Obligation KBC Bancorp N.V. 6.202% ( BE0119284710 ) en GBP

Société émettrice KBC Bancorp N.V.
Prix sur le marché 100 %  ⇌ 
Pays  Belgique
Code ISIN  BE0119284710 ( en GBP )
Coupon 6.202% par an ( paiement annuel )
Echéance 15/10/2007 - Obligation échue



Prospectus brochure de l'obligation KBC BANK N.V BE0119284710 en GBP 6.202%, échue


Montant Minimal /
Montant de l'émission /
Description détaillée KBC Bank N.V. est une société holding bancaire belge fournissant des services bancaires et d'assurance à des clients particuliers, des PME et des grandes entreprises en Belgique, en République tchèque, en Hongrie, en Bulgarie, en Irlande et en Italie.

L'Obligation émise par KBC Bancorp N.V. ( Belgique ) , en GBP, avec le code ISIN BE0119284710, paye un coupon de 6.202% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 15/10/2007







Level: 5 ­ From: 5 ­ Tuesday, October 9, 2007 ­ 3:22 pm ­ mac5 ­ 3861 Intro : 3861 Intro
KBC BANK NV
(incorporated with limited liability under the laws of Belgium)
£150,000,000
V5.4.4
V5.1
DIRECTLY ISSUED PERPETUAL DEBT SECURITIES
having the benefit of a Support Agreement entered into with
KBC GROUP NV
(incorporated with limited liability under the laws of Belgium)
(to be consolidated and form a single series with the £200,000,000 Directly Issued Perpetual Debt Securities issued on
19 December 2003 and the £175,000,000 Directly Issued Perpetual Debt Securities issued on 3 November 2004)
Issue Price: 92.773 per cent.
plus 297 days' accrued interest at the rate of 6.202 per cent. per annum in respect
of the period from and including 19 December 2006 to but excluding 12 October 2007
The £150,000,000 Directly Issued Perpetual Debt Securities (the "Securities") are directly-issued securities of KBC Bank NV (the "Issuer"), a limited liability
V5.1
company incorporated under the laws of Belgium. The Securities will have the benefit of a Support Agreement entered into by the Issuer's holding company, KBC
Group NV (formerly, KBC Bank and Insurance Holding Company NV) ("KBC Holding").
VI1
Upon issue, the Securities will be a further issuance of, and will be consolidated and form a single series for all purposes with, the Issuer's existing £200,000,000
Directly Issued Perpetual Debt Securities issued on 19 December 2003 and the Issuer's existing £175,000,000 Directly Issued Perpetual Debt Securities issued on 3
November 2004 (together, the "Existing Securities").
The Securities will bear interest (i) from (and including) 19 December 2006 to (but excluding) 19 December 2019 at the rate of 6.202 per cent. per annum payable
annually in arrear on 19 December of each year, commencing on 19 December 2007 and ending on 19 December 2019 and (ii) from (and including) 19 December 2019
at the rate of 1.93 per cent. per annum above the London interbank offered rate for three month Sterling deposits payable quarterly in arrear on 19 March, 19 June,
19 September and 19 December of each year commencing on 19 March 2020.
If the Issuer gives a Deferral Notice stating that it will defer the payment of interest that would have been payable on an Interest Payment Date or any portion thereof,
no interest amount or less than the full interest amount will be payable on such Interest Payment Date. The Issuer may give a Deferral Notice in its sole discretion,
but if before or after giving effect to any interest amounts, a Net Assets Deficiency Event has occurred and is continuing with respect to the Issuer, it is required to
give a Deferral Notice. Notwithstanding the foregoing and subject to certain exceptions, Deferred Coupons will become mandatorily payable upon any payment of
dividends on Junior Securities or Parity Securities of the Issuer or KBC Holding or any redemption, repurchase or other acquisition by the Issuer or KBC Holding
of its Junior Securities or Parity Securities. The Issuer will generally be required to satisfy its obligation to pay Deferred Coupons only in accordance with the
Alternative Coupon Payment Method. See "Terms and Conditions of the Securities ­ Deferral of Coupons" and "Terms and Conditions of the Securities ­ Alternative Coupon
Payment Method".
The Securities are not redeemable at the option of the holders at any time and are not redeemable at the option of the Issuer prior to the First Call Date, except in
certain circumstances set out herein. Subject to compliance with applicable regulatory requirements, the Securities may be redeemed at the option of the Issuer, in
whole (but not in part), on the First Call Date or on any subsequent Interest Payment Date. Upon the occurrence of certain events, the Issuer may convert the
Securities, in whole (but not in part), into Conversion Upper Tier 2 Instruments or redeem the Securities. In addition, upon the occurrence of a Supervisory Event
or an event resulting in a general concursus creditorum on the assets of the Issuer, the Securities shall be converted into Profit-Sharing Certificates. See "Terms and
Conditions of the Securities ­ Conversion into Conversion Upper Tier 2 Instruments and Redemption".
The Securities have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act") and are subject to United States tax
law requirements. Subject to certain exceptions, the Securities may not be offered, sold or delivered within the United States.
The Securities will be in bearer form and in the denomination of £1,000. The Securities shall initially only be available for sale in minimum amounts of £500,000, as
described in more detail under "Subscription and Sale". The Securities will be in the form of a global certificate (the "Global Certificate") without interest Coupons,
which will be deposited on or around 12 October 2007 (the "New Issue Date") with the National Bank of Belgium (the "NBB"), as operator of the X/N book-entry
clearance and settlement system (the "X/N System"). Ownership of beneficial interests in the Securities will be shown on, and transfers thereof will be effected only
through, records maintained in book entry form by the X/N System, Euroclear Bank SA/NV, ("Euroclear"), Clearstream Banking, societe anonyme, Luxembourg
("Clearstream, Luxembourg") and their respective participants. To the extent permitted by law, the Global Certificate will be exchangeable in certain limited
circumstances, in whole, but not in part, for Securities in definitive form in the denomination of £1,000 each and with interest Coupons attached. See "Summary of
Provisions Relating to the Securities in Global Form".
This Prospectus has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"), which is the Luxembourg competent
V6.1
authority for the purpose of Article 5 of Directive 2003/71/EC (the "Prospectus Directive") as a Prospectus. This Prospectus will, when published, constitute a
"prospectus" for the purposes of the Prospectus Directive, which implement the Prospectus Directive in Luxembourg. Application has been made to the Luxembourg
V6.2
Stock Exchange for the Securities to be admitted to listing on the Official List and trading on the Regulated Market of the Luxembourg Stock Exchange (within the
meaning of Directive 93/22/EEC). This Prospectus has been prepared on the basis that any offer of Securities in any Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a "Relevant Member State") will be made pursuant to an exemption under the Prospectus Directive, as
implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of Securities.
Investing in the Directly Issued Perpetual Debt Securities of the Issuer involves certain risks. See "Risk factors".
Joint-Lead Managers and Joint Bookrunners
HSBC
LEHMAN BROTHERS
Joint-Lead Manager
KBC BANK NV
10 October 2007


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This Prospectus has been prepared on the basis that any offer of Securities in any Member State of
the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a
"Relevant Member State") will be made pursuant to an exemption under the Prospectus Directive, as
implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of
Securities. Accordingly, any person making or intending to make an offer in that Relevant Member State of
Securities which are the subject of the offering contemplated in this Prospectus may only do so in
circumstances in which no obligation arises for the Issuer, KBC Holding or any of the Managers to publish
a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article
16 of the Prospectus Directive, in each case, in relation to such offer. None of the Issuer, KBC Holding or
the Managers have authorised, nor do they authorise, the making of any offer of Securities in circumstances
in which an obligation arises for the Issuer, KBC Holding or the Managers to publish or supplement a
prospectus for such offer.
Each of the Issuer and KBC Holding has confirmed to the Managers that this Prospectus contains all
information regarding the Issuer and KBC Holding, the Securities, the Support Agreement, the Profit Sharing
Certificates and the Contingent Guarantee Agreement which is (in the context of the issue of the Securities)
material; such information is true and accurate in all material respects and is not misleading in any material
respect; any opinions, predictions or intentions expressed in this Prospectus on the part of the Issuer or (as
the case may be) KBC Holding are honestly held or made and are not misleading in any material respect;
this Prospectus does not omit to state any material fact necessary to make such information, opinions, XI1.1
predictions or intentions (in such context) not misleading in any material respect; and all proper enquiries XI1.2
have been made to ascertain and to verify the foregoing. Each of the Issuer and KBC Holding accepts V5.1.1
responsibility for the information contained in this Prospectus and declares that, having taken all reasonable V5.1.2
care to ensure that such is the case, the information contained in this Prospectus to the best of their IV1.1
knowledge is in accordance with the facts and contains no information likely to affect is import.
IV1.2
Information contained in this Prospectus under the heading "Description of the Issuer" ("Risk V7.4
Management") relating to its indirect sub-prime lending exposure was derived from a report published by XI13.1
Merrill Lynch dated 20 July 2007. Neither the Issuer nor KBC Holding accepts any responsibility for the XI13.2
accuracy of such information, nor have the Issuer or KBC Holding independently verified any such IV16.1
information. The Issuer and KBC Holding confirm that this information has been accurately reproduced, and IV16.2
so far as the Issuer and KBC Holding are aware and are able to ascertain from information available from
Merrill Lynch, no facts have been omitted which would render the reproduced information inaccurate or
misleading.
Neither the Issuer nor KBC Holding has authorised the making or provision of any representation or
information regarding the Issuer, KBC Holding or the Securities other than as contained in this Prospectus
or as approved for such purpose by the Issuer and KBC Holding. Any such representation or information
should not be relied upon as having been authorised by the Issuer, KBC Holding or the Managers.
Neither the delivery of this Prospectus nor the offering, sale or delivery of any of the Securities shall
in any circumstances create any implication that there has been no adverse change, or any event reasonably
likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer or KBC Holding
since the date of this Prospectus.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, the
Securities.
The distribution of this Prospectus and the offering, sale and delivery of the Securities in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by
the Issuer, KBC Holding and the Managers to inform themselves about and to observe any such restrictions.
For a description of certain restrictions on offers, sales and deliveries of the Securities and on distribution of
this Prospectus and other offering material relating to the Securities, see "Subscription and Sale".
In particular, the Securities have not been and will not be registered under the Securities Act and are
subject to United States tax law requirements. Subject to certain exceptions, Securities may not be offered,
sold or delivered in the United States or to U.S. persons.
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In this Prospectus, unless otherwise specified, references to "EUR", "euro" or "" are to the single
currency introduced at the start of the Third Stage of European Economic and Monetary Union pursuant to
the Treaty establishing the European Community, as amended, and references to "£", "pounds sterling" and
"Sterling" are to the lawful currency of the United Kingdom. References to "billions" are to thousands of
millions.
In connection with the issue of the Securities, HSBC Bank plc and Lehman Brothers
International (Europe) (the "Stabilising Managers") (or persons acting for the Stabilising Managers)
may over-allot Securities or effect transactions with a view to supporting the market price of the
Securities at a level higher than that which might otherwise prevail. However, there is no assurance
that the Stabilising Managers (or persons acting on behalf of the Stabilising Managers) will undertake
stabilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the Notes is made and, if begun, may be ended at any time, but it must end
no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the
allotment of the Securities. Any stabilisation action or over-allotment must be conducted by the
relevant Stabilising Manager(s) (or person(s) acting on behalf of any Stabilising Manager(s)) in
accordance with all applicable laws and rules.
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CONTENTS
Page
Summary ......................................................................................................................................
5
Risk Factors ..................................................................................................................................
9
Information Incorporated by Reference ......................................................................................
17
Terms and Conditions of the Securities........................................................................................
19
Schedule -- Terms and Conditions of the Profit-Sharing Certificates ........................................
44
Description of the Support Agreement ........................................................................................
54
Description of the Contingent Guarantee Agreement ..................................................................
56
Summary of Provisions Relating to the Securities in Global Form ............................................
58
Use of Proceeds ............................................................................................................................
61
Description of the Issuer ..............................................................................................................
62
Description of KBC Holding........................................................................................................
84
Taxation ........................................................................................................................................
111
Subscription and Sale ..................................................................................................................
115
General Information......................................................................................................................
117
Index of Defined Terms ................................................................................................................
119
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SUMMARY
This summary must be read as an introduction to this Prospectus and any decision to invest in the
Securities should be based on a consideration of the Prospectus as a whole, including the documents
incorporated by reference. No civil liability attaches to the persons responsible for this summary in any
Member State of the European Economic Area which has implemented the Prospectus Directive solely on the
basis of this summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent
when read together with the other parts of this Prospectus, including any information incorporated by
reference. Where a claim relating to the information contained in this Prospectus is brought before a court
in a Member State of the European Economic Area, the plaintiff may, under the national legislation of the
Member State, be required to bear the costs of translating the Prospectus before the legal proceedings are
initiated.
Words and expressions defined in the "Terms and Conditions of the Securities" below or elsewhere in
this Prospectus have the same meanings in this summary.
The Issuer:
Summary description of KBC Bank NV
KBC Bank NV is a multi-channel bank that caters primarily for V5.3.1
private persons and small and medium-sized companies. Its
geographic focus is on Europe. In its two home markets (Belgium
and Central Eastern Europe), KBC Bank NV has a very important
to even leading position. In the rest of the world, KBC Bank NV has
a selective presence in certain countries or areas. KBC Bank NV's
core business is retail and private bancassurance (including asset
management) in its two home markets, though it its also active in
services to corporations and market activities. See "Description of
the Issuer".
KBC Holding:
Summary description of KBC Holding
KBC Holding is an integrated multi-channel bancassurance group, V5.3.1
catering mainly for retail customers, small and medium-sized
enterprises and private banking clientele. Geographically, KBC
Holding focuses on Belgium and Central and Eastern Europe for its
retail bancassurance and asset management activities, as well as for
the provisions of services to business customers, and occupies
significant, even leading positions in these two home markets. The
group is also active in a selection of other countries in Europe in
private banking and the provision of services to businesses.
Elsewhere around the globe, the group has established a presence in
selected countries and regions. KBC Holding has three main direct
subsidiaries, KBC Bank, KBC Insurance and Kredietbank SA
Luxembourgeoise ("KBL"). See "Description of KBC Holding".
Joint Lead Managers:
HSBC Bank plc, KBC Bank NV and Lehman Brothers International
(Europe)
The Securities:
£150,000,000 Directly Issued Perpetual Debt Securities
V4.4
Issue Price:
92.773 per cent. of the principal amount of the Securities.
V5.1.2
Issue Date:
Expected to be on or about 12 October 2007.
Use of Proceeds:
The proceeds of the issue of the Securities will be used by the Issuer V3.2
to increase its regulatory capital and for general corporate purposes.
See "Use of Proceeds".
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Status:
The payment obligations of the Issuer under the Securities will rank
behind the claims of holders of Senior and Subordinated
Indebtedness of the Issuer, pari passu with claims of holders of
Parity Securities and before the claims of holders of Junior
Securities of the Issuer. In the event of a Supervisory Event or a
general concursus creditorum on the assets of the Issuer, the
Securities will be converted automatically into Profit-Sharing
Certificates. The Securities will have the benefit of a Support
Agreement entered into by KBC Holding. See "Description of the
Support Agreement".
Form and Denomination:
The Securities will be issued in bearer form in the denomination of V4.3
£1,000. The Securities shall initially only be available for sale in
minimum amounts of £500,000.
Interest:
The Securities will bear interest (i) from (and including) 19 V4.7
December 2006 to (but excluding) 19 December 2019 at the rate of
6.202 per cent. per annum payable annually in arrear on 19
December of each year, commencing on 19 December 2007 and
ending on 19 December 2019 and (ii) from (and including) 19
December 2019 at the rate of 1.93 per cent. per annum above the
London interbank offered rate for three month Sterling deposits
payable quarterly in arrear on 19 March, 19 June, 19 September and
19 December of each year commencing on 19 March 2020.
Deferral of Interest:
If the Issuer gives a Deferral Notice stating that it will defer the
payment of interest that would have been payable on an Interest
Payment Date or any portion thereof, no interest amount or less than
the full interest amount will be payable on such Interest Payment
Date. The Issuer may give a Deferral Notice in its sole discretion,
but if before or after giving effect to any interest amounts, a Net
Assets Deficiency Event has occurred and is continuing with
respect to the Issuer, it is required to give a Deferral Notice.
Notwithstanding the foregoing and subject to certain exceptions,
Deferred Coupons will become mandatorily payable upon any
payment of dividends on Junior Securities or Parity Securities of the
Issuer or KBC Holding or any redemption, repurchase or other
acquisition by the Issuer or KBC Holding of its Junior Securities or
Parity Securities. The Issuer will generally be required to satisfy its
obligation to pay Deferred Coupons only in accordance with the
Alternative Coupon Payment Method. See "Terms and Conditions
of the Securities ­ Deferral of Coupons and Alternative Coupon
Payment Method".
Optional Redemption:
The Securities are not redeemable at the option of the holders at any
time and are not redeemable at the option of the Issuer prior to the
First Call Date, except in certain circumstances set out herein.
Subject to compliance with applicable regulatory requirements, the
Securities may be redeemed at the option of the Issuer, in whole
(but not in part), on the First Call Date or on any subsequent Interest
Payment Date. Upon the occurrence of certain events, the Issuer
may convert the Securities, in whole (but not in part), into
Conversion Upper Tier 2 Instruments or redeem the Securities. In
addition, upon the occurrence of a Supervisory Event or an event
resulting in a general concursus creditorum on the assets of the
Issuer, the Securities shall be converted into Profit-Sharing
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Certificates. See "Terms and Conditions of the Securities ­
Conversion into Conversion Upper Tier 2 Instruments and
Redemption",
"Description of the Contingent Guarantee
Agreement" and "Terms and Conditions of the Profit-Sharing
Certificates".
Rating:
The Securities are expected to be rated A1 by Moody's Investors V7.5
Services Limited, A by Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies Inc. and A+ by Fitch
Ratings. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to suspension, reduction or
withdrawal at any time by the assigning rating agency. Any adverse
change in an applicable credit rating could adversely affect the
trading price for the Securities.
Withholding Tax:
All payments of principal and interest in respect of the Securities
will be made without withholding taxes of the Kingdom of
Belgium, unless the withholding is required by a Belgian taxing
authority. In such event (subject to customary exceptions), the
Issuer will pay such additional amounts as will be necessary to
ensure that the net amount received by Holders and Couponholders,
after such withholding, will equal the amount which would have
been receivable in the absence of such withholding.
Governing Law:
The Securities, the Securities Agency Agreement, the Deed of
Covenant and the Subscription Agreement will be governed by
English law. The Support Agreement, the Agency Agreement and
the Contingent Guarantee Agreement will be governed by Belgian
law.
Listing and Admission to Trading:
Application has been made for the Securities to be admitted to
listing on the Official List and admitted to trading on the
Luxembourg Stock Exchange's Regulated Market.
Clearing Systems:
X/N System and Euroclear and Clearstream, Luxembourg
Selling Restrictions:
For a description of certain restrictions on offers, sales and
deliveries of Securities and on the distribution of offering materials
in the United States of America, the European Economic Area, the
United Kingdom and Luxembourg, see "Subscription and Sale".
Risk Factors:
Summary of Risks Relating to the Issuer and KBC Holding
If the Issuer's financial condition were to deteriorate and to the
extent that funds are not available through the Support Agreement,
the Holders of Securities and Couponholders could suffer direct and
materially adverse consequences. The Issuer is not prohibited from
issuing further debt or securities ranking pari passu with or senior
to the Securities. The Belgian Banking, Finance and Insurance
Commission (Commissie Voor Bank-, Finance- en
Assucantiewezen) (the "CBFA", formerly the CBF) regulatory
authorities in the European Union and regulatory authorities in
other countries have oversight powers over the Issuer and in varying
degrees over one or more entities of the KBC Group, and are
empowered to make determinations or take decisions with respect
to any of such entities or a portion of their operations or assets. The
KBC Group's business activites are dependant on the level of
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banking, finance and financial services required by its customers.
As a result of its business activites, the KBC Group is exposed to a
variety of risks, the most significant of which are credit risk, market
risk, operational risk and liquidity risk. The KBC Group is subject
to financial services laws, regulations, administrative actions and
policies in each location that it operates.
Summary of Risks Relating to KBC Holding
KBC Holding is a financial holding company which conducts its
operations through direct and indirect subsidiaries from which it
derives its principal sources of funds. KBC Holding's income and
profitability is therefore dependant on the profitability of its
subsidiaries.
Summary of Risk Relating to the Securities
The Securities are subject to risks relating to: the receipt of interest
payments; redemption of the Securities on the occurrence of certain
specified events (whether before or after the First Call Date);
mandatory conversion of the Securities upon the occurrence of a
Supervisory Event; the Holders' rights under the Support
Agreement; the absence of voting rights of Holders of the Securities
and the reliance of Holders on the procedures of the clearing
systems for transfer, payment and communication with the Issuer.
Financial Information:
See "Description of KBC Holding--Selected Financial IV4
Information".
V2.1
X13.1
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RISK FACTORS
Prior to making an investment decision, prospective purchasers of the Securities should consider IV4
carefully, in the light of the circumstances and their investment objectives, the information contained in this V2.1
entire Prospectus. Prospective purchasers should nevertheless consider, among other things, the investment X13.1
considerations set out below. Words and expressions defined in the "Terms and Conditions of the Notes" IV4.6
below or elsewhere in this Prospectus have the same meanings in this section.
Risk Relating to the Issuer and the KBC Group
Financial Condition of the Issuer
If the Issuer's financial condition were to deteriorate and to the extent that funds are not available
through the Support Agreement, the Holders of Securities and Couponholders could suffer direct and
materially adverse consequences, including elimination of cumulative Coupon payments on the Securities
and, if a liquidation, dissolution or winding up of the Issuer were to occur, loss by Holders of Securities of
all or part of their investment.
Furthermore, the rights of Holders of Securities under the Securities, to participate in the distribution
of assets of the Issuer upon the Issuer's liquidation or reorganisation will be effectively subordinated to all
existing and future liabilities, including liabilities to depositors and trade payables, of the Issuer.
No Limitation on Issuing Further Debt
The Issuer is not prohibited from issuing further debt or securities ranking pari passu with or senior
to the Securities. None of the Securities, the Profit-Sharing Certificates, the Support Agreement or
Contingent Guarantee Agreement limits the ability of KBC Holding to incur indebtedness or issue securities,
including indebtedness or securities that rank pari passu with or senior to the obligations of KBC Holding
under the Support Agreement. The issuance of any such further debt or securities may dilute the claim of
Holders of Securities and of the Issuer under the Support Agreement.
Regulatory Restrictions
The CBFA or its successors, regulatory authorities in the European Union and regulatory authorities
in other countries have oversight powers over the Issuer and in varying degrees over one or more entities of
the KBC Group. Under certain circumstances, any of such regulatory authorities could make determinations
or take decisions in the future with respect to any of such entities or a portion of their respective operations
or assets that could adversely affect the ability of the Issuer or KBC Holding to, among other things, make
distributions to their respective security holders, to engage in transactions with affiliates, to purchase or
transfer assets, to pay their respective obligations and to make any redemption or liquidation payments to
their security holders.
Economic Activity
KBC Bank's business activities are dependent on the level of banking, finance and financial services
required by its customers. In particular, levels of borrowing are heavily dependent on customer confidence,
employment trends, the state of the economies that KBC Bank does business in and market interest rates at
the time. As KBC Bank currently conducts the majority of its business in Belgium and Central Eastern
Europe, its performance is influenced by the level and cyclical nature of business activity in these countries
which is in turn affected by both domestic and international economic and political events. There can be no
assurance that a weakening in these economies will not have a material effect on KBC Bank's future results.
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Risks Related to the Issuer's Business
As a result of its business activities, KBC Bank is exposed to a variety of risks, the most significant
of which are credit risk, market risk, operational risk and liquidity risk. Failure to control these risks could
result in material adverse effects on KBC Bank's financial performance and reputation.
Credit Risk
Risks arising from changes in credit quality and the recoverability of loans and amounts due from
counterparties are inherent in a wide range of KBC Bank's businesses. Adverse changes in the credit quality
of KBC Bank's borrowers and counterparties or a general deterioration in the Belgian, Central Eastern
European or global economic conditions, or arising from systematic risks in the financial systems, could
affect the recoverability and value of its assets and require an increase in KBC Bank's provision for bad and
doubtful debts and other provisions.
Market Risk
The most significant market risks that KBC Bank faces are interest rate, foreign exchange and bond
and equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate
margin realised between lending and borrowing costs. Changes in currency rates affect the value of assets
and liabilities denominated in foreign currencies and may affect income from foreign exchange dealing. The
performance of financial markets may cause changes in the value of KBC Bank's investment and trading
portfolios. KBC Bank has implemented risk management methods to mitigate and control these and other
market risks to which KBC Bank is exposed and exposures are constantly measured and monitored.
However, it is difficult to predict with accuracy changes in economic or market conditions and to anticipate
the effects that such changes could have on KBC Bank's financial performance and business operations.
Operational Risk
KBC Bank's businesses are dependent on the ability to process a very large number of transactions
efficiently and accurately. Operational risk and losses can result from fraud, errors by employees, failure to
document transactions properly or to obtain proper internal authorisation, failure to comply with regulatory
requirements and conduct of business rules, equipment failures, natural disasters or the failure of external
systems, for example, those of KBC Bank's suppliers or counterparties. Although KBC Bank has
implemented risk controls and loss mitigation actions, and substantial resources are devoted to developing
efficient procedures and to staff training, it is not possible to implement procedures which are fully effective
in controlling each of the operational risks.
Liquidity Risk
The inability of a bank, including KBC Bank, to anticipate and provide for unforeseen decreases or
changes in funding sources could have consequences on such bank's ability to meet its obligations when they
fall due.
Impact of Regulatory Changes
KBC Bank is subject to financial services laws, regulations, administrative actions and policies in
each location that KBC Bank operates. Changes in supervision and regulation, in particular in Belgium and
Central Eastern Europe, could materially affect KBC Bank's business, the products and services offered or
the value of its assets. Although KBC Bank works closely with its regulators and continually monitors the
situation, future changes in regulation, fiscal or other policies can be unpredictable and are beyond the
control of KBC Bank.
IV4.6
Position of KBC Holding within the KBC Group
KBC Holding is a financial holding company, with direct or indirect ownership and management of
shareholdings in other companies. The KBC Group's operations are conducted through direct and indirect
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