Arenbergstraat 7

Telephone: (02) 517 41 11

Public Company
Incorporated: 1935 as the Kredietbank voor Handel en Nijverheid
Employees: 9,617
Assets: BFr1.55 trillion (US$41.52 billion)
Stock Index: Brussels Amsterdam

Company History:

The Kredietbank was created in 1935 when the Algemeene Bankvereeniging en Volksbank van Leuven, an institution that had absorbed a number of banks dating back to 1889, merged with the Bank voor Handel en Nijverheid. The Kredietbank was the only Belgian financial institution under Flemish control to survive the world economic crises of the early 1930s; today it is one of Belgium's three largest banks.

Although Kredietbank's initial development was hampered by its high ratio of long-term assets to demand deposits, the bank gradually gained the confidence of business and financial circles and almost doubled its deposit volume between 1935 and 1938. This growth came in large part through a business strategy conceived by Fernand Collin, who became president in 1938, which defined the Kredietbank as an independent bank with a decidedly Flemish character whose responsibility it was to further Flemish economic growth. This growth was to be restricted, however, to short-term loans to small- and medium-sized businesses in Belgium's northern and central regions.

To manage this growth more effectively, the bank formed an executive committee of three board members for handling day-to-day administrative operations and strategic decision-making. This committee closed several unprofitable branches, developed a network of business relationships both inside and outside Belgium, and defused the friction stemming from French-speaking banking institutions in Brussels, as well as from disenfranchised groups previously affiliated with the Bank voor Handel en Nijverheid and the Boerenbond, the Farmers' Union which had formed a now-defunct Flemish financial network at the turn of the century.

Another problem in the bank's early history stemmed from a large debt owed to the bank by the Algemeene Maatschappij voor Nijverheidskrediet (Almanij), a holding company that had contributed significantly to the bank's start-up costs in return for a majority of its shares. The debt, incurred as a result of transactions unrelated to the 1935 merger, created a vicious circle: Almanij could pay the interest on its debt to Kredietbank only if Kredietbank issued dividends on the stock Almanij held; however, Kredietbank could not issue dividends to shareholders without the interest payments due from Almanij.

The only feasible solution to this financial dilemma was to clear the Almanij debt. Almanij began to sell the shares it held in other institutions to generate the capital it needed to pay off its debt, a process that was completed in 1945.

In 1940, the advancing German occupation forced the bank to implement a number of emergency measures, including the relocation of part of the head office to Kortrijk and then to unoccupied France. When the French army fell to the Germans, the Kredietbank staff returned to Brussels to manage the bank's relationship with a new Belgian agricultural organization controlled by the Germans and to handle the transfer of funds to Belgium from Belgian workers in Germany.

Wartime prosperity enabled the bank to increase both the volume of its deposits and the number of operating branches throughout the country, largely through cooperation with small local or regional institutions. This growth initiated a major reorganization in 1941, which divided the Brussels head office into two groups, one handling regular banking activity and the other administering the operations of the entire Kredietbank group. This second one was further reorganized into financial, commercial, and administrative divisions. The financial division, in particular, provided the resources for the bank's postwar development of services for savers and investors of all sizes. The bank launched an intensive campaign to secure deposits from the Flemish middle class, to expand corporate services, and to investigate commercial opportunities outside Belgium. Postwar economic recovery allowed Kredietbank, now the third largest bank in Belgium, to increase the number of operating branches in Flanders. It competed effectively with savings banks in rural areas through the introduction of a pass and deposit book system, and became the first Belgian bank to issue medium-term, fixed interest bonds.

The Kredietbank's growth strategy, which after the war emphasized foreign expansion and the development of portfolio-management services for investors, stimulated its successful involvement in public security offerings for the Belgian government as well as for foreign businesses.

The relaxation of restrictions on operations outside of Flanders and Brussels permitted Kredietbank to amass stakes in selected banks located in Wallonia, two of which later merged into a wholly-owned subsidiary, the Crédit Général de Belgique, in 1961. Another subsidiary, the Kredietbank S.A. Luxembourgeoise, was formed in 1949 to coincide with the establishment of Goodyear Tire and Rubber Company's Luxembourg operation. The Luxembourg subsidiary later focused its attention exclusively on international activities and managing investment funds based in that country.

The Belgian Congo was a third area of postwar expansion. Kredietbank established branches to serve colonists in Leopoldville, Bukava, Elizabethville, and Stanleyville. Internal problems associated with the colony's independence, which was granted in 1960, eventually forced the bank to discontinue operations there in 1966.

Throughout the late 1940s and the 1950s, management of daily operations and decision-making continued to be controlled by the executive committee and its president, Fernand Collin. However, in 1959, the bank added another layer of administrative management between the executive level and the three central divisions, which were also reorganized into regional functions. In 1963, when C. Van Soye succeeded Collin as president, a fourth division was created to manage the bank's growing security and bond issues area.

Beginning in 1965, as competition from foreign banks within Belgium increased and domestic institutions diversified their services, Kredietbank began to develop a strategy for asserting its influence as a major bank while still maintaining its independent, Flemish orientation. This strategy called for continued expansion of its branch network and improvement of consumer services, such as bank cards for transactions paid by check, international traveler's checks, and credit cards. Special accounts and savings plans teamed with other services were also developed to attract new customers, while still other services were created for small- and medium-sized commercial clients. Kredietbank, the first bank in Belgium to install an automated-teller machine (in the late 1960s), joined with two other banks under the name Bancontact to develop a variety of automated banking services.

Although the bank's investment activities produced disappointing results during the 1960s largely due to stricter government regulations, reduced returns, and higher taxes, the Kredietbank continued its involvement in government loan issues, actively placing large international loans in the Eurobond market and participating in the European capital market.

To more effectively manage its international presence, the bank began building a foreign-correspondent network in 1966, supplemented by representative offices in areas which received Belgian exports and that had the potential to support international issues or need loans. The first of these offices were in New York and Mexico City, and offices were later opened in many other cities including Johannesburg, Melbourne, Atlanta, Teheran, Tokyo, Madrid, and Los Angeles.

In 1970, the bank joined six other European institutions to establish the Inter-Alpha Group of Banks. Although this strategy was intended to enhance the Kredietbank's worldwide services, it experienced greater international success in opening its own branches in such areas as New York; London; and the Cayman Islands; and forming a subsidiary in Geneva, Kredietbank (Suisse) S.A.

This expansion, coupled with increased domestic activity, created the need for another internal reorganization in 1972. Additional reorganization efforts focused on improving management of the entire group of subsidiaries and companies controlled by the bank through Almanij. The new structure, instituted in 1978, created three pools, one centered around the commercial business of the Kredietbank, another headed by Almanij to provide special financial services, and a third using the Kredietbank S.A. Luxembourgeoise as the focal point for developing an international merchant and investment-banking operation.

Although international growth slowed temporarily in the early 1980s as many financial institutions suffered losses during the worldwide recession, the bank finished 1984 with assets of BFr671 billion and net profit of BFr2 billion.

Between 1987 and 1988, Kredietbank expanded its services to individuals to include investment options in gold and mutual funds, and became the first bank to offer an index fund tied to the Belgian share market. Introduced in 1986, the bank's Tele-KB service was enhanced the following year, linking business customers with the bank's computers to transmit payment transactions and provide access to current economic and financial data.

Kredietbank is ranked as one of Belgium's top three financial institutions. It has more than 760 branches worldwide and a wide network of associated companies which serve customers in areas where government legislation prevents the bank's direct involvement. Led by its current president, Jan Huyghebaert, the bank expects to meet challenges in the future through continual improvements in customer service, the rapid penetration of new markets, and recognition of growth opportunities that have characterized its development to date.

Principal Subsidiaries: Irish Intercontinental Bank Ltd.; IIB Finance Ltd.; KB-Financial Services (Ireland) Ltd.; KB Financial Services (Dublin) Ltd.; Bankverein Bremen AG; Bank Van der Hoop Offers N.V., S.A.; Gestion KB Income Fund, S.A.; Holding Eurinvest; KB Internationale Financierings-Maatschappij N.V.; Kredietfinance (U.K.) Ltd.; Kredietbank International Finance N.V., S.A.; Gestion KB Capital Fund; S.A. ECU Conseil. S.A.; Decarenta Conseil; Kredietbank North American Finance Corp.; KB International (Hong Kong).

Further Reading:

Van der Wee, Herman and Van der Wee-Verbreyt, Monique. People Make History: The Kredietbank and the Economic Rise of Flanders, 1935-1985, Brussels, Kredietbank, 1985.

Source: International Directory of Company Histories, Vol. 2. St. James Press, 1990.