Deutsche Bank shares sink 7.54% to a new low

Shares in Deutsche Bank have closed down 7.54% to a new low after a weekend report said Chancellor Angela Merkel had ruled out giving it state aid.

Concerns have been raised about its financial health and the bank's shares are down more than 50% this year.

Focus magazine also said that Ms Merkel would not get involved in its dispute with the US over a $14bn bill regarding the sale of mortgage products.

Deutsche Bank said it had not expected Ms Merkel to intervene in the US case.

"At no point has [chief executive] John Cryan asked Chancellor Merkel to intervene in the RMBS [residential mortgage-backed securities] issue with the US Department of Justice," it said in a statement. "Deutsche Bank is determined to meet the challenges on its own."

Of the $14bn bill, which relates to products sold in the run-up to the financial crisis, Deutsche Bank has previously said it has "no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning."

The Focus magazine report had quoted unidentified government sources.

During a regular news conference on Monday, government spokesman Steffen Seibert said: "There is no reason for such speculation [about state aid] and the federal government doesn't engage in such speculation."

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Regarding its financial position, the bank said: "The question of a capital increase is currently not on the agenda, we comply with all capital requirements."

On Monday, shares in Deutsche - which is one of Germany's biggest banks - finished down 7.54% to 10.55 euros, its lowest level since the 1980s.

'Red rag to a bull'

Michael Hewson, chief market analyst at CMC Markets UK, said: "While one can understand the reticence of German politicians to bailout yet another bank, particularly in the lead up to an election next year, one has to question the wisdom of articulating that reluctance out loud when markets are already nervous about Deutsche Bank's capital position.

"It's akin to a red rag to a bull... given that due to its size Deutsche Bank is arguably too big to fail," he added.

"Markets could well look to test the German government's resolve on that as we head into next year, with further falls in the share price below €10 looking increasingly possible, which will increase the pressure on regulators and politicians to step in, and shore up confidence."