KBC, the Belgian banking group, has said it is not selling its Irish business - KBC Bank Ireland, which has a sizeable residential mortgage business.

"It is presently not an option to sell our Irish business," chief executive Johan Thijs told a press conference today.

KBC recorded €136m in loan loss provisions in its Irish business during the second three months of the financial year, down from €195m in January, February and March.

Earlier, the group said it would stop all activities that were not part of its core markets of Belgium, the Czech Republic, Hungary, Slovakia and Bulgaria to bring down costs.

Though KBC has made all of the main divestments it agreed to with European regulators in exchange for the financial aid it received from Belgium at the height of the credit crisis, it still needs to sell smaller units in Belgium, Germany, Russia and Serbia.

It will now consist of the Belgian and Czech businesses, along with International Markets businesses which will incorporate the troubled Irish division.

KBC said today that it would that it would aim to generate more income from retail banking in Ireland.

At the end of June KBC had €16.4 billion of outstanding loans in Ireland, 21.4% of which were marked as non-performing.