Belgian financial services group KBC said Monday that it's agreed to sell some of its bonds and equity derivatives business to Daiwa Securities Capital Markets Co. as well as a reinsurance arm to QBE Insurance, continuing its strategy to dispose of non-core operations.
KBC said Daiwa will pay around $1 billion for its global convertible bond unit and its Asian equity derivatives operations, with around $800 million of the purchase price covering its trading positions.
Daiwa Securities Capital Markets is the investment banking arm of Daiwa Securities Group Inc., one of the largest brokerage groups in Japan.
In addition, KBC will sell its Secura reinsurance unit to Australia's QBE Insurance Group for 267 million euros ($335 million) plus any gains made on the investment portfolio.
Together the two deals will release around $374 million of capital for the group.
The disposals come after KBC also sold its European private banking subsidiary to the Hinduja Group in May for €1.35 billion. The private banking sale and other disposals were part of a deal agreed with the European Commission in exchange for approval of KBC's state aid package.
"The agreement announced today marks another important step in KBC's strategy to wind down the structured products business," said CEO Jan Vanhevel on the Daiwa deal.
"This divestment frees up substantial capital resources while further reducing our group's risk profile and strengthening the group's focus on its core bancassurance markets and expertise," he added. Bancassurance refers to the selling of insurance through a bank.
For Daiwa, the deal fits with plans announced in November to significantly grow its global markets operations, including derivatives.
Shares in KBC slipped 1.3% in Brussels in a mixed session for European banking and insurance stocks.
Private equity deals
KBC's announcement also came as Lloyds Banking Group said it will receive 332 million pounds ($504 million) from the sale of a portfolio of private equity investments, as it also continues to dispose of non-core assets.
The bank said it will sell the assets to a new joint venture with London-based firm Coller Capital. Lloyds will hold a 30% stake in the joint venture, with Coller holding the remaining 70%. The deal values the holdings at around £480 million.