Monday 19 February 2018

KBC Bank Ireland chief executive John Reynolds stepping down

KBC forecasts surging provision for Irish loan losses

John Reynolds, chief exec, KBC Bank
John Reynolds, chief exec, KBC Bank

KBC Bank Ireland has announced that chief executive John Reynolds is leaving the company to pursue other interests.

The bank has appointed Wim Verbraeken, who is currently chief financial officer at KBC Bank Ireland, as its chief executive - the appointment is subject to approval from the Central Bank.

The Belgian financial services group KBC has also forecast it would need to take a provision of up to €775m in the fourth quarter linked to potentially lost loans and mortgages here.

The group, which received €7bn of Belgian state aid during the financial crisis in 2008-2009, had previously forecast loan-loss provision of between €300m and €400m for the whole year for Ireland.

It took €286m of loan loss impairment for KBC Bank Ireland in the first nine months.

The company, which has €15.5bn of outstanding residential mortgages and loans to project developers and companies, said €2bn of restructured mortgages would be now reclassified as more likely to default.

It was also expecting additional provisions due to the slower than expected recovery of small businesses in Ireland.

KBC said the new provisions follow guidance from the European Banking Association on non-performing loans and in view of the upcoming asset quality review to be conducted by the European Central Bank.

They come even as residential property prices here rose by their fastest annual rate in six years in September, although they are still more than 45pc down on peak 2007 levels.

KBC said that it expected Irish loan loss provisions in the range of €150-200m in 2014 and of between €50m and €100m in both 2015 and 2016. It forecast that it would be profitable in Ireland from 2016.KBC also said its net profit fell 49pc from a year earlier to €272m, substantially lower than the €337m on average expected in a Reuters poll.

KBC said this included a €231m of impairments related to remaining divestments, including €73m for Antwerp Diamond Bank, the only planned divestment for which it still needs a buyer.

KBC sold a series of assets, under an agreement with the European Commission, to focus on main markets Belgium, the Czech Republic as well as smaller interests in Bulgaria, Hungary, Ireland and Slovakia.

KBC has already repaid all the €3.5bn it received from the Belgian federal state and a first tranche of the remainder it owes the Flemish regional government.

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