UPDATE 1-Deutsche Bank may buy Dutch Fortis fund unit-sources

* Deutsche "could get Fortis unit for a very good price"

* Bank likely to win EIM administrator role

(Recasts, adds analyst's comment)

By Martin De Sa'Pinto and Reed Stevenson

ZURICH/AMSTERDAM, Sept 18 (Reuters) - In a move that could break an impasse between Deutsche Bank (DBKGn.DE) and the Dutch state, sources said on Friday that the German bank may be eyeing the purchase of a fund unit in the Netherlands.

On Thursday Deutsche Bank backed out of talks with the Dutch state to buy a package of assets from nationalised bank ABN AMRO [ABNNV.UL].

The sale of these assets, ABN AMRO's commercial bank HBU, 13 advisory branches and two corporate client units, had been ordered by the European Commission [ID:nLH635147] as a condition for the Dutch government's plans to merge ABN AMRO with Fortis Bank Nederland, which the state also took over along with ABN in October. [ID:nLH77205]

But sources close to the matter told Reuters on Friday that Deutsche Bank is now looking instead to buy Fortis Prime Fund Solutions (FPFS) as it seeks to bolster its hedge funds administration and custody arms.

Fortis Bank Nederland (FBN) controls FPFS and therefore a sale of the unit may help satisfy European Commission conditions for the ABN AMRO-FBN union.

Originally Deutsche had agreed in July 2008 to buy HBU, the advisory branches and two corporate client units from the Fortis Group, which had taken over ABN but then failed and was broken up and sold off late last year.

"The situation completely changed. First Fortis wanted to sell, then Fortis Nederland became part of the state and they thought it would be much easier to sell parts of Fortis (rather than ABN)," said Paul Beijsens, analyst at Theodoor Gilissen.

That was because Fortis -- and now the Dutch state -- would book a potential 300 million euro loss under the original deal, and had tried to renegotiate with Deutsche Bank.

The Dutch government indicated after deal talks broke down that it wasn't opposed to finding a solution that could involve the sale of other assets.

The question that remains is whether a new deal would satisfy the interests of all three parties: Deutsche Bank, the Dutch state and the European Commission's competition authority.

"Deutsche is definitely the front runner for FPFS and could probably get it for a very good price," a person close to the matter said, asking not to be named.

The deal would also allow Deutsche Bank to turn its hedge fund administration arm, currently a relatively minor player, into a major powerhouse since FPFS manages some $200 billion.

Both Deutsche Bank and Fortis Bank Nederland declined to comment.

FBN has already sold its tax advisory business Intertrust and the Dutch state has put its insurance unit ASR up for sale.

Separately, sources said Deutsche was negotiating the fund administration mandate for Swiss-based fund of hedge funds EIM, which was founded by flamboyant financier Arpad Busson, who was once married to supermodel Elle McPherson.

"EIM is in the process of conducting a project to set up a dedicated fund platform and will seek to convince a number of the funds EIM uses to set up on that platform," said EIM partner Bill Glass in an interview.

"The selection process has not yet been completed,"

Glass did not say which administrators were being considered.

For separate "ANALYSIS-Dutch state faces big test over bank rescues" please double-click on [ID:nLI120284]

(Additional reporting by Ben Berkowitz in Amsterdam and Philipp Halstrick in Frankfurt; Writing by Reed Stevenson; Editing by Lin Noueihed and Greg Mahlich)