Hopes for a takeover of stricken New Star receded today as potential bidder Aberdeen Asset Management bought Credit Suisse's UK asset management division for £250 million.

The all-share deal creates Britain's biggest independent fund management group. It dislodges Toscafund, the ailing hedge fund headed by former Royal Bank of Scotland chairman Sir George Mathewson, from its position as Aberdeen's largest shareholder. Credit Suisse will take on the title through its 25% stake in the new group's issued shares.

The Swiss bank put its asset management division up for sale earlier this year to focus its attention on higher-revenue private banking, although its stake in the new fund means it remains exposed to the business.

Aberdeen ran funds of £102.6 billion up to last month. With Credit Suisse managing £40 billion, the size of the enlarged group turns the fund into a global operation.

Credit Suisse's business has a major presence in Europe, Asia and Australasia.

The buyout was masterminded by Aberdeen chief executive Martin Gilbert, who tripled his fund's size when he bought £46 billion of assets controlled by Deutsche Bank in July 2005.

In October this year, Gilbert linked with Japanese bank Mitsubishi UFJ, another significant shareholder in Aberdeen after paying £100 million for a 10% stake. Aberdeen had profits of £95 million for this year to the end of September.

Gilbert has been associated with John Duffield's struggling New Star in recent weeks, but Aberdeen today described that potential move as "on the back-burner".

Aberdeen finance director, Bill Rattray said: "This is a very sizeable deal for us, quadrupling the size of Aberdeen. This enlarged fund will earn us money from the moment the deal is signed."