City & Business: Chunnel bicker

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The Independent Online
A NEAR-MIRACLE occurred last week. Eurotunnel successfully raised pounds 743m in extra loans and got its long-awaited pounds 858m rights issue underwritten. The Channel tunnel project, which would have run out of cash next month, is flush again, at least for a year or two.

You might think Eurotunnel's advisers would be celebrating a breathtaking financial coup, not to mention the pounds 42m they've trousered in fees. Not a bit of it. Instead they are bickering bitterly aboutwho should take the credit.

No one is saying anything publicly, of course, but the row goes like this: Swiss Bank Corporation is claiming the laurels because it shouldered the biggest share of the underwriting - a whopping 31.5 per cent, exposing itself to a pounds 270m liability before passing on the risk to sub-underwriters.

An outrageous distortion of the truth, say the other joint managers, S G Warburg, Morgan Grenfell and Banque Indosuez. Far from saving the day, they say, Swiss Bank almost sank the entire deal by demanding (and eventually getting) favourable treatment at the sub-underwriting stage.

Swiss Bank has had a bumpy relationship with Eurotunnel ever since it elbowed its way into an advisory role after patching up the long-running dispute between its client Transmanche Link, the tunnel builders, and Eurotunnel.

It has carved out a reputation for aggressive deals over the past 18 months, poaching the customers of more traditional City houses either by under-cutting on price or by innovative deal design. Nor is it afraid of pinching other banks' ideas.

Its audacious approach has, according to your point of view, been either a breath of fresh air in the fuggy, clubby City, or a dangerously destabilising influence. Whichever, I suspect nothing short of a bloody nose is going to stop Swiss Bank's thundering rampage across the City.

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