what should you reply when the PO asks you about the team performance?

1. The role of management is to support the Scrum teams and their decisions. Removing a team member, because the PO or higher management says so, is border dictorial (nontheless a relatively common practice, unfortunatly). 

2. Besides that, the PO had budget for people. Resources are dispossable items. Maybe, if the lack of technical skills, has been raised as an impediment and has been tried to be resolved etc, a team member might be removed. But not just because a PO wants to. 

3. A team should consist of people that are to able to create the product at hand, to reach the goal that needs to be achieved. What was the original reasoning for him to be in the team?

Why is the Product Owner asking about team performance? Is the team not able to achieve the goals established at Sprint Planning? Is the failure to achieve the Sprint Goals consistent? Or is the Product Owner simply not satisfied with the rate of accomplishment of the team?

I'd question a Product Owner who wanted to make changes to the team. Instead, I'd first want to try to fix the underlying problems. The problem could be on the side of the Product Owner - not understanding the difficulty or complexity of the work being done by the team, unreasonable expectations, or something else. But the problem could also be on the side of the Development Team - not enough domain knowledge, not enough technical knowledge, insufficient experience. There could be process, workflow, or tooling issues within the team, as well. As a Scrum Master, you should be able to work with the Development Team and the Product Owner to figure out what the underlying problems are and determine how to correct them.

However, ultimately, removing a poorly performing person is an option. However, that's not the role of the Scrum Master. Scrum does say that teams should be self-organizing, but organizations do expect a certain level of performance from individuals. If individuals are not meeting expectations, then it is within the scope of human resources management to coach the individual or remove them, and some of these decisions are outside the scope of the Scrum Team.

PO is paying for the resources

Does he, or anyone, understand that they are paying for a team?

How do you define "poor performance" for an individual and what is based on?  Is it lines of code written? If so, how do you define the performance of that senior developer that spends a considerable amount of time helping the more junior members in improving their skills and knowledge by pair programming or doing code reviews?  Is it based on the number of defects produced by an individual? If so, how do you compare someone doing very complex back-end code to the person that is only doing stylistic changes via CSS to a web based front end? 

What you should say as a coach/ scrum master to reply the PO when he is asking about the team performance?

I would very seriously and honestly show him how the team has delivered on their Sprint Goals and their ability to address the Product Backlog Items as ordered by the Product Owner.  After all, he did ask about the team and that is the true measure for agile practices. It may be that the team is not doing a very good job of meeting those objectives and if so an open, and possibly uncomfortable, conversation should occur during a Retrospective. Let the team self-organize and self-manage the situation. You might be surprised by their actions and decisions. I have seen one situation where their was one team member that actually asked to be removed and voiced their desire to join another team because the individual felt that they were holding the team back from showing their true capabilities. 

What you should say as a coach/ scrum master to reply the PO when he is asking about the team performance?

The Scrum Master should never place themselves in a position where they are providing feedback to others in the organization regarding team or individual performance.   Such behavior creates an "authority" dynamic and will undermine a Scrum Master's ability to serve.   In my practice, I try at all times to promote a "team" identity, as that helps with team ownership and self-management. 

I agree with some of the previous comments questioning the PO's motivation for this information.   Is the PO unhappy with how the team is delivering?   Has the team missed their forecasts or Sprint Goals?   And are there any concerns coming from the Development Team regarding their performance and ability to work together?

One analogy I like to use is buying software off the shelf.   As the purchaser, I can equate myself to the PO role.   What are my concerns then?   Is the software of high quality?   Does it provide functionality that is beneficial to me?   Is the cost of the software reasonable?

Now, at no time do I ever look at a piece of software that meets the above criteria, and say to myself "I wonder if anyone who worked on this was a poor performer."

Coach your PO to practice similar behavior.   Their focus should be on the end-product, whether it meets DoD and is of high quality, and whether it does what it was supposed to do.   Allow the Development Team to self-manage themselves regarding team performance.