Aug 2, 2010
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Belgium's Van de Velde sues KBC over CDO sale

Aug 2, 2010

July 30 (Reuters) - Belgian lingerie group Van de Velde (VELD.BR) has taken KBC (KBC.BR) to court to seek compensation for debt products sold to it by the Belgian bank and insurance company.

Van de Velde, KBC
Van de Velde brand : Marie Jo

KBC confirmed a report in Belgian business daily De Tijd about the legal action. Van de Velde Managing Director Herman Van de Velde told Reuters by telephone he believed the case was likely to come to court in October.

Van de Velde has fully written down its 3.45 million euro ($4.5 million) collateralised debt obligation (CDO) portfolio over the past two years.

Holders in general of CDOs, seen by many as solid investments before the credit crunch, have suffered heavy losses after the financial crisis wiped out much of their value.

De Tijd said other companies to which KBC sold CDOs were considering legal action.

KBC reached a settlement in September 2009 with investor activist group Deminor on behalf of 40 private banking clients related to CDOs it had sold.

A KBC spokeswoman said the company did not envisage paying compensation to corporate customers as they typically had experienced treasury managers who would have fully understood complex investments.

KBC, which received 7 billion euros in state aid to help it through the global financial crisis, itself recorded losses on CDOs last year of 1.85 billion euros and of 4.00 billion in 2008 and has secured state guarantees to cover some of its exposure.

(Reporting by Philip Blenkinsop; Editing by David Holmes) ($1=.7641 Euro)

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