The Bank of Bermuda's Guernsey office is embroiled in a nasty British High Court case after a seven-year battle with a band of disgruntled investors.

But the bank's HQ in Bermuda continues to play down the case -- which some reports say could involve up to 10 million -- reported in The Royal Gazette earlier this year.

The British national newspaper, The Guardian, has now reported that "settlement talks'' began this week in an attempt to avoid the case hitting a court-room hearing as scheduled for June 28.

It said the case centres around a 2 million offshore derivative crash over which the bank and the investment clients are both pursuing each other for legal compensation.

Seven clients of the Bank's Guernsey branch each lost their 1 million stake money plus another 800,000 on accounts set up for their own speculations in short-term currency reports, it said. "The bank said the losses were their own responsibility and the clients denied this, saying the alleged loss-making trades were not theirs.

"Bank of Bermuda is understood to have offered to waive the 800,000 in return for the investors' waiving the 1 million loss. This offer was refused.'' Two of the seven investors -- who include a retired accountant, engineer and banker -- have settled out of court, two are of unknown status and a further three are taking the legal action, the report said.

Retired accountant Christopher Reynolds sued the Bank in Guernsey and was reported to have won an out-of-court settlement worth 150,000 just weeks before his death from cancer in 1997. There have also been reports that a second investor settled out-of-court with the bank for more than 80,000.

To form a kind of personal pension fund, each of the seven men led by former banker Henry Fink of Croydon, Surrey in England, put in their stake. In its series of articles on the case The Guardian newspaper has repeatedly counted the potential stake that the Bank of Bermuda could be liable for as 10 million.

That sum would include the original stake money, the loss of six years' income and legal costs which Mr. Fink has described as "grotesque''. He also said the case had "practically ruined all of'' the investors. The report said the Bank's position was that the losses were caused by ill-judged speculations on the accounts managed by Mr. Fink and the accounts were operated at the discretion of the investors rather than the its management.

The investors deny the loss-making trades were theirs.

And in the same action the Bank of Bermuda is suing Mr. Fink for the 400,000 balance of a 500,000 bond he lodged with it in an attempt to refloat the seven accounts after the initial problems, the report said.

But a Bank of Bermuda spokeswoman told The Royal Gazette yesterday that the details of The Guardian reports were "misinformed'', although she refused to point out where it strayed from the truth. She confirmed the Bank was taking legal action against one of the men but due to "client confidentiality'' would not admit or deny that the group of disgruntled investors were also suing to recoup their titanic losses.

The amount the investors are suing for remains unclear -- and the Bank continues to nimbly sidestep questions on the case which the media and shareholders should be legitimately asking.

While The Guardian has set the Bank's liability at 10 million in its series of articles, the spokeswoman said this was not correct. "Due to client confidentiality and in light of the pending litigation, we are unable to discuss any further details,'' she said.

COURTS CTS