KBC Groep NV, Belgium’s biggest bank and insurer by market value, agreed to sell its stake in Nova Ljubljanska Banka d.d. to the Republic of Slovenia, while missing a European Union deadline for other disposals.
KBC will sell its remaining 22 percent stake of Slovenia’s biggest lender for 2.8 million euros ($3.7 million), or 1 euro per share, the Brussels-based company said in a statement on its website today. It had purchased 34 percent for 435 million euros in 2002. EU regulators will appoint a trustee to oversee the divestment of Antwerp Diamond Bank and KBC Bank Deutschland after KBC didn’t meet a disposal deadline, it said.
KBC has cut risk-weighted assets by at least 32 percent since the end of 2008 and sold more than 20 entities as part of a disposal program agreed with EU regulators in exchange for approval of state aid. The bank this week agreed to sell its Russian Absolut Bank for 1 billion euros.
“The last units are always the hardest ones to sell,” said Cor Kluis, an analyst at Rabobank International in Utrecht, the Netherlands, with a buy rating. KBC Chief Executive Officer Johan Thijs “has surprised positively in the last quarter. KBC did everything it could possibly do, so the European Commission might show leniency on the remaining disposals.”
KBC shares closed down 2 percent at 25.71 euros in Brussels. They have gained 164 percent this year.
The Belgian company said it’s “maintaining an open and constructive dialogue with the European Commission” on four remaining divestments. KBC planned to sign agreements in Poland, Germany, Belgium and Serbia by the end of this year.
The disposal of Kredyt Bank SA in Poland “remains on track” after the commission extended the deadline, Thijs said in the statement. KBC is negotiating with a number of bidders on a sale of KBC Banka in Serbia, for which it also won a deadline extension to complete the process.
“In view of the ongoing turbulent climate on the financial markets, the acquisition of Antwerp Diamond Bank and KBC Bank Deutschland by external strategic investors is more challenging,” Thijs said. “KBC will continue to explore further divestment possibilities for them in close collaboration with a divestiture trustee, as provided for under the agreement with the European Commission.”
The sale of the stake in Nova Ljubljanska Banka, or NLB, which is expected to be completed in early 2013, will lead to a 100 million-euro charge in the fourth quarter, KBC said.
The Ljubljana-based lender said in a regulatory statement today that “this is a certain turning point that coincides with the plan to restructure the bank.”
“The purchase of the stake is interesting for Slovenia because it will now be able to lead a more effective process of seeking a new long-term strategic partner for NLB,” the Finance Ministry in Ljubljana said in an e-mailed statement today.
Slovenia, the first post-communist nation to adopt the euro, is ready to sell its entire stake in NLB, Finance Minister Janez Sustersic has said as the government seeks to reduce its role in the financial industry and make it more attractive to foreign investors. Slovenia will indirectly own 84 percent of its biggest bank after the transaction.
EU governments spent about 1.6 trillion euros to shore up banks from 2008 to 2010 amid the crisis that followed the collapse of Lehman Brothers Holdings Inc. The EU must approve large state subsidies and can impose conditions.
ING Groep NV, the biggest Dutch financial-services company, last month won more time to sell its insurance operations from an original deadline of the end of 2013. Royal Bank of Scotland Group Plc may seek more time from EU regulators to sell 316 U.K. branches after Spain’s Banco Santander SA in October abandoned its planned 1.7 billion-pound ($2.7 billion) purchase. RBS had been required to sell the outlets by 2014.