London-based European settlement and clearing house LCH.Clearnet Group Ltd. is still working on a proposed merger with New York-based Depository Trust & Clearing Corp., and it expects to finalize a deal around the end of March.

"When we first announced the proposed merger, we were looking at a deal around mid-March. That was quite an aggressive timetable when you think of the amount of due diligence which needed to be done," LCH.Clearnet spokeswoman Andrea Schlaepfer said Wednesday.

"It might slip by a couple of weeks, but that is not unreasonable. The due diligence is progressing and it's going well at the moment," Schlaepfer said.

The comments are largely in line with what DTCC spokesman Stuart Goldstein said two weeks ago - that the company aims to finalize a deal with LCH.Clearnet by the end of March.

The comments also come amid expectations of a counterbid for LCH.Clearnet by a consortium of financial institutions that includes U.K.-based inter-dealer broker ICAP PLC (IAP.LN).

That consortium could include BNP Paribas SA (13110.FR), Citigroup Inc (C), Deutsche Bank AG (DB), HSBC Holdings PLC (HSBA.LN), JP Morgan (JPM), Royal Bank of Scotland Group PLC (RBS.LN), Societe Generale (13080.FR) and UBS AG (UBS). Most of them are European banks.

ICAP said Feb. 2 that it may launch a counterbid as part of a consortium. So far, no formal offer has been made, Schlaepfer said.

There are expectations that ICAP could update the market on its interest in LCH.Clearnet when ICAP releases its interim management statement Thursday.

The Observer newspaper reported that a bid by the consortium could be worth GBP800 million, which works out to around EUR12 a share, higher than the EUR10-a-share bid by DTCC.

LCH.Clearnet didn't comment specifically on whether it would be open to other talks if a higher offer is put up. "We can't comment on anything which the consortium might or might not do," Schlaepfer said.

Some newspapers recently said a merger between DTCC and LCH.Clearnet would create a monopoly and hit competition in the sector. The two firms in October said the planned merger "aims to create the world's leading clearing house."

On the flipside, some observers say any effort by the consortium to block the DTCC-LCH.Clearnet merger would reflect a growing sense of "provincialism," with European banks and dealers creating defensive positions to clear more over-the-counter trades.

Jeffrey Sprecher, CEO of Atlanta-based IntercontinentalExchange Inc. (ICE) said last week that the transatlantic battle over LCH.Clearnet "plays into the whole sense of nationalization right now."

Sprecher, whose exchange in November transferred its clearing business from LCH.Clearnet to ICE's own European clearing house, said a big part of the debate over LCH.Clearnet's fate is whether it should have ties to the U.S. or remain under European control.

DTCC handles the bulk of clearing services for equities and municipal bonds in the U.S., as well as processing over-the-counter derivatives trades. LCH.Clearnet's client base includes London Stock Exchange PLC (LSE.LN) and units of NYSE Euronext (NYX).

(Jacob Bunge in New York contributed to this report.)

Company Web site: www.lchclearnet.com

-By Vladimir Guevarra, Dow Jones Newswires, Tel. +44 (0) 2078429486, vladimir.guevarra@dowjones.com