KBC Groep NV (KBC), Belgium’s largest bank and insurer by market value, agreed to sell Absolut Bank for 1 billion euros ($1.3 billion) to a group of companies managing the assets of Russia’s second-largest non-state pension fund as part of a disposal program agreed with European regulators.
Under the agreement, KBC will receive 300 million euros as well as repayment of all funding currently placed in Absolut Bank of 700 million euros, the Brussels-based company said in an e-mailed statement today. The sale, which will probably be completed in the second quarter, will lead to a 100 million-euro charge, while freeing up about 300 million euros in capital.
KBC has cut risk-weighted assets by at least 32 percent since the end of 2008 as part of a disposal program agreed with European Union regulators in exchange for approval of state aid. Chief Executive Officer Johan Thijs has sold more than 20 entities since 2009, including the private bank and Polish banking and insurance assets, as he focused on KBC’s most profitable businesses.
“Any progress in the divestment program reduces the risk” for investors, said Jan Willem Weidema, an Amsterdam-based analyst at ABN Amro Group NV, who has a buy rating on shares. “Any negative reaction in the stock today is probably profit taking toward the end of the year after KBC shares soared.”
KBC shares fell 0.6 percent to 25.86 euros in Brussels. The market closed at 2 p.m. today. The bank has increased 166 percent this year, making it the biggest gainer among the 46 companies on the Stoxx 600 Banks Index (SX7P), which is up 24 percent.
Absolut is among the 10 largest mortgage lenders in Russia with about 3,000 employees, KBC said. It reported a profit of 1.6 billion rubles ($52.3 million) in the first 11 months of the year, Absolut Bank CEO Nikolai Sidorov said in the statement.
“Already today the buyer has confirmed that Absolut Bank’s brand and team will be preserved,” Nikolay Sidorov, chairman of Absolut’s management board, said in an e-mailed reply to questions. “The bank remains universal, while the bank’s development strategy will be defined after the deal is closed.”
KBC will continue to support Absolut until the deal’s complete, he said.
Investors in Moscow-based Blagosostoyanie, which means welfare and was founded in 1996, include OAO Russian Railways, the country’s rail monopoly, and TransCreditBank OAO (TCBN), according to its website. It has 6.5 billion euros in assets and 2.9 million customers, today’s statement showed.
Olga Ocheretina, TransCreditBank’s head of press service, declined to comment on today’s announcement by phone.
KBC earlier this year agreed to sell Towarzystwo Ubezpieczen i Reasekuracji Warta SA, Poland’s second-largest insurer, and its 80 percent stake in Kredyt Bank SA. (KRB) It still seeks to sell banking units in Serbia, Germany and Slovenia, and its Antwerp Diamond Bank in Belgium.
The bank said earlier this month it will repay a remaining 3 billion euros of federal government rescue funds received during the financial crisis at a premium of 15 percent before year-end. It also plans to reimburse 1.17 billion euros of Flemish state aid plus a 50 percent penalty before the end of June. That’s at least six months before an EU deadline for repayment expires.
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