The business, which contributed about 11% of Natixis' net income last year, said on Monday the move had led it to mark down the value of its funds by as much as 7%.

Around 1.4 billion euros (1.2 billion pounds) was pulled from H2O funds last week after rating company Morningstar put one of its funds under review, citing concerns over liquidity and governance. That sent Natixis shares tumbling. Such concerns were also raised in a Financial Times report.

Concerns about liquidity in funds that allow investors to get their money back on a daily basis have risen recently, particularly in Britain where money manager Neil Woodford was forced to suspend trading in his flagship fund.

H2O, which manages around 31 billion euros ($35 billion), said it had sold part of its non-rated private bonds. It did not give details, but said the aggregate value of the bonds represents less than 500 million euros as of Monday.

The speed with which H2O has acted to reduce less liquid assets contrasts with Woodford, whose flagship fund has a much greater exposure to unlisted companies and has yet to fully update on its sale process.

Natixis said separately it backed the decisions taken by H2O and would bring forward a planned audit of H2O.

The bank also reaffirmed its confidence in its operating model, which involves buying majority stakes in asset management companies and allowing them a degree of independence at the same time as plugging them into Natixis' distribution platform.

Natixis shares closed up 0.7% on Monday.

Natixis' affiliates, which include U.S. firms Loomis & Sayles and Harris Associates, currently manage combined assets of 855 billion euros. H2O manages about 3.7% of group assets.

KBW analyst Jean Pierre Lambert said information on the H2O website showed outflows from its funds of 1.4 billion euros between Tuesday and Thursday last week, suggesting outflows could have neared 2 billion euros by the end of the week.

(Reporting by Sudip Kar-Gupta; Editing by Gopakumar Warrier, Mark Potter and Jan Harvey)

By Sudip Kar-Gupta and Simon Jessop