The bank – which was bailed out by the Flemish authorities last spring with some €7 billion of public funds – will have to divest from a range of activities that together represent some 17% of the institution’s balance sheet.

The bank’s CEO, Jan Vanhevel, claimed he was seeking up to €14 billion of new funds between now and 2013. Divestments are at the forefront of the strategy, with the sale of two of its local affiliates – Centea, a network of some 700 independant brokers in financial services, and Fidea, specialised in insurance services.

Abroad, the bank will sell its Russian and Serbian subsidiaries and will float up to 40% of its Czech affiliate CSOB bank. The future of KBC’s Hungarian branch is uncertain at this point.

Within the merchant banking division, KBC will sell Antwerp Diamantbank and the UK Peel Hunt affiliate, while KBC’s private banking network will be severely cropped. Many of its activities will be sold off, including well-known activities such as Luxembourg-based KBL European Private Bankers, Puilaetco Dewaay and other branches based in Switzerland, Monaco and France.

Other assets, such as the bank’s private equity department, are also said to be on the block, while some of its property interests are being sold, such as the landmark Concert Noble in Brussels.

Vanhevel said that he expected that the bank’s return to profitability would help fund the restructuring programme and hoped KBC would be strong enough to pay a dividend on its 2010 results.