* KBC gets EU Commission nod for revamp plan
* EU exec also approves earlier Lloyds, ING restructurings
* KBC to cut risk-weighted assets by 25 pct
* Merchant banking scaled down, KBL private banking to go
* KBC shares up 5.4 percent after suspension lifted
(Recasts with KBC restructuring, adds shares, analyst)
By Philip Blenkinsop
BRUSSELS, Nov 18 (Reuters) - Belgium's KBC <KBC.BR> on
Wednesday pledged a sharp reduction in merchant banking, the
sale of its private banking unit and a string of non-core
divestments in return for receiving state aid.
The group, into which the Belgian and Flemish regional
governments have pumped 7 billion euros ($10.4 billion), secured
European Commission approval on Wednesday for the restructuring
plan which will cut its risk-weighted assets by 25 percent and
entail no capital increase, sending its shares sharply higher.
[]
The EU executive also approved previously announced plans
from British lender Lloyds Banking Group Plc <LLOY.L> and Dutch
bancassurer ING <ING.AS>.[]
In reviewing a raft of bank bailouts across the 27 European
Union member states, the European Commission has forced lenders
to divest assets, close branches, reduce market share and
temporarily stop paying dividends.
Unlike ING, KBC was permitted to remain in banking and
insurance in its home markets of Belgium and emerging Europe,
where it was the fifth largest bank by assets in 2008.
One of Europe's last, major bailed-out financial groups to
come under the microscope of outgoing Competition Commissioner
Neelie Kroes, KBC said it intends a non-dilutive exit from state
liabilities, with no plans for a capital increase.
It would appear to have escaped harsher measures forced on
other bailed-out banks including ING, which is to spin off its
insurance activities and return to its retail savings bank
roots. []
Kroes said in a statement that the restructuring of all
three banks would return them to long-term viability and secure
a level playing field.
SELECTIVE DIVESTMENTS
KBC has already started reducing its non-domestic corporate
lending and capital market activities and will divest private
banking unit KBL European Private Bankers.
It would focus on internal growth in the next years without
major acquisitions and position itself as a regional European
player, it said. Belgium, the Czech Republic, Poland, Hungary,
Slovakia and Bulgaria would remain as core markets.
However, it would float 30-40 percent of Czech subsidiary
CSOB in 2010 and could do the same for other central and eastern
European units, such as K&H in Hungary.
It said it had no plans for now to divest its small
operations in Russia and Serbia.
Belgian retail banking unit Centea, domestic insurance firm
Fidea and Polish consumer finance unit Zagiel would go.
KBC said the divestments and run-offs up to 2013 represented
39 billion euros of risk-weighted assets, 23 billion euros of
which were realised in the merchant banking division.
The group said it intended to resume cash dividends in 2011.
KBC shares, which had been suspended pending news of the
restructuring, resumed trade sharply higher. At 1310 GMT they
were up 5.4 percent at 35.28 euros, just off a four-week high.
"The important thing is they will pay back the state from
their own means and will not have a dilutive rights issue," said
Albert Ploegh, analyst at ING in Amsterdam. "The restructuring
was in line with expectations, nothing more. So there is some
relief."
ING and Lloyds shares were both up less than 1 percent.
(Additional reporting by Foo Yun Chee; editing by John
Stonestreet)
($1=.6712 Euro)
