J.C. Flowers & Co. acquires Fidea (Belgium) from the KBC group

Regulated information* - 17 October 2011 (Outside trading hours)
KBC Group has reached an agreement with J.C. Flowers & Co. for the sale of its
subsidiary Fidea for a total consideration of 243,6 million euros, including
22,6 million euros pre-completion dividend and subject to pricing adjustments on
closing accounts.
 
* With this transaction, Fidea will become part of an international well-
    established private equity group specialised in participations/investments
    in the financial services sector. Besides Fidea the portfolio of J.C.
    Flowers & Co. already contains a number of financial groups such as Pension
    Corporation (U.K.), NIBC Bank N.V. (The Netherlands) and BTG Pactual
    (Brazil). Through its investment funds, J.C. Flowers & Co. has owned and
    operated financial institutions, including insurance companies, across
    Europe for many years.
 
 ·      Today's  announcement  fits  in  with  the  refocus  strategy  that  KBC
communicated  at the end of  2009. The divestment of Fidea  is a further step in
implementing  this  plan  and  will  not  adversely affect the strength of KBC's
business model in its core markets. Indeed, KBC will continue to provide banking
and insurance services under the KBC brand name in Flanders and Brussels through
its  network  of  736 bank  branches,  19 private banking branches, 13 corporate
branches  and 513 insurance agencies. It will continue  to do the same under the
CBC  name  in  Brussels  and  Wallonia  through  88 bank  branches, 13 corporate
branches, 7 private banking branches and 75 insurance agencies.
 
 ·     J.C. Flowers pays a total consideration for Fidea of 243,6 million euros,
including  22,6 million  euros  pre-completion  dividend  and subject to pricing
adjustments  on closing accounts. A potential  'conditional earn out' is subject
to Fidea's future results.
 
    In  total, this deal will  free up around  0.1  billion euros in capital for
KBC,  primarily by reducing risk-weighted assets  by 1.8 billion euros, but also
taking  into account that the transaction will ultimately have a negative impact
of  approximately 0.1 billion euros on KBC's P&L. The overall positive impact on
KBC's tier-1 ratio is around 0.1% (impact calculated on 30 June 2011).
 
 ·      Fidea is a well-established player on the Belgian insurance market and a
renowned  brand. The company offers both life and non-life insurance products to
private  customers,  the  self-employed  and  companies.  It  sells its policies
through  independent insurance brokers and - within a bancassurance co-operation
agreement - through Centea's and Crédit Agricole's network of agents.
 
 ·      The Fidea brand  and management team  will be maintained  and Fidea will
continue to operate out of Antwerp.
 
 ·      In order to  ensure continuity of  service, KBC will continue providing,
among  other things,  IT-related support  to Fidea  during the  transition phase
estimated to last three years.
 
 ·      The  closing  of  the  transaction  is  subject  to customary regulatory
approvals and is expected to be completed in the first quarter of 2012.
 
 ·      In this deal, J.C. Flowers &  Co. was advised by Credit Suisse, Deloitte
and  Cleary  Gottlieb  Steen  &  Hamilton,  while  KBC  Group was advised by KBC
Securities, Morgan Stanley, Eubelius and Linklaters.
 
Jan Vanhevel, KBC group CEO: 'Today's deal is yet another step in the
implementation of our updated strategy. The divestment of Fidea is one of the
difficult choices we have had to make to meet the demands of the European
Commission. On the other hand, we are pleased that J.C. Flowers & Co. - a well-
established and reputable group with strong expertise and experience in the
banking and insurance sector - has chosen Fidea to be its first major investment
on the Belgian market. The company will build on the existing expertise and
know-how at Fidea, to the benefit of the staff, the brokers and the customers.
 
Johan Thijs, CEO of KBC's Belgium Business Unit and Chairman of Fidea's Board of
Directors: 'Fidea is one of the strongest insurance brands in Belgium, with a
long and rich history, and dedicated staff who provide a top-quality service to
their network of independent brokers. Personally speaking, therefore, it is with
a heavy heart that we have to bid farewell to our Fidea colleagues, with whom we
have had a successful working relationship for many years. We wish them the very
best for the future.
 
 KBC itself will obviously continue to focus on its core activity as a
bancassurer in its core markets of Belgium and Central and Eastern Europe. In
Belgium, we will operate as before through our comprehensive network of KBC and
CBC bank branches and insurance agencies.'
 
J. Christopher Flowers, Chairman of J.C. Flowers & Co.: "We are very pleased to
invest in Fidea, which we consider to be one of the premier insurance brands
within Belgium led by an excellent management team.  We look forward to helping
Fidea chart a new course for the company outside of KBC Group, and we are eager
to get started right away to help continue the growth of Fidea as an independent
company. We believe that our deep experience in financial services, including
most importantly, owning and operating insurance companies, will enable us to
support Fidea to continue its excellent work providing its customers and brokers
with leading insurance products."
 
Edwin Schellens, Fidea CEO: 'We consider this acquisition to be a positive and
reassuring development for our customers, employees, brokers and bank agents.
The period of uncertainty is now over for all of the parties involved. We've
gotten to know our new shareholder, J.C. Flowers & Co., as a real insurance
specialist who fully supports our customer-oriented model. We look forward to
working with J.C.Flowers in developing a new strategy as a stand-alone insurance
company with a view to strengthening further our client focus and service and
enhancing our capital strength and profitability. We are pleased that our
customers, staff, brokers and agents will benefit from the commitment and
support of our new owner.'
 
* This news item contains information that is subject to the transparency
regulations for listed companies.
 
Fidea-JC EN.pdf: 
http://hugin.info/133947/R/1554921/479532.pdf
 
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Source: KBC Groep via Thomson Reuters ONE
 
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