KBC Group receives approval from European Commi...

Regulated information* - 27 July 2011 (After trading hours)

KBC Group today received approval from the European Commission to amend its
2009 strategic plan and to divest its banking (Kredyt Bank) and insurance
activities (Warta) in Poland and sell or unwind selected ABS and CDO assets
instead of floating minority stakes of CSOB Bank (Czech Republic) and of K&H
Bank (Hungary) and selling and leasing back its headquarter offices in Belgium.

Jan Vanhevel, KBC Group CEO, welcomed today's decision, commenting as follows:
'KBC prepared the application with great diligence following an open and
constructive dialogue with the European Commission. We are grateful to the
European Commission and to the Belgian authorities for considering the changed
(regulatory) environment with which we were confronted and which prompted us to
proactively propose alternative measures. The new measures are expected to
release the same amount of capital as the originally intended measures and will
help us to repay the state aid in a timely manner as agreed with the European
Commission, without jeopardising the fundamentals of our strategy.

KBC group has a sound bancassurance business model which is and remains at the
core of our strategy. We will continue to develop this model within our home
markets of Belgium, the Czech Republic, the Slovak Republic, Hungary and
Bulgaria. These strong fundamentals will remain the cornerstone of our group's
future.

Moreover, divesting our Polish banking and insurance activities will help us to
become an ever more focused and less complex group, while maintaining economies
of scale and scope. Maintaining our stake in our Czech (CSOB Bank) and Hungarian
(K&H Bank) banks will help us to retain our growth options for the future.

Now that we have received the approval of the European Commission, we will start
two separate divestment processes for Kredyt Bank and Warta. We will manage the
process for each company in the best way to ensure we achieve the best result in
terms of speed, price and the overall attractiveness of the transaction both for
the KBC group and the entities concerned. We will also do our best to ensure the
divestment process is completed under correct and fair conditions, giving great
care and consideration to the employees and agents of Kredyt Bank and Warta,
while ensuring the same level of quality service to their customers.

We have already received several spontaneous indications of interest for both
companies. Given the attractiveness of the Polish market and of the two
companies, we are confident that we will be able to reach a satisfactory
outcome.

After all, Poland is the largest Central European country with sound
macroeconomic developments and performance of the financial sector. It was one
of the few European countries that did not go through a recession during the
financial crisis. Moreover, the country has been attracting a lot of interest
from investors eagerly looking for interesting strategic investment
opportunities now that consolidation seems to be picking up in the rather
fragmented Polish market. There have recently been some successful transactions
at attractive prices for the seller.

Warta is the second largest insurer in Poland, a very strong brand and a
household name. Kredyt Bank is a strong 'challenger' in the market with solid
positions in specific segments. The bank represents a unique opportunity in an
appealing market, also considering its strong retail focus (381 branches and
around 1.1 million retail customers).

Therefore, we are convinced that we will be able to ensure the future of our
colleagues in Poland, of their customers, shareholders and other stakeholders
within the hands of new long-term stable shareholders. Until we have done so,
Kredyt Bank and Warta and their staff can count on KBC's full and ongoing
support'


Background

On 13 July 2011, KBC communicated that, after careful and thorough
consideration, it and the Belgian authorities had formally applied to the
European Commission on 12 July to amend the strategic plan which was submitted
on 30 September 2009 and which the European Commission approved on 18 November
2009 (the 'EC Decision'). The relevant notification had also been made to the
National Bank of Belgium.

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 had become less effective in achieving the intended aim. KBC's main
objective is and remains to execute the plan within the agreed timeframe and to
repay the Belgian authorities in a timely manner.

In their application to the European Commission, KBC and the Belgian authorities
therefore proposed replacing those measures by others, and formally applied to
the European Commission for its approval to replace the planned IPOs of a
minority stake of CSOB Bank in the Czech Republic and K&H Bank in 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 and
Warta (and their subsidiaries) and the sale or unwind of selected ABS and CDO
assets. The sale/unwind will not happen overnight but will of course be subject
to favourable market conditions going forward.

(For more details and background information, also see the press release and
PowerPoint presentation of 13 July 2011 on www.kbc.com)


* This news item contains information that is subject to the transparency
regulations for listed companies.




ECapproval_Poland_2011_EN: 


http://hugin.info/133947/R/1533786/467346.pdf




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