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FACTBOX-European banks' slow grind to exit bailouts

Carmel Crimmins
Wednesday, 6 Nov 2013 | 11:25 AM ET

DUBLIN, Nov 6 (Reuters) - ING said on Wednesday it should complete its restructuring two years ahead of schedule, meaning the Dutch banking and insurance group could be one of the first euro zone casualties of the 2008 global crisis to emerge from a state rescue.

European banks face a long slog to extricate themselves from government-sponsored bailouts as continuing uncertainty over balance sheet risks, rising capital requirements and anaemic economic growth holds back private investment.

Here is a rundown of progress so far for a selection of banks across the region:

BELGIUM

KBC received 7 billion euros in 2008 and 2009, half from Belgium, the rest from the northern region of Flanders. It has repaid in full the money from the federal state and plans to repay a first instalment of 1.17 billion euros, plus a 50 percent penalty, in the second half of 2013 to Flanders. It plans to repay the balance in seven equal instalments between 2014 and 2020.

BRITAIN

The British government injected 66 billion pounds of equity into Lloyds and Royal Bank of Scotland.

Lloyds is likely to be the first bank to be reprivatised after the government sold a 6 percent stake in September. London is expected to offload a second, larger tranche of shares next year and it could exit its current 33 percent stake altogether, at a profit for taxpayers, by the end of 2014.

Royal Bank of Scotland is trading around 35 percent below what the government paid for its 81 percent stake and is 20 percent below its value in government accounts. London is unlikely to recoup any of the 45 billion pounds it pumped into RBS until after elections in 2015.

Britain also nationalized Northern Rock and Bradford & Bingley, and provided funding support while it runs down their loan books through a state body called UK Asset Resolution.

UKAR owed the Treasury 43.5 billion pounds at the end of 2012, which it expects to fully repay. It repaid 6.8 billion pounds over 2011 and 2012. Britain sold the "good bank" part of Northern Rock to Virgin Money in 2012, and could receive about 1 billion pounds.

CYPRUS

Cyprus' two largest banks, Bank of Cyprus and Cyprus Popular Bank, were spared a state rescue when they imploded earlier this year because large depositors bore the cost of their bailout.

This means Bank of Cyprus does not have to go through the state aid process and agree a restructuring plan, because it is 100 percent privately owned (by the former depositors). The healthy parts of Cyprus Popular Bank were absorbed by Bank of Cyprus, while the unhealthy parts are being wound down.

IRELAND

Ireland spent 64 billion euros saving its banks, making it, per capita, one of the costliest banking crises of all time.

Anglo Irish, at the heart of the country's banking woes, was liquidated earlier this year as part of a deal to release Dublin from a commitment to pay off a 29 billion euro debt.

The state owns Allied Irish Banks and permanent tsb but few expect it to recoup the near 25 billion euros it poured into them.

AIB has said it hopes to attract private investment after its forecast return to profitability next year.

Weighed down by a large stock of loss-making loans that track the low ECB interest rate, permanent tsb is awaiting a ruling on a fresh restructuring plan sent to the European Commission in August.

Bank of Ireland is the only Irish lender to begin weaning itself off state assistance. An investment by a group of North American investors in 2011 cut the state's stake to 15 percent from 36 percent.

Bank of Ireland is now working on a plan to refinance 1.8 billion euros of preference shares by the end of March, that would leave the government with a residual stake left to sell. Dublin has not put a timeframe of when it would like to do so.

GERMANY

Germany pumped 18.2 billion euros into Commerzbank, the country's second-largest bank. The government's shareholding has dropped from 25 percent to 17 percent. It is expected that the state will keep this stake until it can limit its losses - which could take years from now.

GREECE

Greece injected 28 billion euros over the summer to shore up its banking sector leaving the country's four largest banks, Piraeus, National Bank of Greece (NBG), Alpha and Eurobank, majority owned by a bank bailout fund, the Hellenic Financial Stability Fund (HFSF).

The state's stakes in Piraeus, NBG and Alpha could begin to fall by the end of the year when investors get their first chance to exercise warrants that allow them to buy more shares in the banks at a fixed price. Those shares would be sold to investors by the HFSF, the process could take several years and there is no guarantee all warrants will be exercised.

NETHERLANDS

The Dutch government paid out nearly 40 billion euros to rescue the domestic financial sector in 2008, when it provided capital injections for banking and insurance group ING, insurer Aegon and financial group SNS Reaal, as well as nationalising ABN AMRO.

It had to pour a further 10 billion euros into SNS Reaal in February 2013 to prevent it collapsing under property loan losses.

ING should complete its restructuring two years ahead of schedule in 2016 and 8 years after it received a 10 billion euros state bailout.

So far, ING has repaid 11.3 billion euros, including premiums and interest. That leaves 2.25 billion euros in principal and interest still to be repaid in two tranches in March 2014 and May 2015.

The rescue of ABN AMRO cost the Dutch state 27.9 billion euros. The government plans an IPO in the first half of 2015, at the earliest, but is unlikely to recoup its costs.

The Dutch government said in August that it had no concrete plans yet for SNS Reaal but that its banking and insurance businesses should be split and sold off separately.

In June 2011, Aegon became the first Dutch financial institution to repay the state in full with a 4.1 billion reimbursement.

PORTUGAL

Portugal's 78-billion euro EU/IMF bailout has a 12 billion euro recapitalisation line for banks, of which about half has been used by Millennium BCP, Banco BPI and smaller bank BANIF.

Millennium BCP, the country's largest listed bank, took 3 billion euros in June 2012 in the form of contingent convertible bonds that give the state voting rights if not repaid on time after five years.

The bank, which expects to return to profit next year, plans to repay 500 million euros in 2014, 1 billion euros in 2015 and 1.5 billion euros in 2016, although it has the right to complete the repayment in 2017.

BPI has decided to repay early most of 1.3 billion euros in bonds from the recapitalisation line to hold just 332 million euros in state aid.

Separate to the EU/IMF bailout, state-run Caixa Geral de Depositos, Portugal's largest lender, in June 2012 tapped the state for 1.65 billion euros in capital.

SPAIN

Spain has injected 61.3 billion euros into its financial sector since 2009, according to the Bank of Spain, and there are doubts that it will recoup that investment, which amounts to more if asset protection schemes or the government's backing for a so-called 'bad bank' are included.

Most of the banks nationalised after 2009 were unlisted local savings banks or cajas and many have been sold on to other lenders at a loss to the state.

The Spanish government took full control of BFA, Bankia's parent company in May 2012, and the bank, the country's fourth-biggest, ultimately needed 22.5 billion euros in bail-out funds from Europe and Spain's bank restructuring fund FROB. The state still owns BFA and has nearly 70 percent of Bankia itself, with the rest listed on the stock market.

Bankia has already returned to profit, but cannot pay dividends until 2015 at least. By then the government is expected to be in a position to start selling down its stake, possibly in chunks on the market, though it is unlikely to recoup its full investment.

(Additional reporting by Philip Blenkinsop in Brussels, Steve Slater and Laura Noonan in London, Padraic Halpin in Dublin, Sara Webb in Amsterdam, Sarah White in Madrid, Alexander Huebner in Frankfurt and Andrei Khalip in Lisbon; Editing by Giles Elgood)

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