Washington - Holocaust survivors and their families suing German firms for compensation for Nazi-era slave labour have rejected a $1.3 billion settlement offer, a source close to the negotiations said yesterday. The rejection of the offer is a setback to the proposed mammoth merger between the US firm Banker's Trust and Deutsche Bank, one of the German companies targeted by the plaintiffs. Deutsche Bank had offered $280 million and the other German firms in the case had offered between $500 million and $1 billion, the source said.