Belgian bank KBC eyes Central European acquisitions

By bne IntelliNews June 18, 2014

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Belgian bank KBC unveiled a new strategic plan on June 17, with the formerly-troubled Central and Eastern Europe specialist claiming it's now ready to resume regional expansion via acquisitions in the bank-insurance market.

KBC was one of the first amongst those Eurozone banking groups to run into trouble in the crisis after over-stretching during the boom years. That saw it forced to turn to the state for a bailout, and in turn was forced to dispose of assets. It sold over 20 entities, including major banks in two of the region's biggest markets: Poland and Russia.

However, the bank now says it is ready to pay off its state aid early. "As far as repaying the outstanding amount of state aid to the Flemish Regional Government is concerned, and on account of KBC's robust capital position, KBC intends to accelerate its repayments and to make the final one at the end of 2017 at the latest, instead of at the end of 2020 as agreed with the European Commission," KBC says in a statement.

"In the past five years, we have worked hard to honour our commitments towards the European Commission. We have carried out divestments, significantly de-risked our group and also repaid the bulk of the state aid we received during the financial crisis. Our integrated bank-insurance group, with its diversified presence across Belgium, Central Europe and Ireland, is now more sustainable, less complex, more low risk and more cost efficient," says KBC Group CEO Johan Thijs.

Those divestments in the larger CEE markets leaves the rest of Central Europe as the bank's core markets, and the new strategy reflects a bid to entrench that position. It specifically notes that it has "no plans to expand beyond its current geographical footprint."

"In its core markets (Belgium, the Czech Republic, Hungary, Slovakia, Bulgaria), it will strengthen its bank-insurance presence through organic growth or through acquisitions, if attractive opportunities arise," the statement continues. As part of the drive it will "strive for market leadership (a top 3 bank and top 4 insurer) by 2020."

"KBC wants to build on its strengths and be among the best-performing, retail-focused financial institutions in Europe," the statement sums up. Via "solid risk, capital and liquidity management" it aims to build up its business for "retail, SME and mid-cap clients in its core markets ... to become the reference in bank-insurance."

"The model has reached different stages of implementation in the different core countries," KBC notes. "In Belgium, the bank and the insurance company already act as a single operational unit, achieving both commercial and non-commercial synergies. In its other core countries (the Czech Republic, Slovakia, Hungary and Bulgaria), KBC is targeting at least integrated distribution, so that commercial synergies can be realised by 2017 at the latest."

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