UPDATE 2-Dexia clears way for full dismantlement
* Dexia board approves nationalisation of Belgian business
* Caisse des Depots to take most of Dexia's French municipal arm
* Dexia to dispose of DenizBank, RBC joint venture
* Dexia left with 75 bln euros bonds in run-off
* Contains 12 bln euros of euro zone periphery sovereign debt
BRUSSELS, Oct 20 (Reuters) - Bailed-out financial group Dexia cleared the way for its full dismantlement on Thursday, with final board clearance for the nationalisation of its Belgian banking business and details of the sale of its French public financing arm.
Dexia was rescued by France, Belgium and Luxembourg this month, receiving 90 billion euros ($124 billion) of state guarantees and accepting that Belgium would take over its operations there for 4 billion euros.
Dexia said French state bank Caisse des Depots and La Banque Postale, France's post office bank, would take stakes of 65 percent and 5 percent respectively in its French public financing arm, Dexia Municipal Agency.
Chief Executive Pierre Mariani told French business daily Les Echos the takeover price was 380 million euros.
Caisse des Depots and La Banque Postale would also set up a 65:35 joint venture to provide loans to French local authorities, refinanced through Dexia Municipal Agency.
The group said it had also started processes to dispose of its 50 percent share in a joint venture with Royal Bank of Canada -- RBC Dexia Investor Services -- as well as Dexia Asset Management and its fast-growing Turkish operation, DenizBank .
Mariani told Les Echos at least four credible buyers had expressed interest.
Qatar National Bank , the Gulf state's largest lender, is eyeing DenizBank in a deal potentially worth up to $6 billion.
Another Qatari investment group, belonging to members of the al-Thani royal family, is set to take over Dexia's Banque Internationale Luxembourg (BIL), in a deal Luxembourg's finance minister Luc Frieden said was expected to be finalised this month.
Dirk Peeters, analyst at KBC Securities, said the cherry-picking of Dexia was continuing and that this would eventually lead to its conversion into a fixed-income hedge fund.
Dexia said its bonds portfolio in run-off totalled 75.5 billion euros, some 20 billion lower than at the end of June, and that it now held 12.2 billion euros of sovereign debt from Greece, Italy, Ireland, Portugal and Spain, from 20.9 billion before.
Its Greek holding had fallen to 2.1 billion euros from 3.8 billion.
Mariani said the debt portfolio should shrink to 40-50 billion euros by mid-2013.
Dexia said the disposal of its Belgian arm would reduce the size of its balance sheet by 144 billion euros and that it would use the proceeds to repay loans from Dexia Bank Belgium.
The agreement with Caisse de Depots and La Banque Postale would subtract a further 65 billion euros from the balance sheet, which totalled 518 billion euros at the end of June.
As well as its bond portfolio, Dexia would also retain public financing units Crediop of Italy, Sabadell of Spain, a similar business in Germany and some French operations.