Deutsche Bank to change rescue plan

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The Independent Online
DEUTSCHE BANK yesterday gave ground to opposition from German, French and British banks by modifying its controversial rescue proposals for Metallgesellschaft.

Although there were no details of the agreed changes they were sufficient for the main German dissenter, the Norddeutsche Landesbank, to declare that it would now back the scheme.

Barclays, one of the first foreign banks to go public on its criticisms, has yet to see the details of the revised plan. It has backed the immediate rescue but withheld support from a DM2.7bn equity injection until further studies are done.

Deutsche Bank's concession came after frantic last-minute negotiations with dissenting creditors aimed at saving the metals and environmental technology conglomerate from insolvency.

Still insisting that unanimous acceptance of the proposals by 120 creditor banks was necessary, senior Deutsche Bank officers held talks in Paris with several large French creditors in an effort to overcome their opposition.

'The plan has not yet failed, but we are not in the dry. There is still a lot of work to do,' said a Deutsche Bank spokesman.

Nevertheless, other German banks were believed still to have reservations. Opponents of the Deutsche Bank plan want Metallgesellschaft's institutional shareholders, including Deutsche and Dresdner banks, to shoulder a greater share of the new financing.

Several leading French creditors, including Credit Lyonnais, Societe Generale and Paribas, are attaching conditions to their approval. Societe Generale and Paribas issued statements saying they could not accept because of a lack of detailed information on real losses and recovery prospects.

Bankers in Frankfurt said refusal by large foreign creditors to back the package unconditionally would leave German banks with too great a gap to fill.

In a desperate attempt to put pressure on creditors, Metallgesellchaft warned late on Wednesday, just before the deadline for acceptance of the rescue plan expired, that the proposals had to be accepted in toto.

Any attempt to place conditions on acceptance would force the company, employing 57,000, into insolvency.

Metallgesellschaft shares were again suspended yesterday.