Belgian multi-channel bank KBC Group NV (KBCSF.PK, KBCSY.PK) Monday said it has decided to sell its Russian banking unit, Absolut Bank, to a group of Russian companies, which manage assets of a private pension fund, for a consideration of 0.3 billion euros.
The deal comprises repayment of all KBC funding that is currently placed within Absolut Bank for the amount of 0.7 billion euros. According to KBC, this will free up about 0.3 billion euros of capital for the firm, mainly by reducing risk-weighted assets by 2 billion euros. As a result, KBC's tier-1 ratio is expected to improve around 0.4 percent.
The Absolut Bank is being sold to a group which manage the assets of Blagosostoyanie, the second-largest non-state pension fund in Russia. The transaction is expected to close in the second quarter of 2013, subject to regulatory approval.
KBC noted that the sale is a new landmark in its divestment programme of foreign and national assets, which it has committed to execute with the European Commission.
The divestment will allow KBC to focus on retail customers, small and medium-sized enterprises and mid-caps, in its core markets of Belgium and Central and Eastern Europe, while reducing risk-weighted assets.
Johan Thijs, CEO of KBC Group stated, "KBC will continue to focus on its core activity as a bank-insurer in our core markets with a reduced risk-profile."
KBC said the transaction will not have any material impact on its consolidated results in 2012. Meanwhile, at closing, an impact of about - 0.1 billion euros on the consolidated result is expected, but not on the capital account.
Absolut Bank's brand name, staff and management will be maintained in their entirety.
Earlier this month, KBC announced accelerated full repayment of 3 billion euros of state aid it received during the financial crisis to the Belgian Federal Government, together with a 15 percent premium totaling 0.45 billion euros, earlier than its previous plan.
At that time, it also disclosed its intention of repaying 1.17 billion euros of state aid to the Flemish Regional Government, with 50 percent premium totaling 0.58 billion euros in the first half of 2013.
KBC had received state aid from the Belgian Federal government and the Flemish government during the financial crisis and has ever since improved its capital base, both organically and through asset divestments.
In Brussels, KBC shares are currently trading at 25.81 euros, down 0.79 percent.
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