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Mon 10 Oct 2011 12:16 PM

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Qatari royals swoop on Belgian, Luxembourg private banks

Qatari-backed Precision Capital buys Belgium's KBL; Qatari investors also eye Dexia's BIL bank

Qatari royals swoop on Belgian, Luxembourg private banks
Belgian bank KBC has agreed the sale of its KBL private banking unit for €1.050bn ($1.42bn)
Qatari royals swoop on Belgian, Luxembourg private banks
Qatari royals swoop on Belgian, Luxembourg private banks

Qatar's royal family is stepping up its investment in the euro zone's troubled banking sector with plans to buy private banking businesses from Franco-Belgium financial group Dexia and its Belgian rival KBC.

A Qatari investment group looking to take over Dexia's Banque Internationale Luxembourg (BIL) belongs to members of the Al Thani royal family, who are also buying KBC's private bank, Luxembourg's finance minister Luc Frieden said on Monday.

KBC had earlier said Precision Capital, a Qatari-backed firm based in Luxembourg, had agreed to buy KBL, KBC's private banking unit, for €1.05bn ($1.42bn). It said the Qatari investor had requested anonymity.

The Al Thani royal family, whose members also run key Qatari investment groups such as sovereign wealth fund the Qatar Investment Authority (QIA), has already invested in European banks in the past, including in UK bank Barclays in an emergency fundraising in late 2008.

Dexia agreed a rescue deal on Monday that will include the nationalisation of its Belgian banking division and the sale of BIL. Luxembourg is likely to take a minority stake in BIL, which specialises in wealth management, although the size of that investment was not yet agreed, Frieden told a news conference.

Dexia's private banking business could be worth between €1bn and €1.7bn, Morgan Stanley analysts said last week.

The sale of KBL to Qatari investors is a central part of a restructuring plan required by the European Commission in return for €7bn of state aid that KBC received to help it through the global financial crisis.

But the deal will leave the bank €300m short of the price it last year agreed to sell the unit for, before that deal with Indian firm Hinduja Group fell through for regulatory reasons. It will still release about €700m in capital for KBC, which is also planning to sell its majority stake in Poland's Kredyt Bank and insurer Warta.

Qatar has invested in banks using various investment firms. Challenger, an investment vehicle of Sheikh Hamad bin Jassim Bin Jabr Al Thani, paid £300m for a stake in Barclays in November 2008, alongside a bigger investment by Qatar Holding, part of QIA, in a £7bn fundraising. Challenger invested at 153.3 pence per Barclays share, just below the current share price of 166p.

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