HSH Nordbank, the Hamburg-based landesbank which was bailed out with public funds during the financial crisis, is considering the sale of its Luxembourg-based private banking arm as part of EU conditions for receiving state aid, Reuters reports, confirming an article in the Financial Times Deutschland.

HSH Nordbank has been asked to slash its balance sheet by almost half from €175 billion last year to €100 billion in order to satisfy EU anti-trust officials who, according to the report, are concerned about state bailout money causing market distortion.

It has been reported that the bank’s Luxembourg private banking arm may fetch between €80-90 million.

"A sale [of the private banking business] is one of the options. Starting this week we are looking into what we want to do with it," a HSH Nordbank spokesperson told the news service, adding that the bank’s board will soon decide which other assets may be sold.

A number of European banking groups have been forced to offload non-domestic assets to satisfy regulatory requirements over government bailout funds. To cite just one example, last October Germany’s Commerzbank sold off UK private bank Kleinwort Benson to the Belgian group RHJ International, before subsequently divesting its 74 per cent shareholding in Austria’s Privatinvest Bank to Zürcher Kantonalbank and agreeing to sell its Monaco-based private bank, Dresdner Bank Monaco, to Lebanon’s Bank Audi sal - Audi Saradar Group.