Commenting on this strategic reorganisation, Christian Defrancq - Chairman of the Board of Directors of Fin-Force - had this to say: 'On the one hand, the introduction of SEPA presents a real challenge for the financial sector, forcing financial institutions to reflect on the future of domestic and intra-European payments, making them adapt their IT-systems and set priorities. On the other hand, the volume and importance of payments transactions within KBC group and Europe-wide is continuously increasing. Consequently, KBC is looking to make the most efficient use of the resources available to it within Fin-Force in order to achieve its targets and to create synergies within the group. What's more, this strategic reorganisation and shift in priorities will enable the KBC group to continue with its stand-alone strategy in a fast-changing environment and at a time when consolidation is sweeping the financial sector.'

Fin-Force, a pioneer in payments processing since 2000

Fin-Force was founded in September 2000 by KBC Group NV (90%) and EDS (10%) to process payments transactions for the KBC group. DZ BANK (Germany) and Rabobank Nederland subsequently acquired a stake in Fin-Force, which is now 68%-owned by KBC Group NV, 22%-owned by Rabobank Nederland and 10%-owned by DZ BANK. The company currently processes some 412 million transactions a year, 13 million of which are cross-border transactions. By exploiting economies of scale, Fin-Force has managed to reduce processing costs per transaction by more than 50% over the past five years.

The introduction of SEPA and increase in payments transactions within KBC group make it necessary to set priorities

The introduction of SEPA represents a real challenge for the financial sector, forcing financial institutions to stop and think about the future of payments, making them adapt their IT systems and set priorities.

Moreover, payments transactions within the KBC group are continuously increasing in volume and importance, a trend that is expected to continue in the future in view of the fact that the KBC group has built up a significant presence in Central and Eastern Europe over the past few years (Poland, the Czech Republic, Slovakia and Hungary) and has recently also expanded into Russia, Serbia, Romania and Bulgaria.

Given this situation, the KBC group wishes to get the most out of its investment in Fin-Force, to achieve its targets and to create synergies within the group. The know-how and experience built up over the years will put Fin-Force in an even better position to meet the ever higher demands of customers and governments regarding the speed, price and quality of payments transactions. This strategic reorganisation and internal shift in priorities will enable the KBC group to continue with its stand-alone strategy in a fast-changing environment and at a time when consolidation is sweeping the financial sector.

Fin-Force will continue to meet all its existing commitments. Continuity arrangements and Service Level Agreements will be respected and changes will be dealt with on a project and phased basis, in consultation with all the parties involved/partners. Rabobank, Fin-Force and KBC are currently discussing an acceptable solution for the existing relationship between Rabobank and Fin-Force going forward.

The connection of K&H Bank - KBC's Hungarian banking subsidiary - to Fin-Force is set to take place in late 2007, as planned. The recently opened Fin-Force office in Bratislava (Slovakia) is and remains a fully fledged back-up site for the purposes of the business continuity plans, and will also handle payments processing for K&H Bank and (at a later stage) for KBC's other banks in Central and Eastern Europe.

The successful partnership between DZ BANK/Equens and KBC/Fin-Force pre-dates the SEPA period. KBC's SEPA transactions will be handled by Equens, while Fin-Force will continue to process cross-border payments transactions (except for intra-European euro payments) for DZ BANK/Equens. DZ BANK is very happy with the service that Fin-Force provides to Equens and will continue to be represented on the Board of Directors of Fin-Force.

Today's decision will have no impact on staffing levels at Fin-Force. The social partners have been/will continue to be consulted on this strategic reorganisation, and the requisite arrangements are already in place. Fin-Force currently employs 252 people in Brussels and 12 in Bratislava.