Belgian-based bank KBC Group has acquired Ulster Bank's fund management business for €105 million (£82.7 million). The business is expected to generate profits of €5.8 million this year, according to a memorandum passed to likely bidders last year.

Ulster Bank Investment Managers (UBIM), which was managing funds worth about €8 billion on March 31st last, will trade as KBC Asset Management from July, once regulatory approval for the deal is secured. UBIM's chief executive, Mr Gavin Caldwell, will retain his position and all 73 staff will remain with the company.

KBC already owns Irish Intercontinental Bank, which it acquired in the late 1970s, and a non-life insurer in the agricultural sector, FBD Insurance. The sale price included reserves of €5 million and is subject to closing adjustments. Some €11 million in dividends due to Ulster are not included in the deal.

UBIM was offered for sale last December by Ulster's former owner, National Westminster, as part of its defence against hostile bids from Bank of Scotland and Royal Bank of Scotland. When Royal Bank of Scotland completed its purchase of NatWest in February, the group said it would continue with the sale.

Mr Caldwell said UBIM's membership of KBC would enable it to expand its international business, in Britain initially.

Asked whether the company's membership of NatWest had constrained its growth in Britain, Mr Caldwell said it had not been operating in an "open market".

While the company had worked successfully within Ulster Bank and NatWest, he said it had been viewed as a regional player only. The link with KBC would give it the scope needed to secure business from international pension consultants, Mr Caldwell said.

KBC Asset Management chairman Mr Luc Philips said the acquisition would play a critical role in the development of its international institutional business. Its current strategy was to extend its Irish business to wards institutional and private investors, he said.

UBIM's current clients would remain with the company, Mr Caldwell said. This was because UBIM was not changing personnel or its investment process.

While UBIM is regarded as an attractive business which has performed well in its peer group, it is believed that leading Irish banks such as Bank of Ireland, Irish Life & Permanent and Anglo Irish Bank did not submit bids.

UBIM is known to have top-rank clients such as RTE, CRH, Unilever, Compaq and Glanbia in its pension management business.