ADB business is being closed in accordance with the terms set forth by the European Commission as part of KBC’s bailout during the economic slowdown. KBC borrowed €7bn in 2009.
The run-down will be undertaken through the absorption of ADB into KBC. During the process, no new loans will be granted or no new business made.
KBC had discussions with at least 100 potential buyers before Chinese construction company Yinren Group agreed to buy ADB in December last year.
The deal did not fructify as Yinren failed to submit a comprehensive file to the Belgian regulator, the National Bank of Belgium, within the agreed timeframe.
The bank said in a statement: "Even after receiving a final three-month extension to make a submission, Yinren Group has failed to submit a comprehensive file to the National Bank of Belgium.
"In order to honor the divestment arrangements and deadline agreed with the European Commission, KBC has therefore decided to gradually run down ADB’s business activities."
ADB is a niche bank focusing on the diamond sector and diamond jewellery sector. The 75-year-old bank is the second largest diamond bank in the world, with branches in Antwerp, Dubai, Hong Kong and Mumbai.
KBC Group CEO Johan Thijs said: "We regret that a strong brand and a leading player in the diamond banking industry, with a long and rich history, will have to cease operations as a result."
