Bank of America faces the threat of being sued by Parmalat, the collapsed Italian food group, for damages over its dealings with the company's former management.

A spokeswoman for Bank of America said: "We participated in transactions with Parmalat because we believed thet Parmalat was a strong, honest, reputable, investment grade company and also that these transactions served a legitimate business purpose. We do not believe that any legal action against Bank of America would be supported by the facts."