Troubles continue at Deutsche Bank, one of Germany’s largest financial institutions as U.S. government is considering imposing a fine of around $14 billion on the bank for selling faulty mortgage-backed securities in the run up to the financial crisis. This adds to the troubles that Deutsche and other European banks have been struggling with negative interest rates, which are squeezing profits.

Deutsche Bank AG along with Volkswagen AG which are facing multi-billion-dollar bills in the U.S. risk undermining an economy that is the growth engine of the Euro area. A further weakening of the two German stalwarts could impact growth at home and have ramifications outside the country.

German Chancellor Angela Merkel on Tuesday gave no indication that her government might help the group with a U.S. demand. There were reports from Reuters earlier today citing Die Zeit that German government is preparing Deutsche Bank rescue plan. But Deutsche Bank spokesman referred to an interview Chief Executive John Cryan gave German daily Bild on Wednesday and denied the report.

"At no point did I ask the chancellor for support. Neither did I suggest anything like that," had told Cryan Bild in response to a different report that said he had asked German Chancellor Angela Merkel for her support with a $14 billion U.S. demand to settle claims it missold mortgage-backed securities.

Bank of England's Deputy Governor Shafik in a speech today said that the BoE is watching Deutsche Bank developments closely. She said " Deutsche Bank has long-term as well as transitory reasons for trading below book value. Do not see any direct comparison between Deutsche bank and Lehman”

Bumpy ride for European bourses. FTSE 100 rebounds amid reports German government working on Deutsche Bank contingency plan.