The Basel-based private banking group, Sarasin, is delaying expansion plans after revealing a 42 per cent drop in first-half net profit to SFr39 million ($23.41 million). The company attributed the drop in net profit to weak markets and the high cost of expanding its business.

The bank said on Friday that it planned to slow the pace of its expansion, and would also delay major investment projects.

Sarasin, controlled by its partners, has been the focus of speculation that it might be sold to one of its larger partners. However, it made no mention of such speculation in its first-half results release.

It acknowledged simply that expenditures are a necessary part of broadening its business base, and necessary to increase the assets it manages for institutions and wealthy individuals, the mainstay of its business.

Client assets rose slightly to SFr41.9 billion at the end of June from SFr41.4 billion at the end of December 2000.

The group has been keen to expand, and in the first half of this year, it increased staff by 15 per cent to 816 people. The staff expansion has resulted in higher costs, as have investments in other areas of its business.

Rumours that Sarasin, founded in 1841, might be up for sale were heightened after the group said recently that it had hired investment bank Fox-Pitt Kelton for advice on its business structure. Sarasin has said the step was routine.

In a newspaper interview last Saturday, chief executive Peter Merian also denied any plans for selling the bank or teaming up with another partner.

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