Belgium's KBC to Sell Units, Bulgaria Still Growth Generator

Finance | October 10, 2012, Wednesday // 10:00|  views

Belgian financial services group KBC raised its stake in DZI insurer to 95.75% at the end of last year, gaining the right to delist it from the Bulgarian bourse. File photo

Belgium's KBC, which owns Bulgarian insurance subsidiary DZI and local CIBank, announced plans to overhaul its business model in a bid to focus on its strongest markets.

The bank's restructuring reflects the diverging fortunes of Europe's banks, as KBC turns to Eastern Europe for growth, works to reduce its exposure to Southern European sovereign debt and pays back its bailout while banks in other countries are still asking for more government cash.

The bank will focus on its strongest markets, including Belgium and the Czech Republic, and has set new financial targets. "All activities which do not contribute to serving the client relationships in KBC's core markets will be stopped," KBC said.

"The macroeconomic environment, competitive landscape and regulatory situation and outlook remain challenging," Chief Executive Johan Thijs said in a statement. "Our goal is to become more agile and efficient and thus more competitive."

The shift in focus creates a separate business unit for the Czech Republic. Ceskoslovenska Obchodni Banka AS, or CSOB, a key Central European unit of KBC, said longtime Chief Executive Pavel Kavanek will join the Belgian lender's top management in charge of its Czech operations.

Belgium Business Unit and the newly created Czech Republic Business Unit will ensure stable, growing, high-level profitability, KBC said in its official statement.

Bulgaria, together with Slovakia and Hungary, will be part of KBC international Markets Business Unit, which is expected to act as a growth generator.

Under KBC's restructuring plan, Russia's Absolut Bank, NLB (Slovenia), German unit KBC Bank Deutschland, KBC Banka (Serbia) and Antwerp Diamond Bank (Belgium) are to be sold.

Earlier this year Belgium's KBC firmly denied that it seeks to shed Bulgarian insurance subsidiary DZI, as claimed by local media reports.

Bulgaria remains an important market for KBC and therefore it plans to continue to develop its business in the country through DZI and CIBank, which it owns too, reads a statement by the financial group.

At the end of last year Belgian financial services group KBC raised its stake in the insurer to 95.75%, gaining the right to delist it from the Bulgarian bourse.

KBC launched a public tender offer on its Bulgarian insurance subsidiary DZI in October last year, when it held a 90.35% stake.

The bid price was set at BGN 71 per share, while the maximum total consideration amounted to BGN 26.5 M (approximately EUR 13.5 M).

DZI, the former Communist-era state monopoly, is one of the leading companies on the Bulgarian insurance market, competing with the local unit of Germany's Allianz and Bulstrad, owned by Vienna Insurance Group.

KBC finalized the acquisition of 70% stake in Bulgarian insurer DZI Insurance from Bulgarian firm Kontrakt Sofia for EUR 185 M in the middle of August 2007 and launched shortly after that a public bid for the remaining minority stake.

As part of the deal, KBC also acquired DZI INVEST, a securities broker active on the Bulgarian Stock Exchange.

DZI Insurance was created as a state insurer in 1946 and has more than 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments.

The insurer and the DZI Bank were part of the financial group built by banker Emil Kyulev who was shot dead October 2005.

His spouse Vesela Kyuleva sold her majority stake in the bank to Greece's Eurobank EFG Ergasias for EUR 158 M.

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Tags: Bulstrad, Allianz, Emil Kyulev, KBC, DZI, Belgium, Belgian, Bulgaria, Bulgarian, Talanx, Achmea, CIBANK, Czech Republic


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