Deutsche Bank won't back Fiat cash call

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FRANKFURT (Reuters) --

Deutsche Bank will not participate in a rights issue to rescue troubled Italian industrial group Fiat, industry sources familiar with the transaction said on Tuesday.

"It is the clear aim of the bank to reduce its industrial holdings -- that applies not only to Germany but also to Europe," said one industry source.

Deutsche Bank currently owns about 1.6 percent of the loss-making group, a stake worth some 56 million euros ($63.6 million). That would fall to around one percent if Deutsche does not subscribe to the rights issue.

The German bank and Fiat both declined to comment.

Fiat announced a 1.8 billion euro capital increase in June, its second cash call in less than two years.

Founding family Agnelli is set to pump in 545 million euros via its holding companies but that leaves Fiat seeking some 1.25 billion from other shareholders, including Generali.

A decision by Deutsche not to take part in the capital hike would be a further blow to Fiat after its latest restructuring program announced in June failed to impress some investors.

Earlier in July, U.S. investment group Dodge & Cox said it had slashed its stake in Fiat to 0.1 percent from 7.6 percent.

Reuters / July 22, 2003