At the same time, a senior German central banker said rates might fall there, which could help strengthen the dollar.

But the senior bankers are fish out of water when it comes to international lending.

A senior banker said: 'At 12 per cent you'd have to go back to 1985 to get similar value.'

The 1% will always be there, whether they are party apparatchiks or senior bankers.

"It's something that we have bent over backward to avoid doing," said a senior banker based in London.

"We are headed to 115" yen to the dollar, a senior banker here said today, in a view that seems widely shared.

The senior banker said the lead bankers were expected to start signing the restructuring this week.

Ten senior bankers and traders have left the firm in recent weeks.

"I think there's a certain spin on this in Washington that this is under control," said a senior commercial banker.

The bank is "encouraged by the number of senior experienced bankers that want to join us," he said.