DWS the funds unit of Morgan Grenfell's parent, Deutsche Bank will have to pay far more than previously expected as a result of severe problems at three of its British funds, according to the German business newspaper Handelsblatt.
In its paper today, the daily says Deutsche Bank reckons it will have to pay investors up to 230 million marks (£95 million) and industry sources were quoted as saying the amount could reach 350 million marks.
A Deutsche Bank spokesman said he could not confirm the report.
HandelsNat' said Deutsche Bank will probably also have to provide additional liquidity for the fund.
The 420 million marks that the bank has transferred to London have already been used up because investors had sold investments worth 464 million marks before the weekend, the paper said.
One of the funds is registered in Ireland and is listed on the Irish Stock Exchange. The Irish Central Bank is involved in the investigation.
Morgan Grenfell operates one of the largest fund managers at Dublin's International Financial Services Centre. However, the inquiry centres on London.
British newspapers reported that investigators have found "clear evidence of criminality" at Morgan Grenfell Asset Management.
The manager of two of the funds, Mr Peter Young, was suspended and his personal assets frozen pending an investigation into his management of the funds, which held a high proportion of unlisted, speculative high technology stocks.
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