The Netherlands is looking into options to sell Fortis Bank Nederland assets to French bank BNP Paribas as part of a merger remedy ordered by the European Commission, a source said on Tuesday.

Without an asset sale that would satisfy the EU the Dutch government cannot merge nationalized banks ABN AMRO and Fortis Bank Nederland.

The Dutch finance ministry has asked BNP Paribas, which announced a 4.3 billion euro capital increase on Tuesday to pay back state aid, whether it would be interested in buying Fortis Commercial Banking and Commercial Finance, a source close the negotiations said.

A possible deal between the Dutch finance ministry and BNP Paribas would be preliminary and announced through a letter of intent, the source said.

The Dutch Finance Ministry declined to comment but repeated earlier remarks: We are looking at both the ABN AMRO and Fortis Bank Nederland side to resolve the EU remedy, a spokeswoman said.

BNP Paribas's Chief Executive Baudouin Prot also declined to comment.

The Dutch state has to comply with a European Commission order from late 2007 to meet competition concerns before it can merge ABN and Fortis NL. The original remedy was to be the sale of some ABN AMRO assets to Deutsche Bank AG but the Dutch state tried to renegotiate that deal with Deutsche Bank after nationalising ABN and Fortis's Dutch operations last year, because the original sales deal would have generated about 300 million euros in losses.

The negotiations fell apart on September 17 and the Dutch government secured a two-week extension until October 2 from the EU to come up with an alternative proposal.

The original disposal scheme might not be entirely dead, however, as ABN's chief executive, Gerrit Zalm, said on Monday.

I will answer in soccer terms. It is always possible Germany scores in the last minute, Zalm told industry executives at a Holland Financial Center event in Amsterdam.

Under the original remedy which the EU had ordered when a group including Belgian group Fortis struck a deal to buy ABN AMRO Group and carve it up in 2007 Fortis was due to sell to Deutsche Bank a bundle of ABN AMRO assets in the small and medium-sized Dutch enterprise market.

The bundle included commercial bank HBU, 13 advisory branches and two corporate client units.

As an alternative two local banking sources told Reuters last week the Dutch state might be considering selling Fortis Bank Nederland's commercial banking unit instead.

(Reporting by Harro ten Wolde and Steven van Aartrijk; Editing by Greg Mahlich)

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