Belgium's KBC to sell Russia's Absolut bank

By Ivan Anderzhanov in Moscow

Belgian financial group KBC Group is looking to sell Absolut Bank only two years after acquiring its key Russian asset for $1bn.

Analysts suggested that the most likely buyer would be another foreign group keen to gain access to the Russian banking sector.

KBC needs to slash the size of its business by almost a quarter in order to pay back almost €7bn of state financial support received in the wake of last year’s credit crisis.

A mid-sized bank, Absolut  was established in 1993, mainly as a corporate bank, by a group of Russian entrepreneurs. The bank is also active in asset management, capital markets and leasing through two dedicated subsidiaries.

Mikhail Galkin, a fixed income analysts at VTB Captial said the news was neutral for Absolut’s bond issue because KBC will not be able to find a buyer until March next year.

In a note, Galkin said: “The USD-denominated bonds are valued at $175m, maturing in March 2010 (YTM 2%). First, searching for a buyer and preparing the deal might take some time, not to mention that we doubt KBC would be able to sell Absolut before March 2010. Until the sale is finalised, the parent company is likely to keep supporting the bank in a stress scenario. Second, the new owner of the bank would most likely be a foreign financial group.”

The Financial Times said JP Morgan is believed to be advising KBC on its restructuring which could see it offload a number of assets in Belgium, the UK and across Eastern Europe.