Merkel's Christian Democrats (CDU) suffered big losses across much of Germany in the election, in which the AfD, with its anti-immigration message, became the first far-right party in the national parliament in over half a century.
"People want Germany to stay Germany", Stanislaw Tillich, premier of Saxony - where AfD topped the polls -told the Funke newspaper network. "They don't want parallel societies and rising criminality".
The exit of the veteran CDU politician, who is also Germany's longest-serving parliamentary delegate, was widely seen as Merkel's bargaining chip in the imminent coalition negotiations to offer the highly-desired post of finance minister to other parties.
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Merkel's party's Bavarian ally, has signaled it wants a rightward shift, to focus on security and setting a limit on immigration numbers to dampen the appeal of the AfD, a policy firmly opposed by the Greens.
Peter Altmaier, German Chancellor Angela Merkel's chief of staff, will take over as acting finance minister from Wolfgang Schaeuble when he leaves office, German newspaper Sueddeutsche Zeitung reported on Friday.
German Chancellor Angela Merkel and Lower Saxony's Christian Democratic Union's (CDU) top candidate Bernd Althusmann wave after a regional election campaign in Hildesheim, Germany September 27, 2017. "We have to get people listening, to win people over by solving their problems".