KBC Groep : KBC Group: KBC to repay first instalment of state aid received from Flanders today, still ahead of schedule

  KBC Groep : KBC Group: KBC to repay first instalment of state aid received
from Flanders today, still ahead of schedule following successful transfer of
                        a portion of shareholder loans

Press Release KBC

Outside trading hours - regulated information*

Brussels, 3 July 2013 (before trading hours)

Monday morning before trading began, KBC announced that it would not repay the
first instalment of the aid received  from the Flemish Regional Government  in 
the first half  of this year,  but in the  second half, because  it was  still 
investigating the transfer of  a portion of the  shareholder loans granted  in 
the past  to KBC  Ancora and/or  Cera.This was  because the  National Bank  of 
Belgium would only approve the accelerated  repayment of part of the aid  from 
the Flemish Regional  Government provided a  portion of the  above loans  were 
transferred.

Yesterday, KBC succeeded in reaching agreement on the transfer of 0.3  billion 
euros' worth  of  loans  to  KBC Ancora  to  another  international  financial 
institution.In doing  so,  KBC has  met  the  condition recently  set  by  the 
National Bank.The transfer will boost KBC's capital position by a further  0.3 
billion euros and will generate added value for its shareholders.

In practice, this also means that KBC  will repay 1.17 billion euros of  state 
aid plus the penalty of 0.58 billion euros - in total, 1.75 billion euros - to
the Flemish Regional  Government today,  still six  months in  advance of  the 
deadline agreed with the European Commission.

KBC to repay 1.17 billion  euros plus penalty of  50% (0.58 billion euros)  to 
Flemish Regional Government today

On 10 December 2012, KBC announced  its intention to repay 1.17 billion  euros 
of state aid (plus the  penalty of 50%, which  amounts to 0.58 billion  euros) 
received from the Flemish  Regional Government in the  first half of 2013,  in 
advance of the deadline of end-2013 agreed with the European Commission.  This 
repayment was  subject to  the  customary approval  of  the National  Bank  of 
Belgium, which has granted its approval.

Johan Thijs, KBC Group CEO:  'We intended to repay in  the first half of  this 
year, and ahead of  schedule, a substantial portion  of the aid received  from 
the Flemish Regional Government.And  we have succeeded  in doing this,  albeit 
three days late.With a common equity ratio of 12% (at end-1Q13) under full and
early application of the new Basel III capital requirements (i.e. fully loaded
Basel III), our  solid capital  position, together with  meeting the  National 
Bank's additional condition  regarding the  shareholder loans,  has made  this 
possible.

I would  like to  take this  opportunity  to express  our deep  gratitude  and 
appreciation to the Flemish Regional Government  for its support at a  crucial 
moment during the  worst financial  crisis in decades.After  years of  working 
hard, and with the  loyal support of our  staff, clients and shareholders,  we 
are now in a position to fulfil  the commitments we entered into.We are  happy 
to be able to announce today that we will fulfil our commitment to the Flemish
Regional Government  by  repaying 1.17  billion  euros in  principal,  plus  a 
penalty of 0.58billioneuros,  six months ahead  of schedule.In addition,  we 
reconfirm our undertaking, as  agreed with the  European Commission, to  repay 
the outstanding  balance  of  2.33  billion  euros  to  the  Flemish  Regional 
Government in seven equal instalments of 0.33 billion euros (plus penalty)  to 
be paid  between  2014  and  2020.However, we  may  opt  to  accelerate  these 
repayments, too,  if our  capital position  so allows  and the  National  Bank 
grants its approval.

Despite  the  persistent   macroeconomic  uncertainty   and  volatile   market 
conditions,  our  core  activities   and  bank-insurance  model  have   proved 
throughout  the  crisis   how  solid   they  are.KBC   is  now   one  of   the 
best-capitalised and most liquid banks  in Europe.Repaying a large portion  of 
the aid received from the Flemish  Regional Government will allow us to  focus 
fully on  our  core  activities,  on implementing  our  new  strategy  and  on 
achieving   operational   excellence.Our    client-focused   and    integrated 
bank-insurance model in  Belgium, the  Czech Republic,  Slovakia, Hungary  and 
Bulgaria,  and  our   strong  market  positions   form  the  foundations   for 
profitability and  growth in  the interest  of our  clients, shareholders  and 
staff and the communities we serve.'

In addition to the full repayment to the Belgian Federal Government at the end
of 2012, today's repayment  brings the total  in repayments, coupon  payments 
and fees for the CDO guarantee to 8.9  billion euros. And by the time KBC  has 
repaid all  the  aid it  received,  the  total amount  in  repayments,  coupon 
payments and fees  for the CDO  guarantee will  rise to more  than 13  billion 
euros, compared to an amount of 7 billion euros in principal borrowed in  2008 
and 2009 from the two governments.

KBC transfers a portion of the loans granted to shareholder, KBC Ancora

Under Basel  III  capital rules  (fully  loaded), shareholder  loans  must  be 
deducted in full from the bank's equity.  The loans KBC granted to KBC  Ancora 
in 2007 fall under this definition.

KBC has concluded  an agreement to  transfer 0.3 million  euros' worth of  the 
loans to KBC Ancora to another international financial institution. As part of
the agreement, KBC has taken over a  limited amount in interest rate swaps  on 
the Belgian governments from the bank involved at market rates.

The transfer of the KBC Ancora loans will create added value for  shareholders 
and positively  impact KBC's  capital  position (adding  0.3% to  the  group's 
common equity ratio, which came to 12% at the end of the first quarter of 2013
(fully loaded Basel III)).

Contact details

Wim Allegaert, General Manager, Investor Relations, KBC Group
Tel + 32 2 429 40 51 E-mail wim.allegaert@kbc.be

Viviane Huybrecht, General Manager, Corporate Communication & Company
Spokesperson, KBC Group
Tel + 32 2 429 85 45 E-mail pressofficekbc@kbc.be

* This press release contains information provided in compliance with European
transparency legislation for listed companies

KBC Group NV Havenlaan 2 - 1080 Brussels

COM_ECL_repayment Flanders_1_ENG

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Source: KBC Groep via Thomson Reuters ONE
HUG#1713764
 
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