Belgian KBC ditches flotation plans

It has also confirmed it will sell its operations in Poland so that it can repay state aid it has been given. The group and the Belgium authorities have officially applied to the European Commission to revise the firm's 2009 strategic plan, approved on 18 November 2009.

KBC said due to the impact of certain changes in the regulatory environment (especially Basel III and draft IFRS rules on leases) and the difficulty involved in floating K&H in the current circumstances, some measures presented in the initial plan have become less effective in achieving the intended aim.

Approval has been sort to replace the planned initial public offerings of a minority stake of Ceskoslovenska obchodni banka, Czech Republic) and Keresekedelmi es Hitelbank, Hungary and the sale and lease back of KBC's headquarter offices in Belgium by the divestment of KBC's Polish banking and insurance subsidiaries, Kredyt Bank SAand Towarzystwo Ubezpieczeń I Reasekuracji Warta SA and the sale or unwind of selected ABS and CDO assets.

The amendments proposed in the application to the European Commission are expected to release the same amount of capital as the originally intended measures.

Jan Vanhevel, KBC Group CEO, added: 'The results of last year and of the first quarter of 2011 prove that the fundamentals of the KBC group are solid and that we have a sound business model. Over the last 19 months, we have made steady progress in implementing the plan that was approved by the European Commission in November 2009. KBC is gradually becoming a more focused and less complex group, while maintaining economies of scale.

"Our group has more stable and predictable earnings and an adjusted and reduced risk profile, while retaining our growth options and the confidence of all our stakeholders. We remain firmly committed to the bancassurance model which is at the core of our strategy and which we continue to develop within our home markets. These strong fundamentals will remain the cornerstone of our group's future."

He added: "However, as good business practice and a reflection of sound management, we cannot and must not close our eyes to the changes around us, particularly the changed regulatory environment, the impact on the effectiveness of some of the measures foreseen in our initial plan and the consolidation trend recently observed on the Polish financial market. Therefore, we see it as our
duty and responsibility towards all our stakeholders and particularly towards the Belgian and Flemish governments to whom we made a commitment to redeem the government securities within a reasonable timeframe, to investigate and propose alternative measures. KBC is now looking forward to the European Commission's decision regarding the amendments proposed in its formal application."