Hedge funds have started to pull some of their business from Deutsche Bank, setting up a potential showdown with German authorities over the future of the countrys largest lender.
As its shares fell sharply in New York trading, Deutsche was forced to issue a statement emphasising its strong financial position.
European regulators and government officials have kept a low profile in public over Deutsches deepening woes. However, in private they have struck a sanguine tone, stressing that in extremis there is scope under European regulation to inject state funds to support the bank, provided it is done in line with market conditions.
Marcel Fratzscher, head of DIW Berlin, a think-tank, said: If push comes to shove, the German governme…
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