KBC Raises 350 Million Euros Selling Own Shares at 4.7% Discount

KBC Groep NV (KBC), the best-performing bank stock in Europe this year, raised 350 million euros ($455 million) selling existing shares as it prepares to repay a second portion of state aid received.

KBC sold almost 18.2 million own shares held in a private placement at 19.25 euros apiece, the Brussels-based bank and insurer said today in a statement. That’s a 4.7 percent discount to yesterday’s closing price. The sale, which was agreed with the European Commission, will dilute earnings per share by 5.3 percent.

The Belgian bank and insurer, which received 7 billion euros of taxpayer funds, has until the end of this year to repay a remaining 3 billion euros of federal government aid before the penalty rate increases to 20 percent from 15 percent. KBC, which has sold more than 20 entities since 2009 to rebuild capital, has seen its market value double since the start of the year.

“This creates basically additional capacity to repay more federal state aid,” Albert Ploegh, an analyst at ING Groep NV in Amsterdam, wrote in a note published before the pricing was announced. “During a recent sell-side meeting, management seemed less outspoken on its ability to repay in full the remaining 3 billion euros by year-end.”

The sale freed up 385 million euros in capital, boosting KBC’s solvency by about 0.3 percentage point, the company said.

“It remains our ambition to pay back a substantial part of state aid to the federal government before the end of this year,” Chief Executive Officer Johan Thijs said in the statement.

KBC acquired most of the shares that were sold today at an average price of 93.12 euros apiece, as part of a 3 billion-euro share buyback program that was halted after 17 months in May 2008.

KBC shares were suspended from trading in Brussels today pending the results of the placement, which was announced yesterday after the close of market.

To contact the reporters on this story: John Martens in Brussels at jmartens1@bloomberg.net; Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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