Obbligazioni perpetue e subordinate Tutto quello che avreste sempre voluto sapere sulle obbligazioni perpetue... - Cap. 1 (9 lettori)

[zeta59]

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Thanks

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[reef]

Foglio aggiornato, scusate ero fuori sede e non connesso...

 

[Mais78]

KBC Q4 2009 Earnings Call

MANAGEMENT DISCUSSION SECTION

Operator:
Good morning, ladies and gentlemen, and welcome to the KBC Full Year 2009
Results Conference Call. At this time, all participants are in listen-only
mode until we conduct a question-and-answer session. And instructions will be
given at that time. [Operator Instructions] Just to remind you, this
conference call is being recorded.
I would like now to hand over to the Chairperson, Luc Cool. Please begin your
meeting and I will be standing by.

Luc Cool, Director of Investor Relations:
A very good morning to you all. I just want to welcome to this mornings
conference call. Thanks for your participation. We will appreciate that you
are with us this morning. The format of this conference call is usual one. We
will have first an introduction and both our CEO and CFO will run you through
the headline of the set of earnings that we issued this morning. And
obviously afterwards we are happy to take any further questions.
I would now like to pass on to Mr. Jan Vanhevel, Group CEO

Jan Vanhevel, Group Chief Executive Officer:
Good morning ladies and gentlemen. Welcome also on my behalf to be said.
Comment on the results of last year and then especially on the results of the
last quarter. I will give a short introduction and then give over to the CFO,
my colleague, Luc Philips.
And on slide three you can see that we ended the last quarter of 2009 with a
reported net profit of 304 million. This relates to an underlying profit of
280 million and if you compare that to the last quarter of last year, you can
see that even in a difficult economic environment and having the full effect
of the recession where we live in, in our business we could achieve a better
result underlying compare to last quarter of last year.
The overall result as you see, we ended for the year at 2,469 million which
is almost the same of last year but the main importance is of the underlying
net profit for the whole year which end at 1.724 million. You see on the
right hand side of that slide that if you exclude the exceptionals and the
dealing room income which was mainly exceptionals on the credit provision, we
end up in the last quarter of a income of 970 million.
The exceptional items on the fourth quarter is at the level of 86 million.
Luc Philips will go more into detail, but here you can see on slide four that
it's a combination of different ups and positive and minor factors. So
reevaluated the structure credit portfolio and added a positive figure of 600
million.
We have an impairment on goodwill of different subsidiaries in our portfolio
to the tune of 300 million. We had trading losses on the legacy business of
KBC FP of 200 million and then we had the mark-to-market of the government
under-writing fee of 100 million.
So all of that if you combine both positive and negative figures we end up
with an exceptional item of only 86 million plus.
Commenting on the figures of the last quarter, you will see more in detail
later on that we're happy with the continued margin -- growth margin. We not
only have a net interest margin up to 1.94, up from 1.86 in the previous
quarter. So we have seen not only interest margin increase, but also in
interest income increased over the whole year, but especially also the last
quarter. We could recover on our fee business and we also have strong sales
in the life insurance business.
Commenting on that I can say that where we have seen the first half of the
year of course, no interest or limited interest in -- investment in mutual
funds and also in other investments products. We could recoup a lot in third,
but especially also in the fourth quarter of this year we have seen
throughout our business, not only in Belgium, but also in Central Europe. 85
of the appetite for investment products and also the increased sales of life
insurance profits.
The cost performance has been solid throughout the year, but especially also
in the last quarter. We have -- we could keep cost under control, especially
throughout the whole group, in very business unit we've seen a lower level of
cost compared to last year. And you'll see that compared to last quarter of
last year; we're 25% below that level of last year.
In the last quarter we have seen a little bit lower capital market activity
and revenue is lower than in the previous quarter that has been robust. This
is somewhat expected as well. And then we have seen the increase in credit
provisions.
As already indicated, last time we expected in the fourth quarter a rise in
credit provisioning, especially in central and Eastern Europe. You will see
more in detail that in Belgium, we have seen in provisioning as well but at a
very low level and far below our all expectations and for central and Eastern
Europe we are inline with the expectation of there between bracket on the
lower side of that. So all in all we are in line and below the overall
expectations for the whole year but for the quarter this was in line what we
have predicted.
And then the last item is on the education of our business plan and the
business refocus. We can say that we are on track on that, we are working
very hard and we already could bring down the risk weighted assets by 5
billion, compared to the start of the quarter of divestment program, we are
working very hard to speed up in the course of this year and we'll give some
answers if you have that on in that respect.
So that's a summary of the fourth quarter, solid underlying good results and
this is a comfort for the first and the second and the remaining part of
2010. So I will give now the floor now to my colleague Luc Philips.

Luc Philips, Chief Financial Officer:
Good morning, all. Nice to be here. We are on page seven of your presentation
where we just will walk you thorough some of the trends that we have seen in
the last quarter with respect to the net interest income Jan has alluded to
that already that develops fine. We had an increase of 11% year-on-year and a
net interest margin of 195 points 1.95%.
Of course as you all know, in the last or couple of quarters that number is
somewhat benefiting from the government money that we have in, you know that
we are not crewing any coupon on that, so that's an amount of money that
comes in free. But nevertheless, the interest margin that we see pleases us
very much all the more so that this really the result of good both the one on
the deposit and the credit side that the interest margins grow up. The
volumes has not gone up. But there is another factor of consolidated basis,
our volumes are down somewhat, both on the year-to-year and on
quarter-to-quarter. The good news is that this is in volumes have to be look
-- to be situated in those areas that we have give mark for reduction or run
down [ph] i.e. our corporate market portfolio and as you know we have also
finance to the use our exposure in Russia, and these are the two areas where
we have the most of the reduction.
Just for your information and recall that question comes from time to time,
at the bottom of the sheet on page seven, you see some elements that give you
an idea of the sensitivity of our interest income on rate changes both
[indiscernible] and flatting of the yield curve.
Page eight, if you look at the fees and the commissions. There is some good
news. As we have already seen in the third quarter, we see a return to the
appetite of certain of our investment coming from our retail clients, whereas
in previous quarters, the volumes were mostly invested in cash funds.
We have seen in the third and in the fourth quarter the return of the risk
appetite and we are seeing more interest in the capital of product -- equity
product space, we see mostly in the capital protected since nevertheless,
that is major contributor for an increase of 13% quarter of the fee and
commission income. The assets under management was flat for the quarter.
Premium income on the insurance side, stood at 1.1 billion. The non-life was
down fourth quarter. But if you were to exclude ForEx components than you
come to the realization that at least for the full year we maintain same
levels than previously.
Life insurance premiums were up strongly. That has lot to do with the same
investment, same phenomenon that we see on the asset management side. Number
of clients, who kind of investing in product -- in life products that has an
equity component to it.
The fair value gains were down substantially. Jan has referred to it. There
is lot to do with, of course, our situation in dealing room. From a dealing
room perspective, the quarter was not good one. In previous periods we have
had good contribution of the group activity level of fixed income,
[indiscernible] that has dropped somewhat in the last quarter. And moreover,
we adjusted our market value adjustments for an amount of about 100 million
will take into account the lower liquidity that we have seen in the market,
so especially an adjustment of our model that calculate the market value
adjustment that we counted for 100 million. So if you were to ignore that and
on incomparable basis, the number of 335 that we should in the third quarter
could be compared to the number of 152 in the fourth quarter prior to this
methodological changes in the market value adjustment.
The realized gains, 106 million, nothing very special to remark over there.
Dividends were 28 million. We all realize that it is not the best of dividend
here. So I have prompting that we have a big surprise [indiscernible].
Just see over here, I am on page 11, that you have an overview of where we
are, what the developments are, the trends are with respect to the market
shares both in the various countries and in the various products. I think
generally this is very good slide where we see some decreases like we have in
Hungary. That was more or less have dissipated. We have for the rest --
solid, we've maintained all increase of our market share in most of the
countries.
Operating expenses, same story as the third quarter, so as we just -- we
don't spend too much time on that. There were some restructuring charges in
the fourth quarter to the tune of 48 million. But the cost containment
program that we have been having in the previous quarter and throughout the
full year 2009 as a matter of fact is continuing.
Part of the story today is of course the assets impairment mostly on the
credit book. We will go into some details, but we have 300 million increase
quarter-on-quarter of our loan losses that we have booked. They are mostly in
the merchant banking and in Central Europe, again, we will come back to that.
Part of it is of course -- has of course to do with the fact that like very
year in the third quarter we really go through the portfolio that are fast to
come. But some of these developments have been preannounced. And I refer to
the guidance that we gave with respect to credit losses specifically in
Central Europe in the third quarter. So they should not come as a surprise.
Let's go a little bit in detail on the credit losses. May I first draw your
attention to the table on the bottom left and on page 13. You see that the --
in Belgium we increased indeed from 12 to 17 basis points in the credit cost.
But I think that in the current economic circumstances nobody can blame that
that is particularly bad. So -- but its something that you could expect.
Let leave Central Europe on the side for a second. Merchant banking went up
also 116 to 132. Let me remind you that this includes the impairments -- the
loans and receivable impairments that we take on this portfolio. As it
relates to Central Europe, we end up 212 basis points. That is well within
the guidance that we have provided in the previous quarter. It is driven
somewhat by the fact that we have taken a substantial of impairments on the
consumer finance book and bold. There, I think, that we have really clean up
that portfolio, to know that the brokering activity or the consumer finance
activity that is not related to quarters and this is on the sale side. We
have clean up the portfolio, I think, to the extent that we needed to it.
This mean of course the number if you anticipate following quarters,
specifically the numbers of Poland, you might expected to be somewhat lower,
because this is to large extent one time phenomenon.
If you look at the graph on the right hand side, gives you idea of how our
credit goals relates to non-performing loans and high risk loans. If you take
the full graph, you see that specifically in Central Europe, business has
increased in the fourth quarter, again, that is of course driven by consumer
finance, which you should a result and flattening of that.
In merchant banking, actually our high risk loans have come down a little
bit, of course you see that some of that well, because a drop into the
restructured loans, with the same probability of volume and those we see a
rather flat development of these leading indicators for our credit losses.
Please on page 14, let's go into a little bit of detail with respect to our
business units. And Belgium is a little bit of reflection of what we already
set with respect to the underlying profit. They did pretty well driven by an
increased in credit volumes on a quarter-to-quarter.
There was lot of decrease in the deposit margins, that we will see our net
interest income nevertheless end up to 625, which is a highest of the quarter
over here. Again the interest margin have drive this numbers. It's not the
volume that drives the number, we have in Belgium, now interest margin of 162
basis points, which is highest since the Lehman situation. And also here of
course increase in the interest margin is reflected both on the asset and on
liabilities that on the balance sheet.
Just one you're familiar with on the top you see that relating to this deep
in third quarter of 2008, the war for the positive if you remember that was
going on. But since then there has been structurally a good interest margin
here in Belgium. On the lower side you see the spread on the new production
on the SME loans and on the mortgage loans and obviously this was distinct to
our portfolio much lower than on the liability side. But this is also an
indication that at least from a commercial margin point of view we may expect
that to at least be maintained at the levels that we have shown in the last
quarter.
Fees and commissions in Belgium is again a reflection of what we said on a
consolidated numbers, higher interest in mutual funds which translates into
high fee. Operating expenses on page 18 are under control. There is nothing
very much to be said about it. Part of the restructuring cost that I referred
to previously are to be found in the business unit in Belgium to the tune of
about 22 million, year-on-year we are down 24%. The cost income ratio is 56%,
which is a good number and the asset impairment, even though they are up
above the level of the 17 basis points, is an acceptable number, specifically
also if you put up against the backdrop of not - non-profit - non-performing
loans that is stable.
Moving to Central Europe, should not come as a surprise to most of you, we
were very explicit after all in the third quarter with respect to our
expectation on the loan losses. Some of you actually asked the question
specifically whether that meant that we were going to end up in red
territories in Central Europe. We have not denied that at that point in time.
The result is that we have [indiscernible] millions of euro loss, mostly by
the credit losses that we have taken in Central Europe.
You see if you break it down by country, there is a positive 88 in Czech
Republic, 3 million in Slovakia, 11 million in Hungary and is doing very
well, 39 million in Poland, which the 39 million is actually a little bit
lower than the additional provisions we took on the consumer finance side, 46
million in Russia. I think the results are consistent with guidance that we
have been giving in previous [indiscernible] to the loan losses. And then
there is some effects on the goodwill cost.
The loan book came down, most outspoken in Russia in [indiscernible] but the
intentions that we have as far as that is concerned, to a lesser extent in
Hungary. We have been telling you before also that we are losing or lost our
market share in Hungary as a result of the stoppage or the discontinuation in
June of the foreign currency lending, which in the mean time we have to
review that by the way.
Deposit volumes are rather stable and the loan to deposit ratio in Central
Europe now stands at 82%, which is nothing less than remarkable. Assets under
management were up to just about 12%, which was a 6% increase. Over area,
again you see volume changes over the years. I assume that you will have some
questions for us later on. I suggest we don't [indiscernible] going to it.
Page 21, [indiscernible] actually the simplest income organically is up 3%
and that's the result of margins going up to 340 almost rather than volumes.
Fees information go up a little bit same story again over here also, net of
the FOREX effect though they were rather flat that's for the quarter. For the
year they went up 26% and assets under management remained flat.
Page 23 gives you the operating expenses, we have a seasonal increase in the
fourth quarter, we still have to improve a little bit with respect to some of
the expenses but the cost control is in place. The year-to-date cost income
ratio actually stands at 59%.
And then let's talk about country-by-country a little bit about the asset in
balance. The Czech Republic is maybe a little bit higher than we would have
expected at the end of the year. Poland is where we expected to be again good
part of this is a result of the clean up of the consumer finance portfolio.
In Hungary, we stand at 200 basis points beginning of 2009 everybody would
have signed for that number I would take it. But it's pretty much under
control over there. And as we indicated before also our biggest concern even
though at this relatively low portfolio is in Russia where we have a 6% local
credit cost for the year and still higher than the nine month number of 5.84.
We have indicated before also that we would expect this numbers in Russia to
be up in a relatively high number even though there are some early signs and
I think the things are stabilizing a little bit. Would we expect in the next
quarter to see substantial change on that? Well, we should, given the fact
that you could consider the consumer finance clean up in Poland at the
one-off. But we are not nave we would expect that for the first couple of
quarter it's not going to drop to nothing. So we will see in the first couple
of quarter in Central Europe that the credit cost will still be the component
of our P&L account.
Here, we have some indications including the - to these -- an effort asset to
give you some leading indicator as far as that is concerned. You will have
our non-performing loans but probably more importantly the non-performing
loans formation for the last quarter. And the more is concerned what we have
seen in the previous slides whether this in Russia where we see and continue
to increase in our non-performing loans. This the other countries
non-performing loans was formation for the quarter was pre-development
compose or we should at least see a stabilization if not a decrease in the
months to come.
Merchant baking, two components of merchant bank as you know, we have
alarming side commercial side and we have the investment banking side.
Commercial side was not a good quarter 39 million principally driven by
higher loan charges and with respect to the investment banking we had a big
trading result. We didn't have the benefit of all of the activity in the
fixed income and other markets in previous quarters, but nevertheless this
performance in the fourth quarter is less than we should normally have
expected.
Risk rated assets in our business units merchant banking is of course of
particular interest. You see that we continue to deduction of the risk rated
assets coming from a higher 52% in the second quarter already to 47%.
Nevertheless that interest income remains pretty good 274, which of course is
an indication that also in this business units we are able to increase an
increase of interest margin that slowed filtering into the interest margin as
practically speaking, we don't have the effect on the liability side in this
business unit. The build down on the international corporate loan book is
what drives this risk rates assets decrease and as already indicated we are
compensating that by good margin.
Page 27 given us an idea of the fee and commission income that of course up
after weaker first quarter and so have consistently going after ever since.
The fair value against trading income was flat or zero in the quarter as
already indicated driven by about a 100 million of market value adjustments
for even ignoring the 100 million market adjustments has be quarter.
Page 30, operating expenses of the - a little bit confused over here for a
second. Page 30 gives our business unit Private Banking. They had relatively
weaker quarter 24 million. Obviously also driven by certain hesitancy on the
part of clients also [indiscernible] they are also are suffering from some
decrease in their treasury income. And that took some restructuring charges
also in view of -- well, that's happened with the net business unit.
Page 31 is fee and commission income of our private banking unit. Nothing
very much that we would discuss over here: operating expenses remains very
much under control and that would be hit [ph].
I think that we had a technical problem over here and that we may have
skipped a couple of slide items. Just one page. And in term to page 29 which
is something that was skipped inadvertently over here.
To give you some details on our situation in Ireland. As usually we gave you
the composition of the loan book. Nothing very much changed in that. Our
exposure to real estate development is still always the 600 million in this
quarter and obviously the non-performing loans in that component is extremely
high at 35 basis points.
Nevertheless, for the year our Irish operation is going to show 92 million of
profit, that's 176 million of loan provisions. It will put us for the time in
form and rather unique position in Ireland with respect to showing profit.
The non-performing loans continue to rise. This is no surprise, but the
unemployment created about 12%. We have seen about 6% of the loan has been
restructured which is a reflection of the fact that indeed our
[indiscernible] working with clients have some difficulty in the payment of
mortgage loans.
And our coverage ratio is up as a result of the fact that we took some
substantial -- continued to take provision in the third quarter. We are -- we
do want to point out however that of the overall 80 billion portfolio, 82% of
that remains in the low and the medium-risk capital which is of course
reflection of our two CE [ph] over here.
I think that I'll conclude for the time being our presentation. I would like
to turn it back to Young [ph] to talk a little bit about some of the
particular market. My view of interest, we have listed the number of the
things that we would expect you to have some [indiscernible], so in order to
anticipate on that we will discuss them in this presentation. Young

Company Representative:
Okay, thanks Luc. I go forward with the strategic actions. On slide 33,
that's the summary of our plan which we submitted to Europe and this most
division of our strategic exercise and strategic guidance for KBC where we
have this units what we kept, what we decided to divest it to reduce, but
more important is the page 34 where you can see that we start reducing
risk-weighted assets since early last year and you can see that in one year
time if you start with the figures at the end of 2008, we reduced by 8%
meaning 20 almost 12 billion [ph] of risk-weighted assets that have been used
including of course in the current year of the stage on the Belgium
government for the underlying assets in the CDOs but nevertheless if you
exclude that we made 5 billion of risk-weighted assets reduced in the course
of last year.
On page 35, you can see somebody where we are with the different divestments.
The different countries and you can see that we are very busy and that in
Belgium we are preparing the divestment phase and preparing the divestment of
Centea and Fidea. In Central and Eastern Europe we are in the same phase for
the IPU of CSOB, Zagiel which was considered to be divested in 2012 and we
are working already on that file and we expect to have that deal closed
already in this year in 2010 Serbia and Russia that's for later on 2012, 2013
so that trade - has stayed unchanged and then we already quite busy and the -
not only unwinding of [indiscernible] but also the divestment of other
businesses. In KBC Financial Producst you will see that Japan Equities and
reverse mortgages, we are in a quite advanced stage of divesting, we are
preparing as well the equity business, equity derivates business of FP and
then also in Belgium, the KBC Private Equity is more advanced at this stage
than we considered in November of last year and we expect in the course of
this year to come to a closing of that deal.
The same goes along for behind this portfolio scene, for also having that
unit divestment in the course of this year. This is also earlier than
forecasted, so we want it behind this schedule. All the three elements first
of all to show you that we are busy and well on track on the divestment
phase, but second we also by doing so we went to reduce as soon as possible
the level of risk-weighted assets in order to free up capital to repay the
government and of course an important element which is that we also are
already far away as the divestment of KBC European price of banking KBL, KB
works number so to speak. There as well we are well advanced. So by all these
elements we wanted to show you that we are on track and then also in deliver
next to the expectations that we will make.
Net nice profit this year, we could add some money coming from the divestment
and at the mean time reducing risk-weighted assets and by this also when -
what we promise to reduce the risk profile of KBC and to bring it more in
line with our revised strategy being a more group with a lower businesses.
This brings me to the next slide where, Luc will take again over and give you
some more detail on the capital contribution from the different divestments.

Luc Cool, Director of Investor Relations:
Here on page 36, where you have a overview sensitivity analysis if you want
to work with on that slide of the effect on the risk-weighted assets of our
major files that we are working on this point in time, Centea, Fidea are
schedule for late in the year as you know but we are always all in time in
the preparation phase for that. What you have, what you know is that we are
talking about risk-weighted assets, the June of almost 1 billion and its 300
million in Centea, 100 million in Fidea Phidiea and 1.5 billion KBL. European
private bankers had course welcome distributor to the capital - to
risk-weighted asset reduction, on top of that you see the sensitivity
analysis that you have seen previously. So its effectively the effect on the
capital release of a particular price expressed at a price book and you can
have your pick where you think that will end up.
All in all the capital contribution for the these three major divestment
files for this 2000 and for the year 2010, we can expect to have capital
least between 1.2 to 3.6 billion, was if you want extend this table even on
the left hand on the right side you will come to do so, in this case your
already applicable idea with the same for the IPO of COSB depending whether
we bring 30 or 40% to the or another percentage to the market and ending on
the price expressed in book price book. We are talking about a capital
release to the consumer between 1.2 and 3.1 million.
Just as a reminder that we are still very well aware that we have a
complicated situation with KBC financial products. We do have a separate
governance structure in place. I think it was announced already in the third
quarter. That is ongoing. Given the size, the duration and the complexity of
a number of these portfolios we have, and a dedicated team of 20 people doing
nothing but these are 20 experts, obviously, we have taken the measures
necessary in order to minimize the operational risk and to lock in the
necessary competencies.
Obviously, we have also made sure in terms of contingency planning that our
experts in the legacy team can take over and keep positions. And we are very
well on the way and ongoing to concentrate our operations in London as report
to New York. Some of the operations in New York will be relocating to our New
York branch also, in a effort to reduce operational risk. But most of it will
be in London, which from a practical point of view, obviously, is much more
manageable for us than having most of this in New York. Oliver Wyman issued
us a consultant not to be named, is still working with us and they have their
full dedicated expert team of 10 million working with us on this KBC
financial products.
Our solvency positions should not come as a surprise to you, of course. You
have the composition as we have previously shown to you. A loan-to-deposit
ratio stands at a very healthy 88%. The core 1 is 10.8 and -- tier 1 stands
at 10.8. The core tier 1 stands at 9.2. And we have included here country by
country, both the core tier 1 ratios and the loan-to-deposit ratio of our
central European subsidiaries. You may remember that specifically Russia
[indiscernible] at 660 or something loan-to-deposit ratio, so quite a number
of efforts have been made over there. As you see, other than Russia, we are
just slightly over the 100% benchmark in Poland. All of the other
subsidiaries have very healthy loan-to-deposit ratios.
What we are trying to do over here -- this maybe a little bit over-courageous
but we did it anyway -- is to give you some kind of an idea what the
so-called Basel III proposals would do ad hoc on our balance sheet on the
31st of December, 2009. So what this is, this is a very static exercise that
we have done to the best of our abilities. We are not claiming that this is
scientifically correct. We may remind you that we have been invited already
to participate in the Quantitative Impact Study on the Basel III proposals
which will take place later in the second quarter, obviously that will give
us a much better idea, but in the meantime just to give you some kind of
things to think about. As we currently analyze the proposals the effect would
mostly sit on the deductions and then more specifically the deferred tax
assets and the minorities we do not risk - income have a lot of minorities
ask you now so that's its not really their concern. With respect to the tax
assets, it will - amount of 1.8 billion that is in our balance sheet, but
what this reflects is that not all debt will be lost as a matter of fact that
based on the current analysis it looks that we will qualify with the majority
of our deferred tax assets and not has to deducted from our capital.
With respect to the Total Tier-1 Capital the big item, the biggest item is of
course that all of our Non State Hybrid Instruments are disqualified for the
proposed definitions in the Hybrid Capital. As you know that we have paid the
coupons and believe this quarter it is over the mandatory [ph] coupons so by
definition they would disqualify and loose the benefit of the existing Hybrid
Instruments in all of these two capitals.
A most - is a very static exercise where we have implicitly and explicitly
assumed in this first slide that the government instruments won't be
Grandfathers, I think that there is a reason for assumption to take, but this
gives you some idea of the vulnerabilities of the Basel II proposals and that
as that stands now and Basel items KBC could be affected by - when compared.
On a comparable basis this is a rather good picture, but of course we will
see what comes out of the different proposals.
We've done the same thing with respect to the announced liquidity
[indiscernible]. Over here obviously we will have to adjust our liquidity
management that's quite clear. The definition of liquidity reserves of
eligible [ph] liquidity instrument of course is on a change. What we have
done over here is based on the fact that obviously we know which of the
entities are contributors of liquidity and which ones are consolidators of
liquidity. We have projected this out a little bit to the 2012 periods after
all restructuring, clearly you know that institutions such as KBL European
Private Banking and Centea isn't a contributor of liquidity. On the other
hand, Russia is a consumer of liquidity of activity in leasing our activity
and consumer finance. KBC financial products our activities in our project
financing field are all customers in our com liquidity. And as Ricardo [ph]
those off, then with respect to the 10% loan test, that's the loan to
deposit, hoping the other way around, they shouldn't have on a net-net basis
hold that much of impact.
And that stable funding test, we should be all right. We would be little bit
short today. We would also be a little bit short in - as per the
restructuring with respect to the liquidity coverage, we should be fine. So
this is a rather issue in picture, but by the same time of course we do
realize that we will have to switch up in things differently with respect to
liquidity management.
With respect to our stable funding we have some maturities comings up as you
know about 2.9 billion in 2010 you know that we hit the market a couple of
times in 2009 and beginning 2010. That was rather successful. We do have
another 1.8 billion that might be taken as a result of goals for other
events.
And on page 41 I believe now, there you have the maturity schedule of our
long term debt, would suggest that we don't spend too much time on this.
Again, we can come back it as you - as we have item. But we also wanted to
show is this one. We have taken as we indicated in the beginning about 3
million in impairment charges in the fourth quarter. And this picture gives
you an idea of where we are in terms of - where we are marked in terms of our
price to book. You remember the time that with respect to Central Europe,
perhaps the book notables of 3 or 4 were not the exception. I'm not
suggesting although that you would take those numbers as some kind of
standard, but nevertheless that this picture gives an idea that we are rather
conservatively values as far as other investment. In terms of Europe in
concerned we do have no goodwill on our books with respect to merchant
banking and we have about 500 million as we already indicted in KB
[indiscernible].
You will - of course that the trends of decrease in TDS spreads has come to
an end for the time being that over the last couple of weeks we show a slight
increasing trends. For that reason we also plotted it was good to give you an
idea of how that might impact us so we have concluded that on page 43. You
can look at it at your ease.
And then the last thing that in everybody's mind of course is where are we
with respect to [indiscernible] out total portfolio consolidated amounts to
60 billion, whatever that is invested in Belgium you have of course the
inevitable not that we are sorry for that but inevitable investments by us
and for the European subsidiaries in the instrument issued by their own
government that goes without saying. Our biggest exposure both is proposed on
a relative and an absolute basis on the others is in Italy, but the other
countries that make - that are in the storm today are very manageable with
Spain being at 4%, Greece being at 2% and Portugal being at 1%.
I hope that this gives you some kind of idea of what total exposure is in
view of the uncertainty that has risen over the last couple of years. One
thing that we want to just alert you to, as of the first of January 2010, we
will be changing our reporting - our business unit reporting.
It is clear that with all of the entities that our earmarked for divestments,
we want to keep and maintain a consistent presentation of what our underlying
performance is and for that reason we're going to take out all of the
institutions that are earmarked for divestment and actually as Jan indicated,
we have already accelerated these projects for a number of them and all the
entities that are here in the boxes we will shift them as for the first
quarter of 2010 to group center.
Actually they will form the majority of the numbers of group center and what
will remain is hopefully that something that will make your life little bit
easier consistent base to measure the performance of the underlying income
against. So this is as of 2010 that we will implement to this.
I will turn it back over Jan, for wrap up of this presentation.

Jan Vanhevel, Group Chief Executive Officer:
Okay. Thanks, Luc. So I would then looking forward to 2010 I am on the slide
and page 48, the reduction of the cost which we have seen and you have seen
in the course of 2009 will have a tendency to and to bottoming out this year
and we might expect in certain units a slightly increase of certain costs.
Relating to the loan losses our base case scenario for 2010 includes a loss
level of loan losses compared to the financial year 2009. As you might
expect, we don't - we will not propose to our shareholders debate in the
dividends in this year based on the financial figures of 2009. However, we
expect to resume having a nice profit in order to be able to pay dividend
next year based on the results of 2010.
We are in full speed in our divestment project and different programs, which
are on table. And we have noticed a lot of hatred for all the divestments,
and we hope that we will be able to close soon some smaller divestment
transactions in the next quarter but also enter into one flagship project to
be concluded. And as we are unwinding the financial products business, there
also there might cope up some losses, it might be. So that's looking forward
to 2010, some guidance we wanted and I wanted to give you.
Now, we will close our presentation and looking forward and listening to what
your questions and more details elements you wanted to note. Operator, please
go ahead and start the Q&A session.

Q&A

Operator:
Our first question comes from the line of Benoit Petrarque. Please go ahead
with your question.

<Q - Benoit Petrarque>: Yeah, good morning. Benoit Petrarque from Kepler in
Amsterdam. Couple on questions on the slide 39. The first one is on the - the
norm side hybrid instruments. If they do not qualify for Basel III, will you
consider to buy them back and issue new ones. Also on these slide, if the 7
billion State Culture 1 securities does not quality us as a Culture 1, what
are the kind of scenarios will you see that year and also on the impact of
question - impact of Basel III, the IPO of CSOB I mean could result in large
minority which could then negative for Basel II. So what are your thoughts on
that one? That's the first question.

: Okay. With respect to the hybrid, don't forget that the Basel III will
only be implemented in 2012. And we do have these units, this hybrid in our
capital structure until then we do not intent to buy them back in responding
time. With respect to the core Tier 1 instrument, we assume this point in
time we have every indication that there will be a certain amount of
grandfathering [ph]. As you know we are working on a program where obviously
now and 2013 we will be replacing the government instrument by own funds
through the combination of our retained earnings and the risk weighted assets
reduction. That is the essence of the plan that we have presented in November
in London. So in essence essentially what this tells you that we are more as
counting on grandfathering for a limited period of time beyond 2012. But that
we do intent consistent with the plan that we have shown in November to
replace the government instrument with our own funds.

<Q - Benoit Petrarque>: Sorry just mentioned -- do you expect to settle the
amount of grandfathering, how much do you expect?

: I think that we said already that in our plan there was an assumption of
grandfathering for one year period. With respect to the IPO, I am afraid.
It's very difficult position, as you know in IPO is very structure regulated
process. We are restricted that we should not discuss anything with respect
to the IPO of CSOB. So I am afraid that I have kind of stick to those
instructions. I have a couple of folks [ph] sitting over here in room who are
looking at me at this point in time. So I am afraid. I have to reframe from
any comment on the IPO.

<Q - Benoit Petrarque>: Do you know are you speaking [indiscernible] to sell
more than 40% and eventually just lose the control and that to avoid
recognizing risk weighted assets on the balance sheet.

: I am afraid that we can not make any statement rather than amount of
that we have made in November.

<Q - Benoit Petrarque>: Okay. And the second question is on the market value
adjustment for liquidity and counterparty risk, the 100 million, is that
one-off item and could you explain a bit or did you build up this amount?

: Its an item, not a one-off item that we make certain market value
adjustments every month, not only on a portfolio, on the trading positions of
our revenue, but also on a trading positions of KBC financials. But, I will
say, in this market value adjustments are being calculated in accordance with
the particular model and what we have done in the fourth quarter is we made
some adjustments to the model based on market considerations that we have
over the last couple of months in the normal course of the business. There
its - its not a one-off in the sense, it is a one-off in the sense that
generally we do not adjust our models every quarter, but there are markets
trends that we think needs to be reflected in the modeling of our market
value adjustments when we make those adjustment and this not one-off in the
sense that also in the following the quarter the positions in the leading
with leasing room with realty estate figures, this models or there might some
adjustments, of course that might be both positive or negative adjustments,
but that's not new, that's not we have. But 100 million specifically relates
to the fact that we estimate our model value adjustments models but as a
suffer.

<Q - Benoit Petrarque>: Okay. So its not due to a couple of position in your
trading book which are kind of liquid on which you collect some.

: No, not at all.

<Q - Benoit Petrarque>: Specific counterparts, its kind of general modeling
issues here.

: No, no this is nothing to do with particular positions, it is just an
adjustments to our modeling products, the calculation of our market value
adjustment applied consistently specifically throughout the portfolios.

<Q - Benoit Petrarque>: Okay.

: You should not be looking anything that's exceptional in it.

<Q - Benoit Petrarque>: Okay. And then last question on the cover ratio for
Central Eastern Europe, yeah, here I do see a cover ratio of 80%, 85% for
Russia and Hungary, its bit low versus countries like Chez Republic, Slovakia
which are actually less risky countries so there is a bit of paradox I think
here so, which is kind of cover ratio you will feel very comfortable for
Russia and Hungary?

: As I have indicated before we are not managing our cover ratios.
Actually the cover ratios is a result of our [indiscernible] not something
that we manage and the difference between the various entities very broadly
defined as to do with the fact what extent that is hard collateral against
these exposures. So generally speaking the lower the coverage ratio there
more you may assume that mortgage loans for instance make up a bigger part of
the overall portfolio. And this consistent with what you see as different in
those countries.

<Q - Benoit Petrarque>: Okay. Thank you very much.

: You're welcome.

Operator:
Our next question comes from the line of Eapp Myer [ph]. Please go ahead with
your question.

<Q>: Hi. This is a Eapp Myer from Evolution. Your good loan impairments a
little bit low because the book values you now have for something which isn't
European franchises. Do they really represent exit prices because there would
be quite surprise because there would be sequentially price, because that
price for the Russian bank who are sitting on loan losses over there. Second
question on the 7 billion state aid, is this in your view a grandfathering in
the Tier 1 or effect in the core equity Tier 1, because I think the core
equity would be far more important going forward. And thirdly, on gains on
available for sale with $0.00 and let's say trading result. What is in your
view kind of the sustainable level, because they tend to be very volatile and
used to be very high in the parcel ? So in granularity there would be
helpful. And did I understand well that you restarted foreign exchange
lending again in Hungary. Thanks.

: I didn't quite catch the drift of your first question. Were you implying
that what we are showing is book values for our Central European entities is
maybe too low?

<Q>: Too high actually.

: Too high, yes?

<Q>: Yes. Well, actually for the Russian business for example, reporting
quite big losses, loan losses being a big problem. Lending is contracting and
you still have a quite decent good one in our view.

: Well, we have our models of course to calculate our impairments out of
the 300 million of impairment in the fourth quarter a good part of that was
allocated to Russian, who came out of the calculation for Russia. We
obviously do some, I should say the reality text on those calculations and I
know that there are very few Russian banks, who are publicly both. They have
publicly posted at 50 when you compared our quote with the quote of the
Russian publicly posted banks then you would see that we are definitely not
too high calculated pressure at this moment of time on average to the rest of
minority. So we are at the level of about 2 to 2.2.
So I wouldn't agree that we are rather high as far as that is concern.
Another question is of course, can you today in the month of February sell
the Russian asset at that price. Well, we do not do a mark to market of
course of the goodwill of our subsidiary, but I don't think that we are mark
to high as far as that is concerned.
With respect to the grandfathering of the 7 billion, we have a very, very
point. We are camping of course and grandfathering in the core which is quite
clear. And then what is the sustainable amount of fair value changes as such?
It is of course, by very nature rather volatile type of business, but I think
that through a whatever you can call, a cycle whatever that is there is an
amount of about 150 to 200 million is something that we will expect.
Oh! Then you have the - what was the last question again?

<Q>: Foreign exchange lending in Hungary?

: Oh yes, rather we did lose market share as it is also the fact that we
were discontinuing the lending in Russia with respect to the mortgages. We
have within new lending parameters allocated a certain amount of money that
can be produced in foreign currency in Hungary.

<Q>: Okay. And on your fees and commission, they were very...

: Just to one more work of comment, one of the reasons why we did that is
that we continue to see that the loan experience on the foreign currency
loans exceeds the quality of the domestic loans. So there is a pre-selection
in there on that basis that we have opened the door.

<Q>: With the caveat if the foreign of course doesn't deteriorate...

: I don't know that if you have a disposable income that can bake it in
then that is somewhat mitigated and that's what we see in fact I have really
consistency for quarter figure.

<Q>: And on season commission they were very good in the final quarter, do
you think this is representing loads in capital guarantees funds or is it
actually recurring, so is it because of the inflows that is pushing up the
season commission or it actually recurring fees on those products?

: I would consider rather consistent. They are not a lot of exceptional
items and don't forget that we came off very low levels in previous quarters,
clients were simply embarking their money in cash funds and what we have seen
is a level of activity in our capital guarantees that is even lower than the
best deals that the investment quarters that we had in the previous periods.
I would not expect that it will disappear over night.

<Q>: Okay. Thank you very much.

Operator:
Our next question comes from the line of [indiscernible]. Please go ahead
with your question.

<Q>: Yes. Good morning. Just as a related questions to the loan charges. So
basically depends on the measure that has increased from 111 basis points in
the third quarter for the group to 203, so a large movement, some of it is
due to the fact I think that you take advantage of the positive marks on your
CVO to be conservative. So if we look forward to the year you are very
optimistic about - I mean you said that you expect these loan loss charges to
fall compared to 2009, how do you see the first quarter, is the first quarter
going to be closer to the fourth quarter or much more closer to the third
quarter that is my question. Thank you.

: Yes, just give me the mic - microphone instead of switching it off.
Sorry for that. I think that in the - if we make the analysis then it is
clear that the loan loss provision will remain at relatively high level, but
that that will not be in the first or second quarter at the level of the
fourth quarter. So I think if you make the comparison, it will probably be
more on especially what I call the third quarter, that's fine. If you want to
call little bit in the average of the year for the first couple of months,
that will be fine. For the full year, though, we do expect that to be down.

<Q>: Thank you very much.

Operator:
Our next question comes from the line of Sabrina Blanc. Please go ahead with
your question.

<Q - Sabrina Blanc>: Yes, good morning. Sabrina Blanc, Societe Generale. I
have three questions. The first one, could you come back again on the
[indiscernible] to explain your [indiscernible] positive message about this
element. I understood that one-off impact coming from Poland but could you
elaborate for the main three businesses. I have another question concerning
cost of risk. What is your point of view in terms of potential contingent to
some part of Eastern Europe coming from Greece? And the last question comes
from the - about the timing in terms of disposal of IT. I understood that
2010 would be a key but could we [indiscernible] have more IT in terms of
timing for those two disposal and the IPO? And about the Poland and the
consumer credit petition, could this provision that you made at the end of
2009 may have some impact of the - on the price and something for KBL because
Q4 looks slightly weak?

: Okay. Thank you for those questions. I will try to push. Maybe we'll
have to ask you to repeat this.

<Q - Sabrina Blanc>: Yes, sorry.

: The first one was to book some leads on our credit cost in Central
Europe around this visit correctly.

<Q - Sabrina Blanc>: Yes.

: Well, as we already indicated of course, we did have call it an
exceptional item in Poland with respect to the consumer finance loss. I've
indicated before that this is an issue that is not a KBC issue. That is an
issue that is a market issue. There is nothing less than a consumer finance
bubble in Poland; a thing that we have dealt with it in - on again aggressive
basis. And that demand has been for an additional, let's say, 50 million or
around of credit provisions that's only due to the consumer finance business.
I think one of your last questions was whether this was going to affect the
price for our Zagiel [ph], disinvestments. It wouldn't because the Zagiel is
a broker as such. And we will keep in check. We do not intend at this point
in time to necessarily sell the portfolio, as a matter of fact the portfolio
is booked in the books of credit bank. And what we're selling is a
distribution network, we are not selling a portfolio. Of course, there is
somebody would be insisting on having the portfolio upgrades and decent price
for it. And we will be looking at it, but that's not plan number one.

<Q - Sabrina Blanc>: Okay. Do you want that I repeat my questions?

: No. Plus, some other - going beyond Poland, if you exclude the consumer
finance and as we have shown on one of the invest, then we see that the
non-performing loan formation has been slowing substantially in the fourth
quarter with the exception possibly of Russia. So that is for us a leading
indicator that the quality of the loan book is not deteriorating to any large
extent. I'm always making a little bit of an exception for Russia, and for
that reasons if you're rather comfortable that in the first couple of months
let's say in the first quarter of 2010, we do not expect to see the level of
the fourth quarter reserves.
But obviously, we do not expect to be returning back to the levels of
2007/2008 either. So Jean-Pierre asked the question I think that to the best
of our knowledge of this board in time if there is - and its such thing as
knowledge on these things. That it is not unreasonable to assume that in the
first couple of months the cost [ph] would be say on the average of the year
or maybe at the level of the third quarter over there. In order to drop
further down in the second half of 2010. You had the question with respect to
Greece, so contingent - as a contingent on the Greek to the other countries.

<Q - Sabrina Blanc>: Exactly yeah.

: Okay. Micro [ph] you will get it as good as mine I guess, we are seeing
that the last couple of weeks that there were a lot of [indiscernible] big
discuss forever where the I stands for Italy or Island. There has been some
thoughts on DOK. I will assume that implicitly in your question, you also
referred a little bit to the Belgium situation. We do have an high debt
level. We do also have budget problem in this country. But I think that we
are not anywhere near, as in the situation that we are. It's an open economy,
and our trade flows of course are mostly related also within Europe. Our
government debt is financed mostly domestically.
So, I think, there is no reason to expect that Belgium going to slide to
considerable extent, without saying of course not implying that mark
economically. We're living in -- I am glad to hear from it. But I would not
expect any kind of major impact. Do you want to add anything there?

: No. I don't feel anything, so we are in other country and open more
country. And on top of that, the European leaders are at 1 kilometer from
here gathering, having a gathering try to clam down and some of the problem,
which has been cleared. Did we get to all of your questions?

<Q - Sabrina Blanc>: Yes. Thank you very much. The disposal of KBL and
[indiscernible] will be.

: All the timing. Well, as far as timing concerned we do have a slide that
gives you some idea. As we indicated already on the work that we're doing,
preparation of the IPO, since we're under a -- vital to communicate. But we
cannot say anything about that. There will be Polish operation, but let's not
over do that, in the Polish operation of the Gale [ph], without the
portfolio, we did not talking about the amount of money that going to
influence our financial planning for the large extent.
But this is geared towards 2010. As a matter of fact with KBC European
private banking, we are in the process of expecting the first indication of
combining office. And also the process is ongoing. And - but it will be quite
a few months before, we actually in a position to specifically communicate
about that after the non-binding offers, we're going have to make selection.
We then have to select the few parties, with whom we're going to - and second
with whom we're going to open these data room. And that on due diligence
within our discussions with the few parties, recalled to the binding business
proposals. There is legal documentation to be discuss. So it's going to be a
couple of months before we actually going to be able set specifics. But the
process is ongoing and as we speak in the quota of this week and we've
received already a couple of binding and we continue to receive them this
week.

<Q - Sabrina Blanc>: Okay. Thank you very much.

: You're welcome.

Operator:
Our next question comes from the line of Britta Schmidt. Please go ahead with
your question.

<Q - Britta Schmidt>: Yes, hello. Couple of questions for me on the capital
as well, can you maybe comment, there's still around about 600 million
positive impact from the equity options from the Belgium, that you have in
your capital. Is that something that you - is that included in your
adjustments or do you think that, that was staying for the moment, is that it
will credit for the moment?

: No. Just a minute, please. Yes, if your question was, impact is going to
above...

<Q - Britta Schmidt>: Yes, of course. Yes.

: Just let me think of that a little bit. I am not quite sure what it is.
What you see that 600 million is very simple. The fact that as we indicated
before, we have to mark the first loss of our super senior swaps and some of
the notes, as you remember we have 100% model reserve against that in the
third quarter. We knew, I think that we also communicated that in the fourth
quarter we will have to get some value on that which we did, so the model has
been approved in the process, also it came at 600 million. We obviously have
also put model risk reserves, model reserves against the outcome of that.
But at this point in time frankly, I would not be able to tell you what the
impact of the proposals about that would be in respect to the 600 million by
itself. I do want to point out of course that this means that contrary to the
third quarter, we now have some value in the first loss under the government
guided guarantee arrangement, and in the other components of that guarantee
arrangement. And obviously we will have to mark that as the quarter.
So the volatility of this part because you cannot have liquidity if you're
marked at zero, no longer marked at zero, so there will be a certain amount
of volatility in these markets in the next couple of months - in the next
couple of -- going forward in the next quarter. But frankly an account of
quarter three impact, I have no idea where I would have to stop thinking
those haven't given any thought.

<Q - Britta Schmidt>: Okay. And there are only counterparty credit, I see
that you've made no adjustment to the risk weighted asset, you said anything
that you had any sort of feel for, is that is there a little bit in dark what
the input might be?

: Yes. I see what you mean. We've done those exercise also but it is very
much workable in this point in time. It is lot of much longer multitude or
much more than important that what we have been talking about.

<Q - Britta Schmidt>: Okay. And then quickly one last question on -if we look
at not on a consolidated basis, but kind of a non-consolidated basis bank
versus insurance, do you see any impact from solvency during the
capitalization of the insurance business. I mean, solvency is very strong
there, but is there something that where you got some preliminary thought?

: Yes, we do. It's well on basis on what was in Case IV [ph] exercise. We
would expect that the capital, the charge on as a result of solvency about to
double, but keep in mind that at this point in time, we do hold already
solvency levels in our insurance business as it applies the regulatory
requirements as it spends now that it will be on a net basis, not be a
problem for us.
So we should expect these regulatory capital to double that we are already
there. We have, of course, together with you already heard and read that as a
result of the Case IV exercise. There are some thoughts on the part of
regulators that maybe they should do at least four with some more stringent
requirement, but that's an exercise that we are yet to see what's coming out
of it.
As we stand now we would expect the doubling of the regulatory capital in
order to bring it to the level where we are currently are already.

<Q - Britta Schmidt>: Okay. Good. And just two other quick questions, if I
may, on the derivative losses on the estimates [ph] that you've talked. I
mean, you had a provision booked in the past what we see recurring looses
going forward, what's your outlook for the unwinding of these book, can you
give us any sort of feel as to what we should expect in terms of further
losses from there?

: Yeah, you are referring to our provision that we made over the marking
that we did in the second quarter already. We continue to do that and the
loss severity [ph] is very simple. A number of these businesses are in
run-off and that means that either we can wait until the hour of final
maturity or we can take some action in order to accelerate that process.
We're trying to do the latter. Of course, if we do the latter than we are on
the wrong side of the market. We're constantly getting on that side, and what
we are doing is we are, or because it essentially the capital charge against
P&L.
So when we see a possibility to accelerate the run down of some of these
assets and to the extent that we can do that at a cost, which is lower than
our capital cost - the marginal capital cost then we are always interested in
these deals, and that's why we have mark these assets where we have some
market and we continue to do it.
On the other hand, we understand that when we - the provisions we made in the
second quarter of the markings that we made and it's not only NVA's or
provision it's also marking them more conservatively and there still - there
we haven't touch absolutely [indiscernible].
And but again the idea is to put us in a position. And I think we are in a
position that if we can do a reasonable in terms of pricing that we're not
restrains or hesitant in executing those deals for reasons of having market
assets on growing concerns basis.

<Q - Britta Schmidt>: Okay, great. And then the last question I have if there
was just mentioning, I mean some of the CDO layback you have were due to
model change. Could you give sort of insight into what you have changed that
that has actually led to benefit. And whether is perhaps changes
[indiscernible] and any sort of -- what it was previously?

: Well, as I said it was in model that we have developed and that we have
run on all of our CDO holding including Renault. It is all of it is that on
the notes, we have a few notes that came in model; essentially the way to
look at it is the assets have not improved. It's come on the time value of --
out of the implicit options that the Nissan ordered it. And results is that
the notes were marked up by 100 million, 180 was the amount. The super senior
by what was it 600 minus 100, it is 480 above, 300 thereabout. And that
obviously in the fourth quarter we also as you know saw further decrease in
the credit splits. That is also an element that increases the value of the
notes and that was good for about 200 million. But again the fact that we
have marked these -- some that get us on value, some model value to these
assets. These do not consider that as a change of [indiscernible] partly
distracted through the fundamental value. This is adjustment accounting
issue. And it's a -- you may look at it that it is the same thing that the
deep out of the money option also has some time value of the same thing
essentially applies to this.

<Q - Britta Schmidt>: Okay, great. Thank you very much.

: Welcome.

Operator:
Our next question comes from the line Franois Boissin. Please go ahead with
your question.

<Q - Franois Boissin>: Yes, good morning. This is Franois Boissin from Exane
BNP Paribas in Paris. Few questions please. First the net interest income was
quite strong again this quarter. Just wondering if the alternate interest
margin as well [indiscernible]. Just wondering whether it was linked to let's
say favorable environment or further re-pricing of loans and deposits and how
sustainable it is your view.
Second question on Ireland, clearly there is still let's say a deterioration
in asset quality in Ireland, when would you expect the stabilization and at
what level? And maybe just a final question on Solvency II, you expect double
charges just under QIS IV or QIS V. And what will be the number if it's Q4?
Thank you.

: For the last question, shall we say that it was going to double. And you
wanted to know what?

<Q - Franois Boissin>: The doubling of the capital charge, is this what you
see with the Q -- with quantitative impact study number four or five?

: It's four.

<Q - Franois Boissin>: Okay. And let's say with current assumptions proposed
by the CDOs, have you made any kind of equations in the potential capital
requirement?

: I am being told over here that the effect would be 400 million.

<Q - Franois Boissin>: In addition from what -- from the doubling?

: No, no. Just a second, we will get back to you on this one.

<Q - Franois Boissin>: Okay.

: First, with respect to the interest margin, now what you have to
understand that this has nothing to do with the yield curve. This is indeed a
commercial margin over our cost that we charged to the clients, what we
receive from the clients. So essentially, there is nothing to do with
interest transformation at all, while it is on consistent basis. Any kind of
interest transformation which has to be found in our deal rooms, nothing on
commercial margin.

<Q - Franois Boissin>: Okay.

: As far as Ireland is concerned, it's a difficult situation in Ireland
nobody denies it. The unemployment rate is what it is, it's not going to come
down over the next couple of months. We are far in excess of 10%. That is
specifically relevant for us, because good part -- or major part of the
mortgage portfolio relates to mortgages buyer who live in there [ph] or the
people living in their own house. Obviously, then disposable income is much
more important on loan to value. And as indicated in our slides we have
restructured about 6% of the loans over there and it is an indication that
where at all possible we try to kind of work with the clients to solve them.
And what we see, we have been seeing that consistent that our NPL number is
not a static number, its not kind of a number of people who are not paying at
all anymore. Its kind of a number of people who run behind, catch up a little
bit or the people falling into that category. So we try to work with people
with the best of our abilities, as long as it is reasonable.
When would we expect anything to substantial improvement? Frankly, I have no
idea. We would not expect that to be in -- to have a major impact in 2010. I
think the good part about the Irish economy is that it has shown an ability
to correct itself and society that is willing to make the sacrifice that it
takes in order to turnaround the situation. So maybe as of 2011 we might be
seeing a situation, but in only event we would not expect it to see it in
2010.
In the meantime, we are debating over here -- next to me, we are debating an
answer to your last question, just a second.
I think I should better give you an announcement in writing on that question
because my experts [indiscernible] on Greek.

<Q - Franois Boissin>: Okay. Just a follow-up question on the net interest
margins. So you were saying that it is just a commercial margin, then what
droved it. I mean is this re-pricing of loans or deposits and what kind of
trend can we expect going forward?

: I would expect no particular trends upwards or downwards. It's
[indiscernible] on the asset side, it is a reflection of the fact that the
market has expected that there is a cost of risk and that there is a cost of
liquidity. And on the liability side, it is probably - there is almost some
high margin products shifted from term deposits where there is almost no
margin into saving deposits where that is not necessarily there forever, but
it clearly a trend that we have seen over the last couple of quarters.
I must - operator, I think that I'm running out of time over here. Luc, you
want to take over - can we take another question.
I think I've been allowed to take one more question. Our next question comes
from the line of Andrew Coombs, please go ahead with your question.

<Q - Andrew Coombs>: Yes. Good morning. Thanks for taking my question. Just
two on the merchant bank piece. Firstly, if you look at the underlying
revenue trends excluding the methodology change the underlying trading
revenue. I think you're looking at a 101 million that returned from 58
million in the third quarter. And what do you think we should be thinking
about it, is that sustainable run rate there? Say for example, we've
obviously had some positive commentary from lot of the investment banks on
January and February capital market volumes. And I was just wondering what
you're take?

: Well, as we indicated, we would expect a normal level to be 152 to 200
million.

<Q - Andrew Coombs>: And secondly, just for took outs to the impairments on
the international corporate lending loan book, which regions of those
impairments specifically I know where were they heaviest? And also can you
just update us on the one down of the non-core part of the corporate and the
vendor price issuing in Q4 and you have Southeast Asia in cycle? Thank you.

: By definition of course in our core presenting book they situated in our
non-core countries. As I know that is of course the part of the portfolio in
our merchant banking that relates -- that part performed rather low. The rest
of the portfolio [indiscernible] no particular reason why that's concentrated
both in the organic is everywhere keep in mind though that merchant banking
loan loss costs also include Irish operation.

<Q - Andrew Coombs>: And in terms of the shrinkage?

: In terms of...

<Q - Andrew Coombs>: the shrinkage in Q4, I mean the cost stability that you
presume?

: It is across the board test where the exception of possibly of the asset
backed securities I would not expect major, major developments in there.

<Q - Andrew Coombs>: Okay. Thank you very much.

Luc Cool, Director of Investor Relations:
Due to time constraints we need to conclude the call at this point in time. I
would like you to thank you for your participation. We will remain at your
disposal for further questions in the hours and days to come. Have a nice
day.

Operator:
Ladies and gentlemen, thank you for your participation today. This concludes
today's conference. And you may now disconnect your lines. Thank you.

 

[Zorba]

Ho chiesto un po' di prezzi, ma non ho preso nulla:

- HYBRID CAP FUNDING I 8% XS0216711340 lett 40
- HYBRID CAP FUNDING II 6% DE000A0D2FH1 lett 37
- DPB917 65/66.5
- Alpha DE000A0DX3M2 lett 50 (non vorrei fosse una quotazione da pomeriggio...)
- SNS 2017 63.5/64.5
- EFG XS0232848399 lett 44 (bravo Ferdo che le hai prese a 42)
- UBI XS0108805564 94/96

 

[Mais78]

Ho chiesto un po' di prezzi, ma non ho preso nulla:

- HYBRID CAP FUNDING I 8% XS0216711340 lett 40
- HYBRID CAP FUNDING II 6% DE000A0D2FH1 lett 37
- DPB917 65/66.5
- Alpha DE000A0DX3M2 lett 50 (non vorrei fosse una quotazione da pomeriggio...)
- SNS 2017 63.5/64.5
- EFG XS0232848399 lett 44 (bravo Ferdo che le hai prese a 42)
- UBI XS0108805564 94/96

Su Alpha c'e'e rabo che vende a 48 e MS a 49

 

[zar1982]

Salve a tutti ragazzi ...e in particolare al gruppo di fuoco ...parlo Negus , Mais , Varoon, Bosmeld e tanti altri......un ringraziamento al lavoro ECCELLENTE fino ad ora svolto....

Sono dei Vostri....entrato anch'io dopo un lungo giro in Venezuela (molto redditizio) e uno molto meno nel forex....

Acquistate appena adesso 350 K di

BANCO POPOLARE SCARL
XS0304963373

Prezzo 73 /100
leva per 120 k circa resto miei ...rendimento 19 K netti annui al netto degli interessi per finanziamento ....a giugno con stacco cedola incremento propabilmente di altri 50 k per arrivare a 400 k .....Come dico sempre Chi Vivrà vedrà.

ciao, per curiosità posso chiederti che banca utilizzi per andare a leva su questi titoli.
Grazie

 

[zeta59]

Ho chiesto un po' di prezzi, ma non ho preso nulla:

- HYBRID CAP FUNDING I 8% XS0216711340 lett 40
- HYBRID CAP FUNDING II 6% DE000A0D2FH1 lett 37
- DPB917 65/66.5
- Alpha DE000A0DX3M2 lett 50 (non vorrei fosse una quotazione da pomeriggio...)
- SNS 2017 63.5/64.5
- EFG XS0232848399 lett 44 (bravo Ferdo che le hai prese a 42)
- UBI XS0108805564 94/96

Mi pare sia tornata interessante DPB 917

Scartabellando su internet sono finito qui :
equinet AG :: Lead Broker (Floor Trading) Bonds

penso siano i titoli in Pft al 02.02.'10 ( con l'Inglese non vado molto bene)
mi pare abbiano un bel pochetto di P.

 

[Zorba]

Su Alpha c'e'e rabo che vende a 48 e MS a 49

Appunto. Mi hanno dato una quotazione pomeridiana... Grazie Mais. Sono cmq a posto di Alpha... e anche contento che sia cresciuta di un punto rispetto a ieri...

 

[bia06]

abn Ambro 457

Ciao. Io l'ho comprata in ottica cassetto e, pur essendo in gain, sino almeno a 71 la terrò. ABN già a fine 2010, risanata, avrà un immagine (oltre che rating) nettamente migliore. I fondi pensione tedeschi ed olandesi comprano e compreranno ancora. Se poi la tieni in ottica speculativa, certo puoi vendere a patto di trovare di meglio (cumulativa, no loss abs, stato patrimoniale (ri)pulito ecc).

Grazie, il tuo presupposto è validissimo, ma è importante sapere anche come la pensano gli altri, specialmente se si ha la consapevolezza di non essere informati.
Grazie molte.

 

[ferdo]

Ho chiesto un po' di prezzi, ma non ho preso nulla:

- HYBRID CAP FUNDING I 8% XS0216711340 lett 40
- HYBRID CAP FUNDING II 6% DE000A0D2FH1 lett 37
- DPB917 65/66.5
- Alpha DE000A0DX3M2 lett 50 (non vorrei fosse una quotazione da pomeriggio...)
- SNS 2017 63.5/64.5
- EFG XS0232848399 lett 44 (bravo Ferdo che le hai prese a 42)
- UBI XS0108805564 94/96

peccato a non avere i denari ... speriamo che siano attaccati

PS cmq i soldi risparmiati con EFG li ho bruciati in borsa oggi
Speravo si salisse oggi invece una mazzata ...
cmq ho finito i soldi così non ne posso perdere altri