19 November 2009

KBC: Commission approves asset relief, divestment and restructuring package

KBC will retain its integrated banking and insurance model. However, it will divest a significant number of businesses, including in Central and Eastern Europe, particularly those that are not fully in line with its core business model.

The European Commission has approved under EC Treaty state aid rules an asset relief and restructuring package for the Belgian KBC Group. The restructuring package foresees structural and financial restructuring through the divestment, run-down and listing of various businesses.

Competition Commissioner Neelie Kroes said "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."

KBC has received three aid measures:

·       a recapitalisation of €3.5 billion

·       a second recapitalisation of another €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 numbers 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.

 

Press release

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