Deutsche Bank shares slump with no bailout

Deutsche Bank's political entanglement deepened as a German news media outlet reported that the country's leader had ruled out a bailout.

Shares of the German financial institution slumped 5.8% in morning trading in New York to $12 after the magazine Focus reported that Chancellor Angela Merkel would not authorize a bailout for the company as it faces a costly political problem in the U.S.

The company has said that the U.S. Justice Department is seeking a $14 billion civil settlement over the bank's alleged role in artificially propping up the U.S. housing market in the lead up to the Great Recession.

Deutsche Bank spokesman Jörg Eigendorf told the Financial Times that a bailout is "not on our agenda" and that "Deutsche Bank is determined to meet the challenges on its own."

He also reportedly said that raising capital through equity "is currently not on the agenda."

The bank has pledged to fight the U.S. government's demands.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited," the company said recently. "The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts."

The Justice Department is seeking a settlement over the bank's handling of home mortgage-backed securities and "related securitization activities" from 2005 to 2007, according to Deutsche Bank.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.