Alan Hevesi, the New York City Comptroller and the US politician that it leading the fight for compensation, said that he would not withdraw his objections to Deutsche Bank's huge banking merger with US rival Bankers Trust unless there is a written agreement to settle the claims.

His comments came as Deutsche Bank chairman, Rolf Breuer warned that the $10bn Bankers Trust deal, the biggest-ever takeover of a US bank, could be thwarted if it was delayed too long.

Cece Leadon: Optimism about the outcome of talks

Deutsche Bank admitted last week it was involved in funding the construction of Auschwitz, the concentration camp in which 1.5 million people, mainly Jews, were killed by the Nazis.

Immunity from litigation

Jewish leaders, Mr Breuer and a representative of Chancellor Gerhard Schröder are holding prolonged talks in Washington aimed at defusing the growing controversy over German firms' role in the Holocaust.

Rabbi Marvin Heir: "The Deutsche Bank has a problem that it needs to deal with"

The German delegation, who have also held talks with US Under-Secretary of State Stuart Eisenstadt, want to establish a fund for Holocaust survivors and guarantee German companies immunity from law-suits which could bankrupt them.

The aim is to achieve a breakthrough on the size and workings of the fund before the German Chancellor, Gerhard Schröder, visits Washington on Thursday.

Bank merger threatened

Mr Breuer is hoping his trip will help smooth the way for the takeover of Bankers Trust.

Deutsche Bank's deal with Bankers Trust could be thwarted

Deutsche Bank offered $10bn for Bankers Trust in November, and had been hoping to complete the merger by the spring.

Deutsche Bank has agreed to participate in a compensation program sponsored by the German government that would be funded by numerous private businesses in Germany.

However, sources close to the talks say an initial $1.3bn offer by Deutsche Bank for the fund has been rejected as too low by US negotiators.

Threats from Big Apple

US politicians, led by Alan Hevesi, say they will try and block the merger until Deutsche Bank offers compensation for Holocaust victims.

Mr Hevesi said: "Federal and state officials should take no action on the proposed merger between Deutsche Bank and Bankers Trust until these issues are fully resolved."

Although he does not have the power to block the merger himself, Mr Hevesi was influential in organising a coalition which led to a boycott of Swiss banks last year until they agreed a $1.25bn settlement with Holocaust survivors and their heirs.

Private funding for Hitler

Rabbi Marvin Heir, a founder of the Wiesenthal Centre, said that Germany's largest bank had made large contributions to Adolf Hitler's private fund used to support the dictator's pet projects.

Deutsche Bank, along with German competitor Dresdner Bank, already face $18bn lawsuits accusing them of profiting from gold and other assets stolen from concentration camp victims during World War II.

A 1946 investigation by the US military that recommended Deutsche Bank be liquidated and its top officials tried as war criminals.

The bank has denied a central claim in that 1946 report that it was as guilty of using slave labourers in the industrial enterprises it controlled.