Belgian bancassurer KBC Group yesterday cancelled the proposed €1.35bn (£1.2bn) sale of its private banking arm to Indian group Hinduja after failing to win regulatory approval for the deal. The collapse of the deal sets back KBC’s plan to free up capital to pay back state aid and means any eventual sale could be done at a lower price. KBC had agreed in May to sell KBL to the Hinduja Group. It needed antitrust clearance in Luxembourg and nine other countries. KBC's shares closed 6.2 per cent lower after the news. The sale to Indian family-owned investment firm Hinduja Group would have been the largest of KBC's divestments to date.