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KBC GROEP : Belgium's KBC Announces Early Debt Repayment of Flemish Government Loan
01/08/2014 | 05:40am US/EasternRecommend:
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BRUSSELS--Belgian bank KBC Group (KBC) said Wednesday it will make an early repayment of 500 million euros ($681.3 million) to the Flemish regional government, news that helped send its stock price significantly higher.

KBC will make the payment Wednesday, far ahead of the end-2014 deadline for settling the debt, the company said in a statement. The payment includes EUR330 million in principal plus a penalty of 50%.

KBC said the payment is possible because of "KBC's robust capital position." The company said the decision was not opposed by the Belgian central bank.

The bank said that taking into account the repayment and the impact of writing off bad loans by its Irish unit, KBC expects to have a "solid buffer" above its newly-fixed minimum common equity ratio of 9.25%.

KBC was lent EUR7 billion by the Belgian and Flemmish government during the financial crisis. It has already fully reimbursed the federal government in 2012. It still owes another EUR2 billion to the Flemmish government which it must pay by 2020 according to its European Union approved bailout plan.

KBC Chief Executive Officer Johan Thijs said the bank "may opt to accelerate" future repayments to the Flemmish government if our capital position so allows and the national bank grants its approval."

"The strategic plan we agreed with the European Commission five years ago is virtually complete," Mr. Thijs added.

KBC's share price was 4.3% higher at EUR43.80 in late morning trading.

Write to Laurence Norman at [email protected]
 
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