The KBC group (KBC) has reached an agreement with Precision Capital for the sale of its dedicated private banking subsidiary KBL European Private Bankers (KBL EPB) for a total consideration of EUR1.050 billion, EUR50 million of which depend on the results of KBL EPB.
Precision Capital is a Luxembourg entity, a company representing the business interests of a Qatari investor.
KBL EPB is one of Europe’s largest onshore private banking groups with affiliated local banks in numerous locations across nine European countries: Belgium, France, Germany, Luxembourg, Monaco, the Netherlands, Spain, Switzerland and the United Kingdom.
As at 30 June 2011, KBL EPB had assets under management of EUR 47 billion, assets under custody of EUR 38.2 billion (and, through a 51.13% stake in EFA, assets under administration of EUR 87.5 billion).
The transaction comprises the sale of KBC’s entire interest in KBL EPB and includes all the private banking subsidiaries as well as the custody and life insurance businesses of KBL EPB.
The KBL EPB brand, management team and operations will be maintained in their entirety and KBL EPB will continue to be headquartered in Luxembourg.
The closing of the transaction is subject to customary regulatory approvals and is expected to be completed in the first quarter of 2012.
The transaction will release a total of approximately EUR0.7 billion in capital for KBC, resulting in a 0.6 % increase in KBC’s tier-1 ratio. In addition, over the last 18 months, some EUR115 million in capital have already been released as a result of a reduction in risk-weighted assets. The transaction will have a negative impact of approximately EUR 0.4 billion on KBC’s third-quarter P&L.
KBC will continue to offer private banking services in Belgium and Central and Eastern Europe through its KBC-branded private banking businesses.
Jan Vanhevel (pictured), KBC Group CEO, says: ’The least we can say is that the market circumstances of the last few months have been particularly challenging. All the more reason why we are pleased to be able to announce today’s deal. This agreement marks a crucial step in implementing our refocus strategy, while at the same time providing continuity, stability and certainty to the customers and staff of KBL EPB. The 1/3 agreement will allow KBC to release a significant amount of capital, to reduce our risk profile and to further strengthen our focus on the core bancassurance expertise and markets of Belgium and Central and Eastern Europe. It is also reassuring to see that a Qatari investor recognises and values the strengths and potential of a European private banking group. Precision Capital believes it can grow KBL EPB organically onshore and through strategic opportunities and also wishes to further capitalise on links with the Middle East and Asia."
