zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz zzzz zzzz zzzz zzz 21 December 2006 Joint press release KBC Securities acquires majority shareholding in Swiss Capital (Romania) KBC Securities continues to develop its second home market Today, KBC Securities and Sorin Apostol reached agreement, whereby KBC Securities acquires full control of Swiss Capital, the second biggest independent broking company in Romania. Both parties are aiming to finalise the deal in the first quarter of 2007. This acquisition will enable KBC Securities to further develop its other home market of Central and Eastern Europe. Commenting on the acquisition, Guy Van Eechaute – CEO of KBC Securities – said: “The Central European market for equities and corporate finance is in full expansion. By building on KBC’s strong presence in the banking, insurance and leasing markets in this region, KBC Securities has carved out a strong position for itself that it can use to take full advantage of the market’s potential for growth. Although the stock markets of Central Europe are still relatively small at the moment, they are growing at a very quick pace, as illustrated by the fact that KBC Securities’ activities there already account for roughly 37% of its turnover. The acquisition of Swiss Capital will further strengthen our position as one of the leading players in Central and Eastern Europe and create a springboard for KBC Securities to do business on the fast-growing Romanian market. As an active, strategic shareholder, we are aiming to further underpin the robust growth of Swiss Capital, which will ultimately be to the benefit of its customers, employees and shareholders.” Welcoming the agreement, Sorin Apostol, principal shareholder and CEO of Swiss Capital said: “Swiss Capital has experienced strong growth in recent years. Given the enormous potential of the Romanian market, we are very happy that KBC Securities will use its position as a strong, strategic shareholder to guarantee the further development of the company." The Romanian equity capital market and Swiss Capital Although the equity capital market in Romania has started out from humble beginnings, it has developed in line with the country’s robust economic growth (21.7 million inhabitants and real GDP growth averaging 6% per year since 2001). As far as market capitalisation is concerned (24.7 billion euros), the stock markets there (the Bucharest Stock Exchange and Rasdaq, catering for smaller, illiquid growth companies) have almost caught up with Hungary. Over the past few years, the Romanian stock markets have grown at over three times the rate of their Polish, Czech and Hungarian counterparts. This strong growth is expected to continue in 2007, due to – among other things – a number of planned privatisation schemes (including 46% of Romtelecom and a number of energy and utilities companies). It has been primarily during the past year that foreign institutional investors have discovered the Romanian stock market, identifying a region where EU convergence is taking place in the run KBC’s press releases are available at www.kbc.com. 1/3 up to Romania’s accession to the EU on 1 January 2007. In this context, Romania has been one of the countries that has benefited from Anglo-Saxon institutional investors ‘shifting’ funds that had been invested in CEE-3 countries (Poland, Czech Republic and Hungary) to other emerging markets. The local institutional and retail investor segments are both small at the moment. However, new regulations concerning pension funds are being drawn up and should provide a boost to the local institutional investor segment. Retail investors are active primarily on Sibiu, the futures market. Swiss Capital was set up in 2002 when a Swiss investor bought up Sira Invest Bucharest, a local broking company established in 1996. In 2004, 98.5% of the shares were acquired by Sorin Apostol, the principal shareholder and CEO of Swiss Capital until now. Swiss Capital subsequently expanded and became a top-10 player in Romania, with a 3.4% share of the market (currently occupying seventh place). At present, it is the second largest independent brokerage in Romania and the second biggest shareholder in the Bucharest Stock Exchange, with a stake of 1.8%. Swiss Capital employs 37 FTEs and boasts a network of five regional offices. KBC Securities’ second home market of Central and Eastern Europe. The Central European market in equities and corporate finance is in full expansion. By building on KBC’s strong presence in the banking, insurance and leasing markets in this region, KBC Securities has carved out a strong position for itself that it can use to take full advantage of the market’s potential for growth. Although the stock markets of Central Europe are still relatively small at the moment, they are growing at a very quick pace, as illustrated by the fact that KBC Securities’ activities there already account for roughly 37% of its turnover. KBC has a strong home base in the countries concerned. In the Czech Republic, the broker Patria Finance (a wholly owned subsidiary of KBC Securities) is the local market leader with a share of 28%. In Hungary, K&H Equities occupies the number two spot, with a 14% share of the market. In Poland, KBC Securities acquired full ownership of the existing stock market activities of Kredyt Bank – KBC’s Polish banking subsidiary – at the start of 2005. Since then, its market share has gone up from 1% to 5%. In total, KBC’s brokers in Central Europe currently employ some 240 individuals. KBC Securities has developed a business model in each of the three ‘core countries’ (Czech Republic, Hungary and Poland) that is very similar to the Belgian model. In other words, the equities businesses in each country are grouped together under a single entity that caters for both institutional and private customers. The local brokerages in Prague, Warsaw and Budapest focus mainly on serving their home markets and large Anglo-American brokerages that are based predominantly in London. Moreover, KBC Securities, through its offices in Brussels, London and New York, targets primarily Western institutional investors, such as asset management companies, pension funds and insurers. Finally, each country has a corporate finance division handling IPOs, capital increases, and mergers and acquisitions. KBC Securities also has a corporate finance team in Germany, assisting German companies with their business on the Central European market. At KBC Securities in London, a five-man institutional sales team focuses exclusively on selling Central European shares to institutional counterparties in London. They use a research product prepared by KBC’s Central European subsidiaries. KBC Securities’ thorough knowledge of and familiarity with local markets and companies, the local brand-name recognition and the respect for the local language and local practices, combined with broad expertise and a ‘hands-on’ approach, create an excellent springboard for doing business in the equity and corporate finance markets. A multi-domestic model such as this has already proven its worth in the implementation of KBC’s retail bancassurance model. Central Europe is being developed to become KBC Securities’ second home market, but this will not be separate from the first home market in Belgium. KBC Securities, for instance, will continue to play an important role in selling Central European shares in Belgium. Through Bolero, its online broking software, KBC Securities offers private persons a facility for online trading on the stock markets of Warsaw and Prague, and offline on Budapest and Bratislava, KBC’s press releases are available at www.kbc.com. 2/3 the only market player in Belgium to do so. It also gives private investors access to all research published by KBC Securities, including any work relating to Central Europe. Lastly, the corporate finance division of KBC Securities can provide guidance to Belgian companies planning mergers or acquisitions in Central Europe. KBC not only has teams on the spot in Central Europe that are capable of providing these Belgian companies with the necessary guidance, it also has the requisite know-how and experience in this area in Brussels. For more information, please contact: - Luc Cool, Director of Investor Relations, KBC Group Tel. (32) 2 429 40 51 [email protected] - Viviane Huybrecht, Head of Group Communication and of the KBC Press Office Spokesperson, KBC Group Tel. (32) 2 429 85 45 [email protected] or [email protected] Note to the editor KBC Group NV: www.kbc.com / www.kbcsecurities.be KBC Securities is the broking arm of KBC Group NV. KBC Group NV is one of the leading financial groups in Europe. A multi-channel bancassurance group with a geographic focus on Europe, it caters mainly for retail and private banking customers and small and medium-sized enterprises. Besides focusing on providing retail and private bancassurance services, it is also active in asset management, the provision of corporate services and market activities. KBC occupies significant, even leading positions in its two home markets of Belgium and Central Europe and has an extensive private banking network operating under the European Private Bankers concept. It has also selectively established a presence in a number of other countries and regions around the world. KBC Group NV is listed on Euronext Brussels and the Luxembourg Stock Exchange (ticker symbol ’KBC’). With a market capitalisation of around 32 billion euros, KBC is one of the biggest companies in Belgium and a leading financial group in Europe, employing 50 000 people and catering for 12 million customers. After having built up a strong position in most of the countries that joined the European Union (EU) on 1 May 2004 (Poland, the Czech Republic, Slovakia, Hungary and Slovenia), KBC now considers the second wave of accession countries as the main driving force behind maintaining its leading position on its extensive home market of Central and Eastern Europe.