KBC repays second instalment of EUR500m in Flemish state aid
KBC is to repay a second instalment of EUR0.5bn, comprising EUR0.33bn in principal plus a penalty of 50 per cent, to the Flemish Regional Government.
This repayment is again ahead of the schedule agreed with the European Commission. The National Bank of Belgium has not opposed this repayment.
The supervisory authorities, with the National Bank of Belgium as the consolidating supervisor, have taken their Joint Home-Host Capital Decision for KBC Group. KBC Group has been informed of the request for a permanent minimum Basel III (fully loaded) common equity ratio (excluding latent gains) of 9.25 per cent.
The pro-forma ratio at 30 September 2013 (excluding latent gains) stood at 11.4 per cent. Even after the repayment to the Flemish Regional Government and taking into account the impact of impairment charges for Ireland and shareholder loans which, as already announced, will be recognised in the fourth quarter, KBC is expected to have a solid buffer above this 9.25 per cent requirement.
On 3 July 2013, KBC already made an accelerated initial repayment of EUR1.17bn worth of state aid plus a penalty of EUR0.58bn – or EUR1.75bn in total – to the Flemish Regional Government. This latest repayment reduces the outstanding state aid to EUR2bn.
Johan Thijs, KBC Group chief executive, says: 'We are delighted that we can get 2014 off to a positive start by announcing today that we are meeting another part of our commitment towards the Flemish Regional Government. Our solid capital position, as illustrated by a common equity ratio of 12.5 per cent (at end-3Q13 and including latent gains) under fully loaded Basel III rules, has made this possible. This capital position was further boosted by the repayment of shareholder loans and despite the fact that loan loss provisions are scheduled to be set aside for Ireland in the fourth quarter of 2013.”
After fully reimbursing the Belgian Federal Government at the end of 2012, and repaying a first, large instalment of EUR1.17bn plus a penalty of EUR0.58bn to the Flemish Regional Government on 3 July 2013, today's repayment brings the total amount in principal repayments, coupon payments and fees for the CDO guarantee to EUR9.5bn.
By the time KBC has repaid all the aid it received, this total figure will have risen to more than EUR13bn, compared to the EUR7bn borrowed from the two governments in 2008 and 2009.
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