(Reuters) - BNP Paribas (BNPP.PA), France's biggest listed bank, said on Thursday it would reap a 1.5 billion euro ($2 billion) capital gain from selling more than half its stake in real-estate firm Klepierre (LOIM.PA) to Simon Property Group (SPG.N). The deal takes BNP a step closer to meeting tougher capital requirements under new banking regulations, intended to crack down on risk-taking, that have forced many European banks to slash their balance sheets and sell assets to beef up capital. It will also see Simon Property, the largest owner of U.S. malls and outlet centers, become Klepierre's largest shareholder with a 28.7 percent stake. BNP still holds 22.2 percent in the real estate company and there is speculation that a full exit of Klepierre is on the cards. "Although Simon Property says it does not currently intend to increase its stake (in Klepierre), it seems to us that in the medium-term this is the direction we're going in," Natixis analyst Serge Demirdjian said. At 1205 GMT, BNP shares were up 4.2 percent at 37.16 euros. The bank's stock has gained 17.5 percent so far this year, outperforming a 6.4 percent rise for the STOXX Europe 600 index .SX7P. The bank is targeting a 9 percent core Tier 1 capital ratio under the new "Basel III" regulations for January 1, 2013. The Klepierre deal lifts its ratio by 0.32 percentage points and reduces risk-weighted assets by around 25 billion euros, BNP said. BNP is targeting a further 3 billion-euro cut in risk-weighted assets at its investment portfolio, which includes a stake in insurer Axa (AXAF.PA) and private equity assets. The deal also marks the second time in as many weeks that BNP has sold assets to a U.S. buyer. Last month BNP sold a $9.5 billion portfolio of energy loans to American bank Wells Fargo (WFC.N), a sign of how European banks' drive to reduce U.S. dollar funding is offering opportunities to rivals Stateside. The property sector is seen as being particularly ripe for mergers and takeovers, not just because banks are putting assets on the block, but because sluggish economic growth in Europe is pushing property companies to expand via acquisition. "There's not much in the way of rental growth, capital growth, and so companies are looking at means of expanding elsewhere," Investec analyst Alan Carter said. Shares of Klepierre were up 6.5 percent at 24.93 euros. Simon is paying 28 euros per Klepierre share, or a premium of 19.7 percent on Wednesday's closing price. Analysts said this was higher than expected. "The price of 28 euros is above expectations for between 24 to 26 euros," Natixis' Demirdjian said. M&A UPTURN Simon Property Chief Executive David Simon will become the chairman of Klepierre's nine-member supervisory board under the terms of the deal. Two other SPG representatives will also join. Simon Property will receive Klepierre's dividend to be declared in April 2012. The Indianapolis, Indiana-based company has also agreed to acquire a stake in 26 assets of Mills Ltd Partnership belonging to its joint venture partner, Farallon Capital Management, for $1.5 billion. With many of Europe's property companies trading at significant discounts to net asset value, analysts said other cash-rich overseas companies like Westfield Group WDAC.X were possibly eyeing takeovers or the option to snap up stakes. The sector, particularly shopping mall operators, faces dismal rental and growth prospects as recession and the impact of Internet shopping hit property values and tenant demand. "We have been arguing that mergers and acquisitions (in real estate) will come this year, or will be intensifying," said JPMorgan Cazenove analyst Harm Meijer. "I don't rule out Simon doing something else as well, given their track record and under-representation in certain markets like the UK." Simon Property unsuccessfully attempted to acquire UK mall owner Capital Shopping Centres Group (CSCG.L), in which it presently owns a four percent stake, early last year. "Do I think that it's feasible that within the next 5 or 10 years ... that Simon or Westfield end up owning one or two or three of Europe's, including the UK's, largest companies? Yes I think that's feasible," Investec's Carter said. Simon Property revised its full-year outlook and now expects 2012 funds from operations to be between $7.35 to $7.50 per share, up from $7.20 to $7.30 per share. ($1 = 0.7622 euros) (Additional reporting by Eileen Anupa Soreng in Bangalore)

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