KBC to stop all non-core operations

(Reuters) - Belgian banking group KBC said on Monday it would stop all activities that were not part of its core markets of Belgium, the Czech Republic, Hungary, Slovakia and Bulgaria.

By 2015, the group expects to improve its cost-income ratio to 55 percent, and aims for a liquidity coverage ratio of 100 percent, it added. 

To stop activities in non-core markets

* Aims to bring cost-income ratio down to 55 pct (Adds details, background)

Oct 8 (Reuters) - Belgian banking group KBC said on Monday 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.

By 2015, the group expects to improve its cost-income ratio to 55 percent, down from the second quarter of 2012 when its underlying cost income ratio was 58 percent.

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.

KBC will create a new business unit for its Czech operations, splitting up the Merchant Banking unit and dividing it among its other units.

KBC will now consist of the Belgian, Czech and International Markets businesses, with the troubled Irish business being incorporated into the latter unit.

KBC recorded 136 million euros in loan loss provisions in its Irish business during the second quarter, down from 195 million in the first quarter.

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

KBC had 16.4 billion euros ($21.42 billion) of outstanding loans in Ireland 21.4 percent of which were marked as non-performing at the end of the second quarter. ($1 = 0.7657 euros) (Reporting By Robert-Jan Bartunek; Editing by Ben Deighton and Louise Heavens)