European Commission nods on KBC relief, Belgian group to float Czech unit and possibly Hungary's K&H Bank
2011-09-22 12:13:53
The European Commission has on Wednesday approved a EUR 7 billion asset relief and restructuring package for the Belgian KBC Group that said it plans to make a public offering of a minority stake in its Czech subsidiary CSOB that will be listed on the Prague Stock Exchange in 2010. "A similar transaction can be set up in the future for selected other Central and Eastern European subsidiaries, such as K&H in Hungary," KBC added.
The restructuring package foresees structural and financial restructuring through the divestment, run-down and listing of various businesses.
"The Commission is satisfied that the package of measures ensures that KBC will pay a significant proportion of the restructuring costs, will restore the long-term commercial viability of KBC, and tackles the distortions of competition that result from the state aid," the EU executive said in a statement.
Furthermore, following an in-depth investigation, the Commission has concluded that the asset relief measure launched on 30 June 2009, is in line with state aid rules and no doubts remain concerning the valuation and remuneration of the measure.
"The in-depth restructuring of KBC will restore its long-term viability and limit distortions of competition, while at the same time taking into account financial stability concerns. I am therefore satisfied that, through close cooperation with the Belgian authorities, we have managed to strike the right balance," said Competition Commissioner Neelie Kroes.
KBC is an integrated banking and insurance group, serving mainly retail customers, SMEs and private banking clients. KBC is one of the main financial institutions in Belgium. Besides its activities in Belgium and Central and Eastern Europe, KBC is also present in Russia, Romania, Serbia, several Western European countries including Ireland and to a lesser extent in the US and Southeast Asia.
KBC has received three aid measures:
- a recapitalisation of EUR 3.5 billion
- a second recapitalisation of another EUR 3.5 billion and
- an asset relief measure on a portfolio containing Collateralised Debt Obligations (CDOs).
The Commission temporarily approved the first recapitalisation on 18 December 2008 and the other two measures on 30 June 2009, while simultaneously opening an in-depth investigation into several aspects of the asset relief measure.
The final approval of the measures was conditional upon the presentation of a restructuring plan capable of restoring the long term viability of the bank without continued state support.
The Belgian authorities submitted the restructuring plan for KBC on 30 September 2009. The restructuring plan provides for an in-depth restructuring of KBC. KBC will retain its integrated banking and insurance model.
However, it will divest or run-down a significant number of businesses, including in Central and Eastern Europe, particularly those that are not fully in line with its core business model.
Furthermore, it will divest a banking business (Centea) and an insurance business (Fidea) in Belgium which will stimulate competition in this core market.
The restructuring plan also sets out how KBC will repay the two capital injections to the Belgian authorities.
2009.11.18 12:21
KBC to float Eastern European units, repay state aid in full
