European regulators block Hinduja's €1.35-bn KBL European Bank acquisition

KBC Group NV, the Belgium-based bancassurance and asset management services company yesterday said that the Luxembourg's regulator has blocked its proposed €1.35 billion ($1.9 billion) sale of its private banking arm to the Hinduja Group.

Brussels-based KBC Group said that the Luxembourg regulator, the CSSF, and regulators in the nine other European countries reached this decision based on application of the criteria set out in the law governing the financial sector and after consulting with other competent authorities. 

In May 2010, KBC, Belgium's biggest lender and insurer by market value had announced that it had reached an agreement with the Hinduja Group for the sale of its private banking subsidiary, KBL European Private Bankers (KBL epb).

Jacques Peters, CEO of KBL epb said, ''Of course we are disappointed that it had to end this way…. However, it does not jeopardise implementation of our strategic plan, because the European Commission has given us enough flexibility to enable us to carry out our divestments under the best possible conditions.''

KBC, which received €7 billion in government bailout during the financial crisis, was asked by the European Commission to complete an approved restructuring by the end of 2013, and the sale of KBL epb was part of this reorganisation. 

Hinduja Group, controlled by London-based billionaire brothers Srichand and Gopichand Hinduja, agreed to buy KBL to expand its investment firm business.