Merkel: EFSF will be last resort

German Chancellor Angela Merkel has said Europe is facing a race against time to save its indebted European banking system, warning investors risk being hit by deeper losses before the EFSF steps in.

Speaking to Reuters, Merkel said policymakers will only delve into the European Financial Stability Facility (EFSF) as a "last resort". Her comments came as Germany's Deutsche Bank issued a profits warning, raising concerns the eurozone debt crisis is spreading through to the banking system. "Time is running out to establish recapitalisation. Troubled banks need to first seek capital on their own and national governments will help if that is not possible," said Merkel. "If a country cannot do it using its own resources and the stability of the euro as a whole is put at risk because...