* 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 keeps bancassurer model, shares hit 4-week high
(Adds Kroes, updates shares)
By Philip Blenkinsop and Foo Yunchee
BRUSSELS, Nov 18 (Reuters) - Belgium's KBC <KBC.BR> pledged
a sharp downscaling of merchant banking, the sale of private
banking and a string of divestments in return for receiving
state aid, while keeping its core bancassurer model intact.
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.
"There is no such thing as a free lunch and today's
restructuring announcements reflect that. Our policy is to
encourage vibrant but responsible competition in the banking
sector," Competition Commissioner Neelie Kroes said.
She added there were 28 further banking cases in the
pipeline. These should include Franco-Belgian Dexia <DEXI.BR>
and a number of German savings banks.
KBC said it intended a non-dilutive exit from state
liabilities, with no plans for a right issue.
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. []
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.
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 shares, which had been suspended pending news of the
restructuring, hit a four-week high shortly after trading
resumed. At 1440 GMT, they were up 3.7 percent at 34.67 euros.
"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 weaker.
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.
(Additional reporting by Antonia van de Velde; editing by John
Stonestreet and Jon Loades-Carter)
($1=.6712 Euro)
