Germany denied a report it was preparing to take a stake in EADS after failing to find a domestic private investor for part of Daimler's holding in the European aerospace company.
"There are neither concrete plans nor an agreement for a takeover of the Daimler share of EADS through the KfW bank," an economy ministry spokesman said yesterday.
Ruling coalition sources said last month Germany was starting to look for domestic private investors to buy a 7.5 per cent stake in EADS from automaker Daimler and maintain German influence at the Eur-opean aerospace group equal to that of the French.
People in the German government familiar with the matter said in June no acceptable investor had been found, leaving state-owned development bank KfW as the last, best option.
There is opposition to this idea from senior members of the Free Democrats, Germany's junior coalition partner which controls the economy ministry, who want to avoid any possible injection of federal money to EADS.
Daimler, which owns 15 per cent of EADS and has voting rights for a further 7.5 per cent of its shares held by a consortium of financial investors, has made clear it wanted to cut its stake. It no longer views aerospace as part of its core business.
The Financial Times reported yesterday that Germany was bracing to take the stake itself after failing to find a domestic buyer.
The spokesman of the FDP-run economy ministry said this was not the case, as the search process had not even begun yet.
"The priority now is the search for a private investor. The search process will only start in the next weeks," he said. "That is what all the departments in the German government have agreed with Daimler."
A KfW spokesman said he could not comment. Daimler also declined to comment.
The power balance at EADS, which competes with US rival Boeing in the global aerospace sector, has been politically sensitive since the group was created in 2000.
Spanish state holding company SEPI holds 5.5 per cent of the firm and the remainder of the stock is free floating.