Belgian lender KBC is considering selling off its Irish unit and hopes to finish repaying outstanding state aid by the end of 2017.

The loss-making Irish arm of the business had €15.1bn ($20.5) of loans and mortgages outstanding by the end of the first quarter of 2014.

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KBC said it was considering "whether to organically grow a profitable bank, build a captive bank-insurance group or sell a profitable bank."

The lender said it hoped the Irish unit would become profitable by 2016 and that it was keeping all options open after that.

KBC group still owes the European Commission €2bn, not including penalties, after receiving a €7bn bailout package at the peak of the economic crisis.

The bank had agreed to repay the last of the loan at the end of 2020, but now wants to accelerate its repayments and finish paying back the money at the end of 2017.

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It added that it plans to use one third of its excess capital generated until 2017 to make these payments.

KBC has shown signs of aggressively targeting the Irish retail banking market in recent months:

  • In late January, the lender announced plans to expand its mortgage business in 2014 and said it aimed to compete with major banks Allied Irish Banks and Bank of Ireland.
  • In February, the bank announced it was to expand its workforce by adding 200 new staff, as part of plans to move out of business banking and focus on growing retail banking business.
  • The announcement came after the lender reported an increase in deposits to €2.9bn, despite incurring losses of €864m in 2013, and reported adding 34,000 new customers during the year.

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