May 27, 2011, Ageas announced that Bank SA/NV, a (32,6 EUR, -0,46%) affiliate partially held by the Belgian State, had decided not to exercise its call option on the6.5% Redeemable Perpetual Cumulative Coupon Debt Securities 2001 (RPCC) issued by Bank SA/NV.
Following the Bank SA/NV decision, and pursuant to the terms and conditions of the Securities, Ageas sought the approval of the National Bank of Belgium (the "NBB") to acquire the Securities against cash and at par (the "Exchange") on the first call date i.e. 26 September 2011 (the "Exchange Date"). Ageas has now been notified by the NBB of its consent to the Exchange. In addition, Ageas was informed that holders representing 95% of the amount of the Securities have decided to opt for the Exchange.
Due to the high participation in the Exchange, Ageas has decided, contrary to the previous announcement, to record the acquired Securities under Loans and Receivables at their fair value at the Exchange Date and not as Financial Instruments "available for sale". Ageas included a net charge of € 40m in the second quarter of 2011 representing the difference between the par value and fair value of the Securities as at 30 June 2011. Changes in the fair value until the Exchange Date may have a further impact on the net result of the General Account.
As a holder of the Securities Ageas will be entitled to a quarterly coupon payment of 3-months Euribor +237 bps on the total amount of the acquired Securities. The net interest income on the cash amount invested is expected to rise by approximately € 24m.
Ageas emphasizes that the Exchange will not affect the solvency position of its insurance operations, nor its discretionary capital, as EUR 1 billion has already been set aside
for the Exchange.
The € 40m charge, as announced last Friday (after close), was not included in our 2Q11 and 1H11 forecast. Ageas should therefore report a 2Q11 net profit close to break-even.
We remain Buying with an unchanged target of € 2.85.