German Chancellor Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home, German media wrote on Saturday.
The government denied a newspaper report on Wednesday that it was working on a rescue plan for Germany's biggest bank, as its shares went into a tailspin fueled by a demand for up to $14 billion from U.S. authorities for mis-selling mortgage-backed securities before the financial crisis.
Germany, which has insisted Italy and others accept tough conditions in tackling their problem lenders, can ill afford to be seen to go soft on its flagship bank, the Frankfurter Allgemeine wrote.
"Of course Chancellor Merkel doesn't want to give Deutsche Bank any state aid," it wrote in a front-page editorial. "She cannot afford it from the point of view of foreign policy because Berlin is taking a hard line in theItalian bank rescue."