KBC sells private banking network to India's Hinduja Group

Belgium's KBC group has sold its private banking subsidiary, KBL European Private Bankers (KBL ebp), to the Hinduja Group of India for €1.35 billion.

KBL ebp includes a number of well known names in private banking from around Europe, such as Merck Finck in Germany, Theodoor Gilissen Bankiers in the Netherlands, Brown Shipley in the UK and Richelieu Banque Privée in France.

The various arms account for some €47 billion in assets under management and the group employs 2,661 staff.

KBC had been under pressure to sell its private banking business from the Belgium government after receiving billions in state aid during the credit crisis. It will continue to offer private banking services in Belgium and Central and Eastern Europe through its KBC-branded private banking businesses.

'We plan to invest further in the business, maintaining each of the subsidiaries, while also providing KBL epb with access to the fast growing markets of the Middle East, the Indian subcontinent and Asia,' chairman of the Hinduja Group Srichand P. Hinduja said. 'In this way, we hope to address the private banking needs of clients internationally and facilitate capital flows between fast growing economies and established Western financial markets.'

The deal is expected to be completed in the third quarter of 2010 and will shore up KBC's balance sheet.

'With this divestment, we are releasing a significant amount of capital and further strengthening the KBC group, with its focus on its core bancassurance expertise and markets (Belgium, Central and Eastern Europe), and with its reduced risk-profile. This important transaction enables the group to report a very strong pro forma core tier-1 ratio of 10.4 % as of 31 March 2010,' said Jan Vanhevel, KBC Group CEO.