Hinduja Group Acquires KBC

Chandrasekhar Atreya
21 May, 2010
New York City

Hinduja group of India has agreed to acquire the Luxembourg-based KBL EuropeanPrivate Bankers for 1.35 billion euros in an all cash deal.

[R]Hinduja group of India has agreed to acquire the Luxembourg-based KBL EuropeanPrivate Bankers for 1.35 billion euros in an all cash deal.[/R]

The Hinduja Group has agreed to buy KBC for 1.35 billion euros ($1.69 billion), the private banking arm of Belgian high street bank KBC, the Luxembourg-based KBL EuropeanPrivate Bankers to expand its wealth-management business in Europe.

Mumbai-based Hinduja group plans to complete the acquisition in the third quarter this year subject to regulatory approvals. KBL which has 47.4 billion euros of asset under management will take a charge of about 300 million euros this quarter.

In a joint statement the company said that the group will give KBL greater access to the fast growing Middle East, Indian and Asian markets and intends to grow the private bank internationally in more than 100 countries. The KBL brand, management team and operations will be maintained in their entirety and continue to be headquartered in Luxembourg, as part of the deal.

The disposal will help KBC by cutting its risk-weighted assets by 5.5 billion euros thus freeing 1.3 billion euros of capital. However KBC will suffer 300 million euro loss on the disposal as the acquisition price falls short of the sum of KBL’s book value and outstanding goodwill in KBC’s accounts.

The deal resulted in a 1% increase in KBC’s core Tier ratio and a pro forma core Tier 1 ratio of 10.4% KBC said. KBC Groep advanced 76 cents or 2.6% to 30.58 euros in Brussels trading at 11.09 a.m.

KBC was advised by JP Morgan Chase & Co., while Deutsche Bank AG and Spencer House Partners LLP worked with Hinduja Group on the transaction.