The Hinduja Group acquires KBC group's private ...

Regulated information* - 21 May 2010 (07.30 a.m. CEST)

KBL epb to grow in India, Middle-East and Asia

KBC increases its core tier-1 ratio by 1%

Brussels, London, 21 May 2010

KBC group ("KBC") has reached an agreement with the Hinduja Group ("Hindujas" or
"the Group") for the sale of its dedicated private banking subsidiary KBL
European Private Bankers ("KBL epb") for a total consideration of EUR 1.350
billion.



· The Hinduja Group is a diversified international business that has been in the
banking business since 1914 and is present in the sector through Hinduja Bank
Switzerland and IndusInd Bank in India. As well as providing a stable home,
continuity and careful stewardship for KBL, the Group will also give the bank
greater access to the fast-growing Middle-East, Indian and Asian markets. The
Hinduja Group intends to grow KBL epb internationally by using the Group's
business interests in more than 100 countries.

 ·       KBL epb is one of Europe's largest onshore private banking groups with
affiliated local banks in 55 locations across ten European countries: Belgium,
France, Germany, Luxembourg, Monaco, the Netherlands, Poland, Spain, Switzerland
and the United Kingdom.

·       At the end of 2009, KBL epb had assets under management of EUR 47
billion, assets under custody of EUR 37 billion and, through a 52.7% stake in
EFA, assets under administration of EUR 103 billion.

 ·       The transaction comprises the sale of KBC's entire interest in KBL epb
and includes all the private banking subsidiaries as well as the custody and
life insurance businesses.

·       The KBL epb brand, management team and operations will be maintained in
their entirety and KBL epb will continue to be headquartered in Luxembourg.

 ·       The closing of the transaction is subject to customary regulatory
approvals and is expected to be completed in the third quarter of 2010.

 ·       As of 31 March 2010, the pro forma release on core capital of the
transaction for KBC is approximately a positive EUR 1.3 billion, resulting in a
1% increase in KBC's core tier-1 ratio and a very strong pro forma core tier-1
ratio of 10.4%.

 ·       KBC will continue to offer private banking services in Belgium and
Central and Eastern Europe through its KBC-branded private banking businesses.



Jan Vanhevel, KBC Group CEO: "The transaction today is an important first step
in implementing our updated strategy. With this divestment, we are releasing a
significant amount of capital and further strengthening  the KBC group, with its
focus on its core bancassurance expertise and markets (Belgium, Central and
Eastern Europe), and with its  reduced risk-profile.

This important transaction enables the group to report a very strong pro forma
core tier-1 ratio of 10.4 % as of 31 March 2010. On a personal note, it is with
regret that we say goodbye to our KBL epb colleagues, with whom we have worked
together successfully for many years.  We are convinced that the Hinduja Group
will allow KBL epb to grow its business, secure the future of its staff and
continue offering superior customer service."

Srichand P. Hinduja, Chairman of the Hinduja Group: "We are very pleased to
welcome KBL epb into our business, which has a long and successful history in
the banking sector. We intend to ensure that KBL epb clients continue to receive
exemplary service from a highly-motivated staff working in a new and secure
environment.

We look forward to working with the existing management team of KBL epb who we
believe have done an excellent job to date. We plan to invest further in the
business, maintaining each of the subsidiaries, while also providing KBL epb
with access to the fast growing markets of the Middle East, the Indian
subcontinent and Asia.  In this way, we hope to address the private banking
needs of clients internationally and facilitate capital flows between fast
growing economies and established Western financial markets."

 Etienne Verwilghen, KBL epb CEO: "We see this acquisition as wholly positive
and reassuring for the clients . The Hinduja Group fully supports our
client-focused model and strategy with a long-term perspective.  We look forward
to working closely with them in taking the bank to new markets. We are convinced
that all KBL epb's private banking clients, staff and the Luxembourg financial
centre will benefit significantly from the highly committed support of the new
owner."



Impact on KBC

On 18 November 2009, KBC announced its updated strategy of focusing on its core
bancassurance expertise in its home markets (in Belgium, Czech Republic,
Slovakia, Hungary, Poland and Bulgaria) and further reducing the risk profile of
the group.

 As part of this updated strategy, the group announced its intention to
deconsolidate the activities of the European Private Banking Business Unit,
which operated with commercial autonomy and benefited from lower-than-average
synergies with the bancassurance activities of the group. The announcement today
represents the implementation of a major element of the strategic plan presented
in November 2009.

 In 2009, the underlying after tax profit contribution of the KBL epb to the KBC
group was EUR 140 million.  As of 31 December 2009, it represented around EUR
5.5 billion of risk-weighted assets.

The capital impact for KBC is an immediate EUR 1.3 billion release on  core
capital, resulting in a strong core tier-1 ratio of 10.4% as of 31 March 2010.

The transaction which will release EUR 1.3 billion of capital (net impact on
capital including the release of Risk Weighted Assets, goodwill and an
impairment of EUR 0.3 billion which will be booked in the second quarter
results)  is fully in line with the announcement made on 18 November 2009 of a
target capital relief of EUR 0.8 billion to EUR 1.5 billion.

 KBC will continue to offer private banking services in Belgium and Central and
Eastern Europe through its KBC-branded private banking businesses.


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



[HUG#1417499]





    pb KBLEPB & Hinduja E: 

http://hugin.info/133947/R/1417499/368219.pdf