Indian conglomerate Hinduja Group’s planned $1.9-billion acquisition of Luxembourg-based KBL European Private Bankers (KBL epb) has fallen due to regulatory hurdles.

The proposed deal, estimated to be worth $1.9 billion, was announced in May 2010.

Luxembourg regulator CSSF has blocked the deal, according to Belgian entity KBC Group NV. KBL epb is the private banking arm of KBC.

“Hinduja Luxembourg Holdings (HLH) regrets that the deal will not be going forward.

“The company will communicate further once it has received all the necessary regulatory information and has had the chance to discuss the matter with KBC,” HLH said in a statement on Tuesday night.

The Hinduja Group had submitted the deal approval to CSSF and the regulators in the nine other European countries where KBL epb operates.

KBC on Tuesday said that CSSF has stopped the evaluation of the proposed acquisition since the “decision would have been to object to it’’.

“The CSSF reached this decision based on application of the criteria set out in the law governing the financial sector and after consulting with the other competent authorities.

“In practice, this means that the sale of KBL epb to the Hinduja Group will not go ahead,” the Belgian group said in a statement.

KBC said it would thoroughly assess the various options to take the best decision regarding the future of KBL epb.

“To our surprise and regret, the Hinduja group was unable to obtain approval for this deal from the regulators in the ten European countries in which KBL epb is active.

“Although, naturally, we were and are unable to do anything about the situation, there is no denying that this is disappointing for us,” the KBC Group CEO, Mr Jan Vanhevel, said.

As part of restructuring efforts, KBC has sold many of its businesses since 2009. The group had also received bailout funds to tide over the financial meltdown.

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