Mumbai: Dresdner Bank, part of the Allianz insurance group, said it would join a rescue plan for US bond insurer Ambac Financial Group Inc

Dredsner would offer a sum in the low double-digit millions of euros if the package under discussion was approved, the head of its investment banking operations Stefan Jentzsch said.

He said there were various rescue options for Ambac. "If what is now on the table comes to pass then we will take part in the package," he said.

Dresdner along with several other banks is working on a deal that could shore up Ambac's balance sheet and preserve its top credit rating, thus avoiding a downgrade that could force investors to sell billions of dollars of securities.

Ambac, facing billions of dollars of expected losses from guaranteeing repackaged subprime mortgages, is talking to banks, including Citigroup Inc, UBS AG and Wachovia Corp, and regulators about raising about $3 billion in fresh capital to keep its top credit ratings.

A deal has not yet been signed, and may still fall through, but talks with banks are advancing.

A lowering of credit rating by Moody's and Standard & Poor's would his Ambac's top credit ratings and force investors to sell billions of dollars of securities and lift borrowing costs for consumers and city governments.
The US bond insurance industry guarantees some $2.4 trillion of debt.

The insurers, originally focused on insuring bonds issued by state and local governments, lost big after they started guaranteeing repackaged consumer debt and other complicated instruments.

Bond insurers MBIA Inc and FGIC Corp have announced plans to divide their municipal bond insurance businesses from their other insurance operations.

Ambac may also follow a similar path, people familiar with the situation said.

While Fitch has cut Ambac Assurance Corp's ratings on January 18, both Moody's and S&P have said they may also cut the top ratings for Ambac's main bond insurance company.

Ambac has guaranteed $524 billion of debt as of end-December.