European leaders reached a deal with Greek debtholders on Thursday morning that would force private investors to take a 50% cut in the face value of their bonds. Our view: The cut in fair value of Greek debt is in line with expectations as the market have foreseen up to 60% haircut. KB (3625 CZK, 1,83%) will have to make additional impairment of at least CZK 1.8bn, or some 15% of expected 2011 net income (according to Bloomberg), possibly already in 3Q11. This will bring the total impairment to at least CZK 3.5bn (KB has already made CZK 1.7bn impairment on Greek government bonds in 2Q11). Given the capital adequacy ratio of 16.1% and Tier 1 of 14.6% at the end of 1H11, KB is well equipped to handle those writedowns and still pay dividend. We believe the news could have mildly negative trading impact, as we expect it to be at least partly priced in.