Monday 02 January 2017 1:28 pm

Deutsche Bank share price up as merger and bailout rumours shot down

Shares in Deutsche Bank are trading up today after the German banking giant's chairman silenced murmurs of mergers and bailouts.

The share price for the country's biggest bank had a turbulent 2016, particularly after it was revealed in September that the US Department of Justice was considering slapping the lender with a fine of as much as $14bn (£11.4bn) for mis-selling mortgage-backed securities. The bank settled for a comparatively small $7.2bn last month.

There have already been some predictions on what Deutsche Bank will do to pay the fine, with speculation having already surfaced the bank will be slashing bonuses. The lender has also already undergone considerable restructuring efforts, notably its Strategy 2020 turnaround plan, which was initially announced in October 2015.

But, chairman Paul Achleitner has ruled out merging with another European bank and receiving state aid as being among Deutsche's options.

"The management board in principle looks at everything that could help the business…At the moment, however, enthusiasm for a pan-European merger is muted as we have other priorities," Achleitner told Frankfurter Allgemeine Sonntagszeitung over the weekend.

And, on the possibility of a state bailout, Achleitner remarked: "No one in Germany needs to worry about rescuing banks."

Shares in Deutsche Bank are up 1.9 per cent at €17.57 at time of writing, as the European markets carried on trading while the UK enjoyed a bank holiday break.

[charts-share-price id="731"]

However, investors had another reason to be cheerful today, after the latest manufacturing Purchasing Managers' Index showed the sector in Germany was performing particularly strongly.

Shares in the banking giant took a nasty tumble late last year when it was reported German Chancellor Angela Merkel may be unwilling to extend a bailout to the struggling lender, even given the size of the fine it was facing.

This is not the first time in recent history the bank has pushed back on suggestions a merger could be in the pipeline. Last August, it was rumoured Deutsche Bank could be merging with fellow German lender Commerzbank, but this was quickly laid to rest.

Meanwhile, a number of key industry voices, including those from the European Central Bank, have warned the continent currently has far too many lenders and have called for consolidation across the banking industry.

Deutsche Bank is due to announce its preliminary results for 2016 on 2 February. For its 2015 full year results, the lender revealed it had plunged €6.8bn into the red, its first full year loss since 2008.