1 billion after deduction of the frankness

The Belgian State flies to the rescue of KBC, the bancassureur which will be thus was saved by the Government three times in seven months. He brings his guarantee to a portfolio of structured loans of 20 billion (in notional value), according to a schema that must be submitted to the European Commission and unveiled yesterday morning as promised (the "voices" of yesterday).

In detail, the unloading mechanism involves structures "CDO" (below) including the counterparty risk on credit MBIA (14.4 billion) Enhancer on the one hand and on the other hand products "super senior" (5.5 billion). The Bank supports a first tranche of $ 3.2 billion loss (previously funded). For the remaining 16.8 billion, it buys a State guarantee covering 90 of the risk of default of payment ($ 15.1 billion after deduction of the frankness). In fact, a second tranche of 2 billion is supported by the new to the market value of stock, knowing that KBC retains the option to appeal to external capital, and 14.8 billion will be guaranteed in "cash". The State hopes have never anything to pay, taking into account the situation of the portfolio. "For the Belgian taxpayer, there is no load (...)". "because it is a system for which the KBC will pay a premium", said the Prime Minister Herman Van Rompuy. These measures of unloading of the structured credits weigh 800 million on the results of the second quarter: 1.2 billion corresponding to the premium paid to the Belgian Government, offset to 400 million by a resumption of provision. The Bank estimated that 1.5 billion residual sensitivity on the treated portfolio, taking into account the adjustments already past.

Third rescue plan

In fact, the schema of this third rescue plan is structured to avoid to the maximum output of cash for the taxpayer and the emergence of public shareholders in the Flemish financial group. At the current level of the KBC action, the State would take up to one third of the capital.

KBC also decided to draw the line of 1.5 billion of capital development base at its disposal by the Flemish region in the second rescue plan, shares without voting rights, bringing the recapitalisations which it received, half for the Flemish region to 7 billion. Including these measures of strengthening of the capital, the Tier-1 solvency ratio is 11 and 8.3 for the "core Tier-1". Without these measures, the latter would be fallen to 5.3.

Victim of his involvement as issuer and investor in the area of structured credit, KBC however speaks of an "encouraging" Q1: improved trade margins, favourable evolution of the costs and losses on credit in line with forecasts. He posted a new historic loss of 3.6 billion euros but profit "underlying" 465 million, far better than the last quarter of 2008 even if it pulls back from 37 in one year. But in view of the economic cycle, the Bank also very exposed in Eastern Europe expects an increase in credit losses in the next few quarters. The course of KBC ended yesterday down nearly 25.