KBC Groep to Repay $11.1 Billion of ECB Loans in First Quarter

KBC Groep NV (KBC), Belgium’s biggest bank and insurer by market value, will repay 8.3 billion euros ($11.1 billion) of three-year loans to the European Central Bank in the first quarter.

“Given the substantially improved condition of the wholesale funding market and KBC’s very solid liquidity position, we decided to repay” the loans, Chief Financial Officer Luc Popelier said in a statement today without specifying when in the quarter the repayments would be made. Brussels-based KBC has covered a quarter of its 2013 wholesale funding needs in the first three weeks of the year, it said.

The ECB will say at about noon in Frankfurt how much three- year LTRO banks plan to pay back at the first opportunity on Jan. 30. President Mario Draghi flooded financial markets with two tranches of three-year loans, or LTRO, a year ago to avert a credit crunch after banks stopped lending to each other because of the sovereign debt crisis. Banks borrowed at the average of the ECB’s benchmark rate over the loans’ duration.

KBC drew 3.5 billion euros from the ECB in December 2011 to help replace funding at its Irish banking unit. It had got another 5.4 billion euros “to further enhance its funding maturity structure,” according to today’s statement.

The rest of the loans will stay with a KBC subsidiary for now, spokeswoman Viviane Huybrecht said by telephone, without naming the unit.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net