KBC: Selling Irish arm not an option

Belgian banking group KBC said selling its Irish business, KBC Bank Ireland, a bank burdened with a sizeable residential mortgage business, is not an option.

The announcement was made as the banking group outlined its vision for “2013 and beyond”.

KBC recorded €136m in loan loss provisions in its Irish business during the second quarter, down from €195m in the first quarter.

In a statement the bank said: “Ireland remains an exception, where in the coming years KBC Bank Ireland will be managed to maximise its value contribution through its retail banking business.”

KBC is planning to expand its Cork office and open a new branch on Dublin’s Baggot St.

John Reynolds, CEO of the bank’s Irish operation, which employs 700 people, said the news is “an endorsement of the work we have been undertaking to consolidate and grow our business in Ireland”.

“We have been proactively capitalising on opportunities in retail banking while carefully managing our mortgage and banking business and this strategy is supported by our parent,” he said.

However, KBC Bank CEO Johan Thijs said the bank will be refocusing on the continental market and did not include its Irish branch in its plans. “KBC clearly defines its core markets as those markets where it is present with banking and insurance companies.

“These core markets are Belgium, the Czech Republic, Hungary, Slovakia, and Bulgaria, where the group is strongly embedded in the local economies.

“In some of these markets KBC has achieved a market leadership position. All activities which do not contribute to serving the client relationships in KBC’s core markets will be stopped,” a statement read.

KBC’s priority has been the implementation of the plan agreed in 2009 with the European Commission with the aim of repaying state aid and of complying with capital requirements.

Mr Thijs said: “Our goal is to become more agile and efficient and thus more competitive. In doing so, we will not only adapt to changing client behaviour but will also meet the legitimate expectations from society as a whole.”