The Belgian banking group, KBC, which owns more than one-fifth of FBD Holdings would continue to be a passive shareholder in the medium term and was not interested in acquiring the agricultural insurance company, its chief executive, Mr Paul O'Callaghan, said yesterday.

Mr O'Callaghan, who was speaking after FBD's annual general meeting, said that despite KBC's interests in Irish Intercontinental Bank (IIB) and the Irish Life Home Loans company, Irish Life Finance, the Belgian group had previously stated it "would not be aggressive in its approach to this company".

KBC, formed from the merger of the Belgian banks, Kredietbank and CERA Bank, last year, has a 22.9 per cent stake in FBD.

It has been in talks with Irish Life, with which it shares the ownership of Irish Life Finance, on acquiring the mortgage lending company.

It is also negotiating with Irish Life to acquire its 25 per cent stake in IIB and its 24 per cent stake in the Hungarian bank, K&H. The negotiations have been prompted by Irish Life's decision to merge with Irish Permanent and the consequent conflict in the mortgage market which has arisen.

The chairman of FBD, Mr Michael Berkery, said the combination of low interest rates and the continuing increase in claims costs had led to increased premiums to cover underwriting costs. Over-dependency on the motor insurance market had to be avoided, he said, because new entrants were causing instability by providing reduced premium rates but with an inadequate service.