany’s biggest lender fails to raise enough capital to pay the potential fine.

 

In an article to be published on Thursday, Die Zeit claims that the first stage would involve attempting to find a solution, with Deutsche Bank selling parts of its business to a German or foreign company, and the state issuing guarantees for potential losses.

 

The second stage, which would only apply if such a private solution were to fail, would involve a state-sponsored bailout.

 

According to Die Zeit’s research, shared with the Guardian, the German government is “debating a state takeover of as much as 25%” of the bank. This might facilitate a merger with Commerzbank, which is 15% state owned.

 

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