Germany's second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.
"Intense talks" have been going on for several days, according to sources who spoke to the news agency Reuters.
Several people familiar with the matter told the agency that the aim was to reach an agreement in principle by the Christmas holidays.
Commerzbank told Sky News it does not comment on market rumour and speculation.
Last week, the bank said it needed to raise an extra 5.3 billion euros by June 2012 to cope with a potential default of European government debt under new rules laid down by the European Banking Authority.
It has until January to explain how it will raise the money.
The bank, which has 14 million customers, is trying to raise the extra funds from private investors and has said it could also sell off parts of its business, cut costs or reinvest its profits to shore up its reserves.
Commerzbank's chief financial officer Eric Strutz said: "We are aware of our responsibility for the supply of credit to the German economy and we will continue to stand by our customers.
"We stand by our intention not to make use of additional public funds," he said.
Banking and Finance reporter at the Wall Street Journal, David Enrich, told Sky News he was not confident the money could be found through the usual channels.
He said: "The (German) Government already owns about 25% of Commerzbank...they have other options other than going to the Government.
"They can sell assets, they can try and get money from private investors...the Government is likely to come back in and act as a fallback option."
Shares in Commerzbank have fallen by 74% in value this year.
It is already 25%-owned by German taxpayers after it was given a previous bailout of 18.2 billion euros following the damaging takeover of rival Dresdner bank at the height of the financial crisis in August 2008.
The European Banking Authority has ordered banks across Europe to raise an extra 114.7 billion euros to maintain a minimum requirement of 9% capital reserves in the event of a more widespread partial default by European governments on their loans.
Commerzbank is one of six German banks that need to raise a total of 13.1 billion euros - up from a previous estimate of 5.2 billion euros - to cope with a potentially more damaging series of defaults.
SKY
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