BRUSSELS, Oct 1 (Reuters) - Belgian financial group KBC said it had sold the final two collateralised debt obligations (CDOs) in its portfolio, bringing to an end a five-year drive in which the bank disposed of 25 billion euros ($31 billion) of the assets.
The group said it would take a 20 million euro hit on the sale of the final two CDOs in the third quarter but the deal would free up 300 million euros in capital and improve the group’s solvency ratio by 0.4 percent.
CDOs are investment products which pool together loans and mortgages which can then be more easily traded. While initially being a very profitable business for banks, they became a large burden at the height of the credit crisis of 2008, when the loans making up these products turned sour.
1 US dollar = 0.7923 euro Reporting by Robert-Jan Bartunek; Editing by Pravin Char