The Royal Bank of Scotland wanted to erect the shirt on the arched bridge next to its headquarters at Gogarburn in Edinburgh.
The 28 square metre mesh sign was intended to promote the Six Nations tournament, sponsored by the bank.
RBS, which is 81% owned by the taxpayer, applied to Edinburgh City Council for permission to place the shirt on the bridge.
However, council planning chiefs have now refused the application.
The rejection came after its transport department raised concerns a giant shirt would distract drivers on the A8 dual carriageway below.
They ruled it would be a road safety risk to both drivers and pedestrians.
In a report, planning officials said: "The proposed nature of the banner hoarding complies with council guidance relating to advertisements,sponsorship and city dressing and would not result in a detrimental impact to the amenity of the location, particularly on a temporary period for a short-term basis.
"However, it is considered the proposed size and position of the banner hoarding would be detrimental to road safety."
The shirt would have been on the bridge for a two-month period while this year's Six Nations tournament is running.
A spokeswoman for RBS refused to comment on the application.