No way Merkel can bail out Deutsche Bank, German media say

No way Merkel can bail out Deutsche Bank, German media say

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.”

The Munich-based Sueddeutsche Zeitung wrote that Merkel would be breaking a promise to taxpayers if she were to bail the bank out, which could spell disaster for her re-election bid next year as the anti-immigration AfD party gains ground.

The AfD is already benefiting from a backlash against Merkel’s open-door refugee policy, makinghuge gains in two regional elections last month and hitting an all-time high of 16 percent support in an opinion poll last week.

“A state aid package would drive voters into the arms of the AfD,” the Sueddeutsche wrote in an editorial. “Domestic political considerations make it unlikely that Berlin would play this joker. Even more unlikely is that the European Commission would agree. The political risk would be simply too high.”

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