KBC will pay back aid as soon as possible
KBC will this year try to pay off as much as possible of the remaining €3 billion it owes the federal government, the bankinsurer promised last week. KBC was announcing its results after a “difficult year” in 2011, which involved issuing a symbolic dividend to shareholders of one cent per share.
KBC was severely affected by the financial crisis of 2008-2009 but, unlike Fortis Bank, managed to stay on its feet thanks to a government bailout of €7 billion – half from the federal government and half from Flanders. It has already repaid €500 million to the federal government and would like to benefit from a lower penalty rate – 15% if the loan is paid back this year. The rate goes to 20% next year.
The terms for the government of Flanders, though, are different: 50% regardless of date of payback. Last week it was reported that the government was considering leaving some of its credit in KBC for the longer term, to possibly gain some influence on the group’s policy. The idea would be to monitor KBC’s state of health more closely in order to avoid a repeat of the Dexia debacle.
Those reports were denied by senior figures at KBC. Financial director Luc Popelier said there was “no need for extra transactions” between the bank and the government. “We are keeping strictly to the plan that was agreed with the governments and with Europe,” he said. According to a condition imposed by the EU competition authorities at the time of the granting of state aid to KBC, the bank has to repay €4.7 billion of the bail-out sum by the end of next year.
Despite an “exceptionally difficult year,” Popelier says KBC is confident its programme of divestment will bear fruit. In the past year, KBC Group has sold subsidiaries Centea in Belgium and Warta in Poland; Kredyt Bank in Poland is to go shortly. In addition to paying shareholders a symbolic dividend of one cent, KBC executives themselves have this year decided to forgo a bonus.
