KBC BANK Ireland has been recategorised as a core part of its Belgian parent bank’s operations and will form part of the bank’s international markets business.

Previously described by KBC in Belgium as “non-core”, the Irish banking subsidiary will now join its banking subsidiaries in Hungary, Slovakia and Bulgaria as well as units still to be divested by KBC in the international division.

The Belgian bank said that it would maintain its operations in Ireland where KBC Bank Ireland will be “managed to maximise its value contribution through its retail banking business”.

The Irish banking operation described the latest restructuring by its Belgian parent, which has received €7 billion in state aid, as “an expression of confidence in Ireland by a foreign bank”.

The Irish unit noted the significance of the announcement by the Belgian parent which was in contrast to the divestment of operations outside of the bank’s core markets, including Russia, Slovenia, Germany and Serbia.

John Reynolds, chief executive of KBC Bank Ireland, said the announcement was an endorsement of the work the bank has undertaken to consolidate and grow the Irish business, despite challenging market conditions.

“We have been proactively capitalising on opportunities in retail banking while carefully managing our mortgage and banking business and this strategy is supported by our parent,” he said.

“The group recognises that we are well positioned to secure further growth in the Irish banking sector.”

KBC Bank Ireland, formerly IIB Bank, has had a presence in Ireland since 1973 and employs 700 people in Dublin, Cork, Limerick, Galway and Belfast.

The bank has aggressively targeted new deposits in the savings market over the past year. It also will open a new retail office in Dublin in the coming months.

The Belgian bank injected the first cash into its Irish subsidiary since the start of the banking crisis when it pumped €75 million into KBC Bank Ireland earlier this year as loan losses remained high.

The Irish bank also converted almost €300 million of subordiated debt loaned to the Irish unit into capital earlier this year.