The Luxembourg regulator CSSF has said it is stopping its evaluation of the sale of Belgian bancassurer KBC’s private banking subsidiary KBL European Private Bankers to the Hinduja Group, after concluding that its decision would have been to object to it. No specific reason was given.

In practice, this means that the disposal, announced in May 2010, will not go ahead.

KBC has said in a statement that “over the coming weeks, and in relation to implementing its strategic plan, the group will thoroughly assess the various options so that, given current market conditions, it can take the best decision regarding the future of KBL epb.”

The sale was part of a restructuring required by the European Commission and a KBC spokeswoman told Reuters the group remained committed to the divestment.

The agency also quoted an unnamed source as saying: "We think the process will start again soon, KBC won't want to wait around. ... The business has improved [since the deal was agreed with the Hindujas] and we think that previous and new bidders may take another look."

Other sources reportedly said the UK Financial Services Authority had also raised objections to the deal and had encouraged Luxembourg not to approve it.