Letting ANY German bank fail would make our govt look bad, though, after all the posturing during the Greek crisis.
As an aside, do you have any opinion on the merits of these institutions for personal banking? (I assume you are in Germany.)
The most likely scenario would be a bail-in, which I think few people outside of the financial community is aware of and understands.
Bail-in is the power given to the regulator to declare a bank non viable and to impose losses on its creditor over a week end, and as a result auto-recapitalise the bank, which will be open for business and healthy the following Monday. You can see it as a flash, extra-judiciary chapter 11.
The regime is designed to impose losses on regular creditors (bond holders), rather than clients taking a credit exposure to the bank through derivatives or deposits, even if in a bankruptcy these would have the same ranking and should suffer the same losses. This should reduce a lot the disruption on the market of a bank going bad.
Banks have been required to hold minimum levels of bailinable wholesale debt to ensure regulators can do a large scale bail-in.
Politically, this would be the safest route for the German gvt, as it doesn't use tax payer funds and does not let bank investors get away scars-free. Again, hypothetically. I don't know about DB specifically and to be honest am a bit surprised by the alarmist statements I read.
[edit] actually looking at their annual report, they report a fully loaded CET1 ratio of 11.1% which is decent. Banks are way better capitalised than in 2006:
https://www.db.com/ir/en/download/Deutsche_Bank_Annual_Repor...