KBC sells German division to Apollo et al.

Investors in the consortium alongside Apollo Global Management and Grovepoint include Apollo Commercial Real Estate Finance (ACREF) and the Teacher Retirement System of Texas. ACREF contributed up to $50m (€38m) of the deal value in exchange for a 21% stake.

The acquisition by the consortium is subject to regulatory approval and is expected to take up to nine months to be finalised.

The sale of its German division has freed up approximately €100m in capital for KBC by reducing its risk-weighted assets. KBC has been involved in a strategic plan with the European Commission since November 2009 to reduce its risk-weighted assets and refocus its efforts primarily on retail customers, SMEs and mid-cap companies in Belgium and the CEE region. KBCD was earmarked for divestment as part of the plan.

The strategic agreement with the European Commission came after KBC sold core-capital securities worth €7bn to the Belgian state and Flemish regional government in 2008 and 2009 – specifically selling €3.5bn to each – due to the bank's need for state aid following the financial crisis.

Since then, KBC has been executing a divestment process for a number of its risk-weighted assets, a procedure that must be completed by the end of this year. At the end of 2012, the banking group had only KBCD, Antwerp Diamond Bank and KBC Banka in Serbia left to sell. It sold KBC Banka Serbia to Société Générale Srbija and Telenor Serbia in April this year. Following the sale of KBCD, the banking group has only one asset in the form of Antwerp Diamond Bank left to divest as per its agreement with the European Commission.

As of December 2012, KBC still owed the Flemish regional government its full €3.5bn. The banking group repaid the Belgian state in two lump sums, initially returning €500m to the state – plus a 15% penalty – in January 2012, then repaying the balance of €3bn plus a 15% penalty in December last year.

Company
KBCD caters to medium-sized German companies, providing corporate banking and financial services as well as professional real estate financing, acquisition finance and institutional asset management. KBCD also provides private wealth management services to German high-net-worth individuals.

The KBC subsidiary was originally founded as a cooperative banking organisation in Bremen in 1863. KBC acquired KBCD, then called Bankverein-Bremen, in 1982 under the bank's former name of Kredietbank. The KBC banking group was called Kredietbank ABB Insurance Cera until it changed its name to KBC Groep in 2005.

Bremen-headquartered KBCD employs 180 staff and has additional branches throughout Germany, namely in Hamburg, Hannover, Berlin, Düsseldorf, Frankfurt, Stuttgart and Munich. At the end of 2012, the banking division had a total of €2.6bn in assets under management.

People
Axel Bartsch is the CEO of KBCD, while Johan Thijs is the CEO of KBC. Stuart Rothstein is the CEO and president of ACREF. Brent Geater and Sascha Sauberlich led the deal for Grovepoint.

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• Topics
• DACH
• Financials
• Buyouts
• Apollo Management
• Germany
• Belgium