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KBC Sells $455 Million Stake at Discount; Shares Slump

Oct. 16 (Bloomberg) -- KBC Groep NV, the best-performing bank stock in Europe this year, raised 350 million euros ($455 million) selling a 5.1 percent stake as it sought to repay a second portion of state aid. The stock slid.

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

The company lost as much as 8.1 percent on the Bel20 Index, the biggest intraday drop since July 23. It slid 4.8 percent to 19.2 euros at 12:41 p.m.

KBC, which received 7 billion euros of taxpayer funds under a bailout, has until the end of this year to repay a remaining 3 billion euros of federal government aid before an interest penalty increases to an annual 20 percent from 15 percent. The market value of KBC, which has sold more than 20 entities since 2009 to rebuild capital, had doubled from the start of the year until yesterday’s close.

“This creates basically additional capacity to repay more federal state aid,” Albert Ploegh, an analyst at ING Groep NV in Amsterdam, wrote in an e-mailed 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.

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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