KBC reacts to factual inaccuracy in analyst's report
KBC wants to react to an equity research note issued this morning by
KBW Ltd (London), since it contains a number of material factual
inaccuracies concerning KBC's total subprime exposure.
KBC Group's consolidated exposure to CDOs with underlying ABS amounts
to ¤7 bn as was disclosed in detail in the 2Q and 3Q quarterly
reports. This amount includes the exposure of KBC Financial Products,
the issuer of the CDOs. The perception that only ¤12 bn out of the
¤26 bn issued is still outstanding is unfounded.
The ¤7 bn in proprietary exposure forms part of a total (non-matured)
amount outstanding of ¤26 bn in CDOs with ABS underlyings issued by
KBC Financial Products. KBW's estimate that KBC holds 57% of the
outstanding CDOs issued by KBC Financial Products is therefore
The research note also suggests that there is a risk of KBC marking
to market "to itself", since it holds a large portion of the CDOs. In
this regard, we would like to clarify that the marking to market of
the CDO components (ABS, CDS) is based on third-party trades of these
instruments or their comparables.
It is correct that ¤1.3 bn was placed on credit watch by Moody's
yesterday, ¤592 m of which is held by KBC.
In this regard, KBC wants to reconfirm its earlier and repeated
statements that it considers its exposure to US subprime mortgage
debt to be limited. There are no reasons to change the loss expected
as disclosed on 9 November 2007 in the 3Q quarterly report.
For more information, please contact:
Luc Cool, Director of Investor Relations, KBC Group
Tel. (32) 2 429 40 51
Viviane Huybrecht, Head of Group Communication and of the KBC Press
Office spokesperson, KBC Group
Tel. (32) 2 429 85 45