German Government Has Ruled Out Taking Stake in Deutsche Bank

The fact that Berlin appears to have ruled out any aid for the embattled lender as both unnecessary and politically unfeasible could put Deutsche Bank under renewed pressure as it works to stabilize its share price and stay out of the news while negotiating an acceptable settlement in a U.S. misconduct investigation.

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"We have a different bank resolution system than in 2009 and this must apply to us in Germany too," the government officials said according to this person. This referred to recent legal changes that now force European governments to bail-in creditors--and in some cases depositors--before they shore up a struggling bank with taxpayer money.

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It would be legally possible for Berlin to participate in a capital increase at the bank without bailing in creditors as long as it did so under market conditions--for instance by participating alongside private-sector investors. But such a move could be unpopular at home less than a year before a general election and expose Berlin to accusations of double standards after it campaigned for years to end state-financed bank bailouts in Europe.