German contractor Philipp Holzmann has filed for insolvency following the collapse of two-year long government efforts to save the company.

Eleventh hour attempts to save the construction giant by Deutsche Bank, the company’s biggest shareholder were scuppered following the $52.7M plan’s rejection by three of the Holzmann’s 17 bank creditors.

The three banks, Commerzbank, Dresdner Bank and HVB Group saw the bailout package as a non-viable proposition to maintain Holzmann’s survival.

The decision has highlighted a shift in attitude in Germany that sees relations between banks and the construction industry coming under pressure with the banks far less likely to bail out loss makers than before. The decision, that could see the company facing losses in excess of $1.1bn, has angered investors and bond holders who see it as unacceptable that an alternative to bankruptcy was not found. The anger is still furthered by the revelation that $112M pledged to the company in 1999 by the German government was never used.

Holmann has an international staff of some 24,000 people and has said that the future of its employees is at risk.

German Chancellor, Gerhard Schröder who was at the heart of previous rescue attempts has dashed hopes of future government intervention saying in the UK press, " I would have wished for a different outcome from the bank talks."