'Following my decision to relinquish my mandate as administrator, I have also decided that I will not be asking for severance payment,' Mr Axel Miller said in a statement.

Mr Miller was to have received 3.7 million euros (S$7.4 million), according to bank documents.

The departure of Dexia executives was a condition set by the French government for shoring up the Franco-Belgian banking group, which lends heavily to French municipalities.

Paris also insisted that Mr Miller be stripped of any right to severance pay.

Earlier this week, the French, Belgian and Luxembourg governments threw a 6.4-billion-euro lifeline to Dexia which was caught in the financial storm caused by the US banking crisis.

The French government this week started preparing legislation to be presented in the coming weeks restricting executive payoffs after several banks became vulnerable, due in part to poor investment decisions.

Dexia's troubles came amid the biggest financial upheaval since the Great Depression, forcing the US government to draw up a US$700 billion rescue package to contain fallout from the crisis. -- AFP