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Scrutiny has focused on UK banks this week, where sources confirmed Lloyds TSB would look to sell Insight Investment and Clerical Medical Investment Group if its merger with HBOS went ahead. A merger of Insight and Swip Fund Management would have created the UK's largest asset manager.

Speculation over the future of Kaupthing Singer & Friedlander Investment Management also intensified as the UK government placed its parent division Kaupthing Singer & Friedlander into administration.

KSFIM runs seven UK-distributed retail funds under the Singer & Friedlander bannner, which in total have £173.2m under management.

Other UK banks with retail fund or retail structured product divisions include Royal Bank of Scotland, the Co-operative Bank and Barclays, which incorporates Barclays Wealth and Barclays Global Investors.

HSBC, which owns HSBC Global Asset Management, is not considered to need the same level of recapitalisation as Barclays, RBS, Lloyds TSB or HBOS.

Santander, the Spanish bank that owns Abbey National and Santander Asset Management, is also understood not to require extraordinary funding.

Insurers also rushed to reassure their clients they were well capitalised last week. Aviva, which owns Morley Fund Management, revealed it was adequately backed.

Mark Connolly, executive director of distribution and client service at Standard Life Investments, said the division was looking to buy other companies.

Friends Provident had already announced it would look to sell its majority stake in F&C Asset Management earlier this year.

Speculation had also been circulating as to whether New Star could avoid issuing new stock. However, a spokesman for New Star said under current conditions, a rights issue would be unnecessary.

Howard Covington, chief executive, said earlier this year New Star was only in danger of breaking its banking covenants if the FTSE remained below 4400 for 12 months, as a proxy for its ability to generate fees. New Star's debt is not due for refinancing until 2013.

Darius McDermott, managing director at Chelsea Financial Services, said further consolidation in the asset management industry was likely as a result of the worsening market environment.

"If we look at the end of next year, the industry will look slightly different. There will be fewer and fewer viable businesses, including fewer floated groups."

Mr McDermott said any deal involving Insight would have a larger effect on the institutional arena than on the retail.

"Insight does not have a huge retail presence, but it does have a strong presence in institutional."

Kaupthing had not responded to queries at the time of going to press. Insight and Clerical Medical declined to comment.