KBC, Belgium's largest bank, will scale down some of its international businesses in the coming weeks after announcing its second profit warning in a month, said a spokesperson for the bank.
However, media reports claiming the bank will close corporate branches in China and Japan alongside KBC Financial Products, its New York-based derivatives and structured products business, were dismissed as false.
According to the source, KBC is not planning to completely close any of its businesses and is still committed to markets outside Belgium and Central Europe, including the UK, Asia and the US. "However, KBC has confirmed on several occasions it is currently reviewing a number of business lines and examining its operations outside its home markets, evaluating whether or not they belong to its core activities, generate sufficient return or use up too much capital," the spokesperson added.
KBC also confirmed that this process is based on a case by case approach and is being conducted throughout the overall operation. "It is, hence, logical that some (not all) business lines and activities such as KBC's UK, USA and Asian operations will be or have been reviewed, leading to downsizing or a discontinuation of activity, but without a closure of the local business as such - contrary to what was erroneously stated," the same source stressed.
The bank's share price has been hit, following investor concerns over its exposure to structured credit products. In its profit warning, KBC said it has agreed a €2bn capital injection with the Flemish Regional Government, with an additional standby facility of €1.5bn. The bank took a €3.5bn bailout only four months ago.
The news followed KBC chief executive André Bergen's recent comments on taking decisive measures to reduce costs and further reduce the risk profile of KBC's activity portfolio, as well as the closure of KBC Alternative Investment Management, the hedge-fund manager unit of the group.