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Europe's KBC Group Continues Disposals To Shrink Risk Exposure
KBC Group, the European financial services group that has already sold its private banking business, said today it has agreed to sell Fidea, its Belgian insurance business, to private equity firm JC Flowers & Co for €243.6 million (around $337.9 million).
The price includes a €22.6 million pre-completion dividend and subject to pricing adjustments on closing accounts, KBC said in a statement.
KBC has been looking to dispose of some businesses as it looks to reduce its risk profile and focus on core businesses. Hit by the financial crisis, KBC received some €7 billion in funds from the Belgian and Flemish regional governments about three years ago.
Besides Fidea the portfolio of JC Flowers & Co. already contains a number of financial groups such as Pension Corporation (UK), NIBC Bank (Netherlands) and BTG Pactual (Brazil).
“Today’s announcement fits in with the refocus strategy that KBC communicated at the end of 2009. The divestment of Fidea is a further step in implementing this plan and will not adversely affect the strength of KBC’s business model in its core markets,” KBC said.
In total, the sale of the Fidea business will free up around €100 million in capital for KBC, primarily by reducing risk-weighted assets by €1.8 billion, but also taking into account that the transaction will ultimately have a negative impact of approximately €100 million on KBC’s profit and loss account. The overall positive impact on KBC’s tier-1 ratio is around 0.1 per cent, based on a 30 June calculation.
Fidea sells life and non-life insurance products to private customers, the self-employed and companies. It sells its policies through independent insurance brokers and – within a bancassurance co-operation agreement – through Centea’s and Crédit Agricole’s network of agents.
Earlier this month, KBC said it had agreed to sell its private banking subsidiary to Luxembourg-based Precision Capital, a company that represents an unnamed Qatari investor. KBL European Private Bankers ("KBL epb") was sold for a total consideration of €1.050 billion, €50 million of which depends on the results of a KBL epb “earn out”.
