* KAS Bank investments have risen in line with market
* Trading volumes in past few months slightly up
* Banks could be hit by corporate credit writedowns
* Shares close up 0.6 percent
By Gilbert Kreijger
AMSTERDAM, June 9 (Reuters) - Dutch KAS Bank, a wholesale provider of securities services such as custody, is close to buying operations in Germany and has seen its own investments rise in line with the market, its chief executive said.
"In addition to organic growth we are looking at small acquisitions and if necessary also a larger acquisition. This has happened less in the past one and half years of course but we are now looking in Germany at something," KAS Bank Chief Executive Albert Roell told Reuters.
KAS Bank, which competes in Europe with U.S. State Street and European privately-held Euroclear, was close to a German deal to take over a specialist unit in fund and asset administration, Roell said.
Roell said he expected European banks to reconsider their operations and to spin off some specialist activities.
"We have already seen this a little in the last few years but this will increase. Banks will say: 'We don't want to keep doing this kind of services, it's better to go to specialists'," Roell said.
KAS Bank shares closed up 0.6 percent at 12.08 euros, after trading lower most of Tuesday.
Trading volumes at KAS Bank, which made a 39.9 million euro ($55.4 million) loss in 2008 due to writedowns and had 89.2 million euros of commission income, had slightly risen since markets normalised and recovered partly in March, Roell said.
"Investments for own account -- of which KAS Bank has relatively few -- were all recovering slightly," Roell said.
The value of the five bank perpetual bonds that KAS Bank owns had probably risen in line with broader market movement in the past three months, Roell said.
"I have full confidence in all five banks. These are all five systemic banks. I have full confidence in them, including ING," Roell said.
Roell did not rule out that credit assets could fall further.
"We are in the middle of a recession. The biggest hits are still to come," Roell said.
"Markets have had a great rally but no one is saying that this is the end of the crisis. If you are practically looking at a recession then there will be a lot more problems in normal industry, which in turn will spill over to the banks." ($1=.7208 Euro) (Editing by Simon Jessop and Rupert Winchester)