Andersen has slashed its offer to settle Enron shareholder lawsuits to $300m and was on Friday scrambling to meet a midnight deadline to cut a deal or be named in a class action on Monday.

The class action will consolidate some 60 suits from shareholders and pension funds seeking compensation over the collapse of the energy trader. About 10 banks are likely to be named as targets for their part in Enron's complex financial arrangements.

The offer from Andersen, which acted as Enron's auditor, is less than half its original $750m and reflects the firm's loss of revenues and reduced chances of survival after the US government charged it with obstruction of justice.

Lawyers for the shareholders have accepted that Andersen has a substantially reduced ability to pay, people close to the talks said.

On Friday afternoon there were still other obstacles to a deal including a demand that Andersen co-operate with the shareholder efforts to wring compensation from other groups.

Monday's class action will make the banks its main targets as well as two law firms. The shareholders believe all played a part in defrauding investors.

Negotiations were continuing on Friday and the list of targets was likely to be revised over the weekend. Among those recently dropped from the suit were JP Morgan Chase and Goldman Sachs, who have argued that none of the plaintiffs suffered loss from their role.

Still likely to be included on the list are Citigroup, Deutsche Bank, Bear Stearns, Credit Suisse First Boston, Merrill Lynch, Bank of America, Barclays and CIBC. The law firms Vinson & Elkins and Kirkland & Ellis are also likely to be named.

Enron itself will not be named as it has filed for bankruptcy.

However, lawyers for the shareholders are angry that Enron, and some of the banks, are part of the group that is seeking part of Andersen's $300m.

Shareholders' lawyers, headed by class-action specialists Milberg Weiss, allege the banks took part in the fraud by underwriting Enron's debt issues and lending money, so allowing the energy trader to continue to operate.

But analysts said they had a hard case to prove. The banks are not liable simply for assisting in any alleged fraud by ignoring what may have been blatant warnings. The lawyers will have to show that the banks were "primary violators".

A deal for Andersen needs to come soon if the US core of the once-mighty firm is to have any chance of survival. Merger talks with rivals foundered on fears of litigation liability but Andersen's main problem is still a federal criminal trial starting in May.