KBC Ireland exit to fund ex boss’s expanding Bulgarian realm

Bolt-on deal should boost the group’s return on tangible equity to 12.7 per cent in 2024

Peter Roebben, the former head of KCB Bank Ireland, was already on track to leave Dublin after two years to take over the helm of Brussels-based KBC Group’s Bulgarian banking unit when the announcement came in April that the Belgian bancassurer was getting to hell out of the Irish market.

But he’ll be a big beneficiary from the decision to quit the Republic.

KBC Group announced this week that it is taking over Raiffeisenbank (Bulgaria) for just over €1 billion to grow its Roebben-led Bulgarian operation into the third-largest financial group in the country. Where will the funds come from? The net proceeds from its planned sale of the €10 billion-plus Irish loan book to Bank of Ireland and US investment firm CarVal Investors, according to Societe Generale analysts Phelbe Pace and Geoffrey Dawes.

"Increasing market share in Bulgaria while exiting the Irish market is a good illustration of KBC's coherent strategy and financial discipline in our view," they said.


Roebben, a 55-year-old KBC lifer, was clear in his views when The Irish Times asked him in early February, as the bank reported full-year results, about what the then-heightened speculation about Ulster’s future said about banking in this State (not knowing that KBC was also eying an exit at the time).

The biggest challenge, he said at the time, was the level of expensive capital that Irish banks must hold in reserve against mortgages, which is almost three times what KBC has to apply against home loans in its other main markets – eating into the parent group’s chances of getting an acceptable return on its equity investment in the State.

While the Société Générale number crunchers said that while KBC Group's capital reserves position will be unchanged following the closing of the Irish and Bulgarian transactions next year, the eastern Europe bolt-on deal should boost the group's return on tangible equity by 0.7 percentage points to 12.7 per cent in 2024.

The speed with which KBC has found other opportunities for the money once committed to Dublin should provide fodder for the Department of Finance’s long-awaited review of the state of the Irish banking sector, the terms of which are expected to be unveiled on Thursday.