PARIS, Oct 3, 2008 (AFP) - The chief executive of troubled Franco-Belgian bank Dexia said Friday he would forego a 'golden parachute' payoff after resigning following a government bailout.

'Following my decision to relinquish my mandate as administrator, I have also decided that I will not be asking for severance payment,' Axel Miller said in a statement.

Miller was to have received 3.7 million euros (5.1 million dollars), according to bank documents.

The departure of Dexia executives was a condition set by the French government for shoring up the Franco-Belgian banking group, which lends heavily to French municipalities.

Paris also insisted that Miller be stripped of any right to severance pay.

Earlier this week, the French, Belgian and Luxembourg governments threw a 6.4-billion-euro (nine-billion-dollar) lifeline to Dexia which was caught in the financial storm caused by the US banking crisis.

The French government this week started preparing legislation to be presented in the coming weeks restricting executive payoffs after several banks became vulnerable, due in part to poor investment decisions.

Dexia's troubles came amid the biggest financial upheaval since the Great Depression, forcing the US government to draw up a 700-billion-dollar (505-billion-euro) rescue package to contain fallout from the crisis.

A source close to the matter told AFP that Miller may be replaced by Gilles Benoist, director general of the French insurance group CNP, but a spokeswoman for that company later said Benoist formally denied the report.

The source also said Jacques Guerber, vice-president of Dexia's executive committee, was in the running to replace Miller.