BELGIUM - Belgian-French bank Dexia today categorically denied it would sell a part of its asset management business to raise more capital, though admitted expansion plans have been suspended.

Hugo Lasat, chairman of the management board of Dexia Asset Management, told IPE in an interview asset management is part of Dexia's core strategy and the bank was not in talks to get rid of part of the business.

Since its assets under management have dropped by €10.2bn since January to the current level of €98.5bn, Lasat said "it would be contradictory to start talks about a different orientation of Dexia Asset Management".

He added the company has now suspended earlier planned expansion strategies which had seen the asset manager looking for "new institutional processes".

"Dexia AM looked actively on other continents for production capacity, namely new processes on the institutional side, but under the current market conditions we have suspended these plans," he said, adding "buying a very cheap asset manager now can become a very expensive one in two months' time".

Lasat stressed the company was still seeing inflows from institutional clients was continuing to to do well in the institutional pensions market.

This is in contrast to the wider Dexia group, which has run up huge losses in its US operations and revealed this morning it was the latest European bank to be bailed out, thanks to a €5.4bn injection from the Belgian, French and Luxembourg governments, along with a further €1bn pledged by three current institutional shareholders.

Pierre Richard, chairman of the board of directors at Dexia, and Axel Miller, chief executive officer, both stepped down this morning after the company's share price closed nearly 30% lower by closed of business yesterday (Monday) in Paris — triggering the emergency talks with government officials.

This development came only two days after Belgium, the Netherlands and Luxembourg said they would invest €11.2bn in Belgian-Dutch bank Fortis, after its shares shrank by a fifth on Friday.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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