European banks, under pressure from regulators to bolstercapital, are selling some of their fastest-growing businesses tocompetitors from outside the region — at the expense of futureprofit and economic growth.

Spain's Banco Santander SA, Belgium's KBC Groep NV and Germany'sDeutsche Bank AG are accelerating plans to exit profitableoperations outside their home markets. Santander, which said inOctober it needs to plug a 5.2 billion-euro ($6.9 billion) capitalgap, sold its Colombian unit last week to Chile's Corpbanca for$1.16 billion. Deutsche Bank is weighing options including a saleof most of its asset-management unit, while KBC may dispose ofbusinesses in Poland.

Such sales risk hurting long-term profit, just as Europe entersrecession, investors say. It's the unintended consequence of thedecision by European regulators to make banks increase core capitalto 9 percent by June instead of 2019. Unwilling to raise equitybecause their share prices are too low, lenders are sellingprofitable assets because they're struggling to find buyers willingto pay enough for their troubled loans to avoid a loss that woulderode capital. Investors say the sales risk leaving banks focusedon a stagnant economy and deprive them of economic growth fromoutside the region.

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