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Deutsche Bank shares hit record low on report Merkel won't help the troubled lender

Deutsche Bank shares saw renewed selling in stock markets on Monday after a report seemed to rule out any state-aid for the embattled German lender.

Focus, a German weekly news magazine published in Munich, reported on Friday that Chancellor Angela Merkel had categorically ruled out stepping in to help Deutsche Bank with its U.S. legal troubles in 2017, citing unidentified government officials. The article states that Merkel made her views clear in discussions with Deutsche Bank CEO John Cryan.


Shares of the bank have been hit hard this month after the U.S. Justice Department suggested the bank pay $14 billion to settle a number of investigations related to mortgage securities. The investigations refer to the way it sold these securities before the financial crash of 2008.

A German government spokesperson released a statement to reporters on Monday saying that there was no need to speculate about state aid for Deutsche Bank. Jorg Eigendorf, head of communications and senior group director at the bank, told CNBC that reports of state aid were "just speculation" and said that the bank strongly intends to solve its problems by itself.

"At no point of time (CEO) John Cryan has asked the chancellor for support in the negotiations with the Department of Justice and he doesn't intend to do that. He is very strong on that position," he said.

Deutsche Bank signage.
Patti Domm | CNBC
Deutsche Bank signage.

The company has previously said that a settlement between $2 billion and $3 billion would be fair, as it had already paid $1.9 billion in 2013 to resolve similar claims, the Wall Street Journal reported earlier this month.

Initial concerns over Deutsche Bank surfaced earlier in the year with investors detailing concerns over its exposure to the energy sector and a possible cash crunch.

U.S. banks have been busy rebuilding their balance sheets after the 2008 crisis but their European counterparts have been slow off the mark. Deutsche Bank came out fighting in February 2016 saying it had "sufficient" reserves to service its so-called tier 1 debts.

But the Justice Department's proposed settlement sparked worries about the bank once again. Some analysts are worried that the German bank could end up defaulting on certain bonds, and ABN AMRO Bank has previously suggested that Deutsche Bank's tier 1 coupon payments could be at "real risk".