Greece's National Bank agrees sale of Bulgarian units to KBC Group

A cleaning lady mops the steps at the main entrance of the Bank of Greece headquarters in Athens, Greece, July 15, 2015. REUTERS/Yiannis Kourtoglou/File Photo

ATHENS/SOFIA (Reuters) - National Bank of Greece NBGr.AT agreed to sell a 99.1 pct stake in its Bulgarian unit United Bulgarian Bank (UBB) and its fully-owned leasing subsidiary Interlease EAD to Belgian bank KBC Group KBC.BR, National Bank said on Friday.

National Bank will receive 610 million euros ($642.45 million), it said, while UBB plans to make a 50 million euro dividend distribution to the Greek lender ahead of the transaction and after approval by its annual general assembly.

The sale of UBB is part of National Bank’s restructuring plan agreed with the European authorities to boost its capital.

“The transaction further strengthens NBG’s position in terms of capital and liquidity, allowing for the redeployment of resources to support the Greek economic recovery,” National Bank Chief Executive Officer Leonidas Fragkiadakis said in a statement. NBG has had a presence in Bulgaria for 15 years.

UBB is Bulgaria’s fourth-largest bank in terms of assets. Interlease is the third-largest leasing firm in the country, KBC Group said in a statement.

KBC said it will use internal sources and available funds to pay the price in cash. The deal is subject to approval by the relevant authorities and is expected to be concluded in the second quarter of 2017 at the latest.

KBC has been active in Bulgaria through its CIBANK unit. The combination of UBB and CIBANK will result in the creation of the third-largest banking group in Bulgaria in terms of assets, with a market share of approximately 11 percent, it said.

Reporting by Angeliki Koutantou in Athens, additional reporting by Tsvetelia Tsolova in Sofia; editing by Susan Thomas