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Belgium sells ‘bad bank’ credit portfolio

12:26 29/04/2013

Belgium has pared back its public debt with the sale of the structured credit portfolio held by its ‘bad bank’, Royal Park Investments (RPI), to US private equity firm Lone Star and Credit Suisse, reports Reuters’ Ben Deighton. The announcement was made by the finance ministry on Saturday. Finance minister Koen Geens (pictured) said last month that Belgium needed to find a further €1 billion from asset sales to ensure national debt did not rise above GDP. RPI has sold its asset portfolio through a block sale to Credit Suisse and Lone Star Funds, a specialist in buying distressed debt assets, for €6.7 billion, an official statement said. It means the Belgian state, along with Ageas, the insurance company that emerged from the break-up of Fortis at the height of the financial crisis, will both receive about €1 billion. As of last month, Ageas and the Belgian state both had about €750 million of equity capital in RPI, while French bank BNP Paribas had €200 million. Belgium’s budget deficit topped the European Union’s limit of 3% of output in March when the EU statistics agency Eurostat forced it to include the bail-out of troubled bank Dexia in its budget calculations. To solve the problem, Belgium made €1.4 billion of savings and said it needed to raise another €1 billion from asset sales. In Saturday’s statement, the Belgian state also said it would buy back from Ageas a call option on shares in BNP Paribas so it could sell its stake in the French bank when it judged fit, without having to worry about the option. Belgium’s 10% stake in BNP Paribas is worth about €5 billion. Ageas said it planned to pay a dividend of €1 per share following the Lone Star sale.

Written by The Bulletin