Merkel had been pressing for private investors to contribute up to a third of the second rescue package by accepting later repayment on their Greek bonds.
She said she now backed a new package along the lines of a deal on Romanian debt agreed in Vienna in 2009, whereby private banks agreed to buy new government bonds to replace ones that matured.
However her insistence on Saturday on the need for a major input from the banks will not go unnoticed among ratings agencies and others sensitive to any signs of coercion.
Eurogroup chief Jean-Claude Juncker said Saturday that the problems which have forced Greece, Ireland and Portugal to seek emergency aid could affect Italy and Belgium, even before Spain, tipped as the next casualty.