UK private bank Kleinwort Benson is to be sold following the European Commission’s decision on the German government’s capital injection into its ultimate parent, Commerzbank.

The European Commission has stipulated that Commerzbank must specifically focus on German domestic banking activities and it must therefore dispose of some of its foreign businesses.

According to a statement, Commerzbank has reassured Kleinwort Benson’s board and chief executive Robert Taylor that this will not be a “fire sale”. The European Commission has set a deadline of end-2011 for Commerzbank’s restructure and the focus will now be on finding the best partner with which Kleinwort Benson can continue to build its business, the bank said in a statement.

“Whilst these are perceivably unsettling times for our clients, staff and other key stakeholders, we are fully committed to business as usual and there will be absolutely no disruption to the service clients receive from us. Commerzbank continues as our parent until a decision is made regarding our new structure and ownership and we will continue to benefit from their full financial backing,” said Mr Taylor.

“Kleinwort Benson is a well-capitalised and stable business in its own right, and we are optimistic and excited about the opportunities ahead of us. We are currently exploring a number of interesting avenues and this process will continue in the coming months,” he added.

Kleinwort Benson is a subsidiary of Dresdner Bank, which in turn was acquired by Commerzbank from German insurer Allianz in January this year. Kleinwort Benson has assets under administration of £6.04 billion (around $9.1 billion), as at 31 December 2008.

Last month media reports speculated that Commerzbank will have to sell German bank Eurohypo, along with its Dresdner Bank operations in Switzerland and Luxembourg, as part of its state aid package from the German government.