Daiwa Capital Markets to acquire KBC Group's Gl...

Regulated information* - 5 July 2010 (08.00 a.m. CEST)

KBC Group has reached an agreement with Daiwa Capital Markets (registered name
in Japan is Daiwa Securities Capital Markets) for the sale of its Global
Convertible Bond and Asian Equity Derivatives businesses for a total
consideration of approximately USD 1 billion([1]), consisting of approximately
USD 0.2 billion for staff, IT infrastructure and other assets (excluding the
trading position) and approximately USD 0.8 billion for the trading position.
The acquisition forms a strong foundation for Daiwa's growing derivatives
business whilst freeing up capital resources for KBC in the amount of USD 0.2
billion.

  * In November 2009, Daiwa Capital Markets (Daiwa), the investment banking arm
    of leading Japanese brokerage and financial services company, Daiwa
    Securities Group, announced plans to significantly grow its global markets
    operations including derivatives. This acquisition represents a significant
    step towards executing this strategy, and the firm intends to grow the
    acquired businesses, integrating them into its existing derivatives
    franchise, and so providing continuity and future growth opportunities for
    staff and customers.
  * The businesses being acquired by Daiwa are leading market players in the
    sales, trading and structuring of global convertible bonds and Asian equity
    derivatives. These businesses employ approximately 150 staff across offices
    in London, New York and Hong Kong.
  * The businesses, platform and operations will be maintained in their entirety
    by Daiwa and will report to Daiwa's Global Head of Derivatives, Dominique
    Blanchard.
  * In the Asia Pacific region KBC Bank will continue to concentrate on
    corporate banking including lending, trade finance and treasury sales for
    core clients with links to KBC's home markets in Europe.
  * Over the last two years, KBC's Global Convertible Bond and Asia Equity
    Derivatives business generated an average contribution to the underlying net
    result of KBC Group of 2%.
  * The transaction will release approximately USD 0.2 billion in capital for
    KBC, resulting in an increase in KBC's tier-1 ratio of 10 basis points.
  * The closing of the transaction is subject to regulatory approval and is
    expected to be completed by early in the fourth quarter of 2010.


Jan Vanhevel, CEO of KBC Group, commented: "The agreement announced today marks
another important step in KBC's strategy to wind down the structured products
business within KBC Financial Products. This divestment frees up substantial
capital resources while further reducing our group's risk profile and
strengthening the group's focus on its core bancassurance markets and expertise.
We are convinced that Daiwa will enable the business to grow, while securing the
future of the staff of these businesses and maintaining excellent customer
service levels."

Toshinao Matsushima, Global Head of Markets at Daiwa in Tokyo added: "We are
very pleased to welcome KBC's Global Convertibles and Asian Equity Derivatives
business into our group. Last November we announced plans to globalise our
offerings, centering our efforts on the growing Asian markets. With this
acquisition we demonstrate our commitment not just to growing in Asia, but also
to building a globally competitive derivatives business. The acquisition cements
and accelerates our plans to become a major player in the Asian equity
derivatives and global convertible bonds space. We intend to ensure that their
customers continue to receive the same outstanding service from a motivated and
highly-specialised staff working as part of one of Japan's leading financial
services companies."

Luc Popelier, CEO of KBC Group's Market Activities, continued: "I am delighted
that KBC's Global Convertible Bond and Asian Equity Derivatives businesses can
now continue their growth path with a solid and reliable international financial
group like Daiwa. The experience and know-how that both businesses have built up
over the years will enable them to continue responding to the increasing demand
for new innovative products and for high-quality service. We look forward to
that and wish our colleagues from both businesses every success in developing
the business further under the Daiwa label."

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 and Central and Eastern
Europe) and further reducing the risk profile of the group. As part of this
strategic update, KBC Financial Products' activities had been earmarked for
divestment or run-down.

KBC Financial Products is a leading market player in the sales, trading and
structuring of global convertible bonds and Asian equity derivatives. Its Global
Convertibles product range covers a complete set of primary and secondary market
services for issuers and investors in convertible bonds on the European, US,
Asian and Japanese markets. The entity is a top-ranked player, making markets in
over 1 200 global convertible bonds issues. Its Asian Equity Derivatives
business is one of the top three issuers of Hong Kong warrants providing
market-making services in listed Hong Kong warrants and issues of equity-linked
notes and options based on the equity of Asian companies. As this business was
not deemed consistent anymore with KBC's core strategy, it was earmarked for
divestment.

The agreement reached with Daiwa immediately releases 0.2 billion dollars' worth
of capital and will have a positive impact of 10 basis points on KBC's tier-1
ratio. Over the last two years, the businesses generated an average net profit
contribution to the underlying result of the KBC group of 2%.

In recent months, KBC Financial Products has divested its Japanese Equities
business, its US-based reverse mortgage entity, World Allied Finance Corp, and
(in December 2008) its Asia-focused fund of funds management activities. KBC
Financial Product's fund derivatives, structured credit products and legacy
parts of the equity derivatives businesses, as well as some remaining smaller
business lines, are under review or working in a run-off mode.

Strategic fit with Daiwa

The acquisition brings further scale to Daiwa's growing derivatives and
investment products business, specifically in the equity space. In June 2008,
Daiwa took the strategic decision to scale up its structured products platform,
starting with its home market in Japan, and the firm is now expanding its
offerings across Asia. This acquisition follows announcements, made last
November, that the Japanese investment bank intends to double its headcount in
Asia. Daiwa operates across equity, fixed income, rates and foreign exchange in
the derivatives markets.

Dominique Blanchard, Hong Kong-based Global Head of Derivatives at Daiwa, says:
"By acquiring these KBC businesses, Daiwa immediately becomes a significant
player in the global convertible bonds and Asian derivatives markets. We are
acquiring quality teams with successful and long-standing track records of being
leaders in their markets. Importantly, the strategic fit with Daiwa is excellent
and the addition of these teams will complement our other expansion plans."


--------------------------------------------------------------------------------

[1] The exact amount will be determined at completion when assets are
transferred at market value at that time.


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



[HUG#1427764]





    KBCFP_GlobalD_AsianED_ENG: 

http://hugin.info/133947/R/1427764/376393.pdf



This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. 
The owner of this announcement warrants that: 
	(i) the releases contained herein are protected by copyright and other applicable laws; and 
	(ii) they are solely responsible for the content, accuracy and originality of the information contained therein. 
All reproduction for further distribution is prohibited.
		
Source: KBC Groep via Thomson Reuters ONE