INA Holding KG's takeover bid for FAG Kugelfischer Georg Schaefer AG has reached a new level in acrimony, according to observers in the financial markets.

In a astonishing reversal, FAG's long-term "house bank", Dresdner Bank, has terminated its relationship with the company and is now working for and supporting INA.

Dresdner has joined a consortium of banks, including the powerful Deutsche Bank, financing INA's hostile takeover bid. Dresdner is sharing responsibility for buying up as many FAG shares on the open market as possible.

In changing its allegiance, Dresdner Bank came out and is publicly recommending that FAG's shareholders accept INA's 11 Euro per share takeover offer.

With the announcement, FAG supervisory board member Heinrich Linz immediately resigned his seat. Mr. Linz is also a member of Dresdner's management board and would have been involved in making the decision to terminate the FAG account. Equally swiftly, Ulrich Seiffert was named by FAG to replace Mr. Linz. Mr. Seiffert is a former Volkswagen executive involved in product development and technology.

FAG did not identify a successor bank for Dresdner Bank. However, FAG has already assembled its own powerhouse team to fight the takeover effort - Merrill Lynch & Co., Goldman Sachs Group Inc., and HypoVereinsbank AG.