|US regulators are seeking a $14-billion fine from Deutsche Bank over its actions leading up to the subprime mortgage crisis in 2008 / File|
The sell-off saw shares plunge by more than 6.6 percent by around 1300 GMT to stand at 10.65 euros ($12), making it by far the DAX 30's worst performer.
At one point in the session, Deutsche Bank shares stood at 10.63 euros, a historic low.
"Given the state of the news, people are selling almost in a panic," said analyst Michael Seufert of NordLB bank.
Investors were blindsided by news earlier in September that US regulators were seeking a $14-billion fine from Deutsche Bank over its actions leading up to the subprime mortgage crisis in 2008.
German news weekly Focus at the weekend reported that Chancellor Angela Merkel had ruled out any chance of offering state aid or interceding with the US authorities.
Analysts offered some crumbs of comfort for Deutsche watchers, with Seufert noting "there's no reason at the moment why the bank would have to ask the government for help".
Merkel spokesman Steffen Seibert meanwhile said there were "no grounds" for reports that Deutsche might receive state funding.
But the government would be unlikely to allow Deutsche to fail in the event of a true crisis, Andreas Utermann, chief investment officer at Allianz Global Investors, told Bloomberg Television on Monday.
With around $2 trillion of assets on its balance sheet, Deutsche Bank is "too important for the German economy" for the government to allow it to fail, Utermann said.
In the near term, investors fear that even if Deutsche negotiates a much lower deal with the US Department of Justice, the looming fine will still exceed the $5.5 billion the bank has set aside to cover its roughly 8,000 open legal cases.
A larger fine could force chief executive John Cryan into raising more capital, potentially diluting the value of existing Deutsche Bank shares.
Even once a deal has been reached with the DoJ, Deutsche is still under investigation by the New York Department of Financial Services over alleged money laundering in the bank's Russian arm.
Deutsche Bank stock has lost half of its value on the Frankfurt exchange since January, after the lender booked an almost 7.0-billion euro loss in 2015.