Err, this doesn’t look good:
KBC Group NV has requested to have its share suspended for today, Wednesday, 13 May. Yesterday, several wild rumours circulated the market. Since it is currently in its pre-earnings black-out period (the period prior to its earnings release when the group does not disclose any information), KBC as a listed company does not wish to comment until Thursday morning, when — as scheduled — it will provide the financial markets with detailed information on its first-quarter results at 7 a.m.
So what could these wild rumours be?
Business newspaper De Tijd is reporting that the Belgian government is working on a new rescue plan because KBC – market value €8bn – is set to write down the value of its CDO portfolio by a further €1bn. This fresh hit seem to have been triggered by a downgrade of bond insurer MBIA.
De Tijd says the Belgian government is considering three plans: a “first loss” agreement under which KBC would cover initial losses, a government guarantee for CDOs put in a separate vehicle or a government cash insurance for the CDOs.
Who said the financial crisis was over?
Update: Some addition info on KBC’s CDOs from Reuters:
It has already written down to zero all its CDOs except those with the highest “super senior” status. It still had 5.4 billion euros of CDOs written down to 57 percent of par value at the end of 2008. It also had a further 4.8 billion euros of asset-backed securities marked down to 74 percent of original value.