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The European Commission wants Belgian-French financial services group Dexia to shed or divest foreign business in return for receiving state aid, Belgian newspaper De Standaard reported on Tuesday.
The newspaper said Dexia would have to cease activities in countries where it had already reduced exposure, such as Japan,the United States, Britain and Slovakia.
Dexia's Italian bank subsidiary Crediop and its Spanish operations were also under threat, De Standaard said, adding the probability Dexia would have to sell Crediop was high.
"In Italy, there is still a significant financing problem,there are insufficient deposits to finance the activities. That means Dexia is very reliant on interbank credit" De Standaard said, citing what it said were several sources.
The paper said Dexia might even have to sell its Turkish bank subsidiary Denizbank, although the company was firmly against this.
European Commission spokesman Jonathan Todd called the report "premature speculation". Dexia was not available for comment. The Commission has said previously it will rule on Dexia by the end of February.
Dexia received 6.4 billion euros ($9.6 billion) from France,Belgium, Luxembourg and key shareholders in September 2008. It later won state guarantees for its new borrowing and to cover riskier securities linked to subprime mortgages.
Dexia's problem was that a large part of its long-term lending relied on short-term interbank borrowing, a market that dried up during the global financial crisis.
Dexia, which made a loss last year of 3.3 billion euros, has sold its loss-making U.S. bond insurer Financial Security Assurance (FSA) to Assured Guaranty.
Dexia has said it will continue with retail, private and commercial banking in Belgium, Turkey, Luxembourg and Slovakia and lending to public bodies such as hospitals and housing groups in Belgium, Luxembourg, France, Italy and Iberia.
It plans to save 600 million euros in the 2009-2011 period,shedding around 1,500 jobs.
Chief Executive Pierre Mariani said this month that Dexia's measures to date would reduce its balance sheet by 30 percent. He also said Dexia was not discussing a mooted divestment of French arm Credit Local with the Commission.