KBC Group NV

(Incorporated with limited liability in Belgium)

EUR 1,400,000,000 5.625 per cent. Undated Deeply Subordinated

Additional Tier 1 Fixed Rate Resettable Callable Securities
Issue price: 100 %
This prospectus (the Prospectus) constitutes a listing prospectus in relation to the issue of EUR 1,400,000,000 5.625 per cent. Undated Deeply Subordinated
Additional Tier 1 Fixed Rate Resettable Callable Securities (the Securities) by KBC Group NV (the Issuer). The issue price of the Securities is 100 per cent. of their
Original Principal Amount (as defined in Condition 16 (Definitions)). The Securities will constitute direct, unconditional, unsecured and deeply subordinated debt
obligations of the Issuer, ranking pari passu among themselves without any preference, as described in Condition 2 (Status of the Securities) in Terms and Conditions of
the Securities.
The Securities will bear interest on their Prevailing Principal Amount (as defined in Condition 16 (Definitions)), payable (subject to cancellation as described below)
quarterly in arrears on 19 March, 19 June, 19 September and 19 December in each year (each an Interest Payment Date), from and including 19 March 2014 (the
Issue Date) to (but excluding) 19 March 2019 (the First Call Date) at the fixed rate of 5.625 per cent. per annum. The first payment of interest will be made on 19
June 2014 in respect of the period from (and including) the Issue Date to (but excluding) 19 June 2014. The rate of interest will reset on the First Call Date and on each
fifth anniversary thereafter (each a Reset Date). The Issuer may, in its sole discretion, elect to cancel the payment of interest on the Securities (in whole or in part) on
any Interest Payment Date, and it will be required to cancel the payment of interest on the Securities on any Interest Payment Date to the extent that the Distributable
Items or the Maximum Distributable Amount is insufficient. As a result, holders of Securities (Holders) may not receive interest on any Interest Payment Date. Interest
that is cancelled will not be due on any subsequent date, and the non-payment will not constitute a default by the Issuer. See Condition 3 (Interest and interest
cancellation) in Terms and Conditions of the Securities.
The Prevailing Principal Amount of the Securities will be written down if the Issuers consolidated CET1 Ratio falls or remains below 5.125 per cent. as of any
Quarterly Financial Period End Date or Extraordinary Calculation Date (all as defined in Condition 16 (Definitions)). Holders may lose some or substantially
all of their investment in the Securities as a result of such a write-down. Following such reduction, the Prevailing Principal Amount may, at the Issuers
discretion, be written up to the Original Principal Amount if certain conditions are met. See Condition 7 (Principal Write-down and Principal Write-up) in
Terms and Conditions of the Securities.
The Securities have no fixed maturity and Holders do not have the right to call for their redemption. As a result, the Issuer is not required to make any payment of the
principal amount of the Securities at any time prior to its winding-up or administration. The Issuer may, at its option, redeem all, but not some only, of the Securities on
the First Call Date or any Interest Payment Date thereafter at their Prevailing Principal Amount plus accrued and unpaid interest (all as defined in Condition 16
(Definitions) in Terms and Conditions of the Securities). The Issuer may also, at its option, redeem all, but not some only, of the Securities at any time at their
Prevailing Principal Amount plus accrued and unpaid interest (if any) upon the occurrence of a Tax Gross-up Event, a Tax Deductibility Event or a Regulatory Event
(each as defined in Condition 16 (Definitions) in Terms and Conditions of the Securities). Any optional redemption of Securities by the Issuer will be subject to the
general conditions to redemption as set out in Condition 5 (Redemption and Purchase), and no optional redemption may be made at a time when the Prevailing Principal
Amount of the Securities is lower than their Original Principal Amount. If a Regulatory Event, a Tax Gross-up Event or a Tax Deductibility Event has occurred and is
continuing, the Issuer may substitute all of the Securities or vary the terms of all of the Securities, without the consent or approval of Holders, so that they become or
remain Qualifying Securities (as defined in Condition 6.1 (Substitution and Variation)).
An investment in Securities involves certain risks. Investors should ensure that they understand the nature of the Securities and the extent of their exposure to
risks and they should review and consider these risk factors carefully before purchasing any Securities. In particular, investors should review and consider the
risk factors relating to a Write-down and the impact this may have on their investment. For a discussion of these risks see Risk Factors beginning on page 14.
Application has been made to the Financial Services and Markets Authority (Autoriteit voor Financile Diensten en Markten/Autorit des services et marchs financiers)
(the FSMA) in its capacity as competent authority under Article 23 of the Belgian Law dated 16 June 2006 concerning the public offer of investment securities and the
admission of investment securities to trading on a regulated market (the Prospectus Law) to approve this document as a Prospectus for the purposes of Article 23 of
the Belgian Prospectus Law and Article 5.3 of the Prospectus Directive (as defined herein). This approval cannot be considered as a judgment by the FSMA as to the
opportunity or the quality of the transaction, nor on the situation of the Issuer. Application has also been made for the Securities to be listed and to be admitted to trading,
as of the Issue Date, on the regulated market of NYSE Euronext Brussels (Euronext Brussels). Euronext Brussels is a regulated market for the purposes of the
Prospectus Directive.
The Securities will be issued in minimum denominations of EUR 100,000 and integral multiples of EUR 1,000 in excess thereof. The Securities will be issued in
dematerialised form under the Belgian Companies Code (Wetboek van Vennootschappen/Code des Socits) and cannot be physically delivered. The dematerialised
Securities will be represented exclusively by book entries in the records of the X/N securities and cash clearing system operated by the National Bank of Belgium (the
NBB) or any successor thereto (the Securities Settlement System). The Securities shall be governed by, and construed in accordance with, English law (except for
Conditions 1, 2 and 12, which shall be governed by Belgian law).
The Securities are expected to be rated BB by Standard & Poors Credit Market Services Italy Srl, a subsidiary of Standard & Poors Financial Services LLC (Standard
& Poors) and BB by Fitch France S.A.S. (Fitch). Each of Standard & Poors and Fitch is established in the European Economic Area (the EEA) and registered
under the Regulation (EC) No 1060/2009 on credit rating agencies (CRA Regulation), as amended, and is included in the list of registered credit rating agencies
published by European Securities and Markets Authority (ESMA) on its website in accordance with CRA Regulation (the information contained on this website does
not form part of this Prospectus unless otherwise specifically incorporated by reference hereto).
A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning
rating agency.
The Securities have not been registered under the United States Securities Act of 1933, as amended (the Securities Act). Subject to certain exceptions, the Securities
may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act (Regulation
S)) (see Subscription and Sale).
Joint Bookrunners and Joint Lead Managers
Goldman Sachs International J.P. Morgan KBC Bank Morgan Stanley UBS Investment Bank
The date of this Prospectus is 17 March 2014.
 IMPORTANT INFORMATION

This listing Prospectus comprises a prospectus in respect of Securities issued for the purposes of Article 5.3 of
Directive 2003/71/EC as amended (which includes the amendments made by Directive 2010/73/EU to the
extent that such amendments have been implemented or applied in a Relevant Member State of the European
Economic Area) (the Prospectus Directive).

The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the
knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information
contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the
import of such information.

Market data and other statistical information used in this Prospectus has been extracted from a number of
sources, including independent industry publications, government publications, reports by market research
firms or other independent publications (each an Independent Source). The Issuer confirms that such
information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from
information published by the relevant Independent Source, no facts have been omitted which would render
the reproduced information inaccurate or misleading.

This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein
by reference (see Documents Incorporated by Reference). This Prospectus shall be read and construed on
the basis that such documents are incorporated in and form part of this Prospectus.

None of the Joint Lead Managers has independently verified the information contained in this Prospectus.
Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or
liability is accepted by any of the Joint Lead Managers or any of their respective affiliates as to the accuracy
or completeness of the information contained or incorporated in this Prospectus or any other information
provided by the Issuer in connection thereto. None of the Joint Lead Managers accepts any liability in relation
to the information contained or incorporated by reference in this Prospectus or any other information provided
by the Issuer in connection thereto. The statements made in this paragraph are made without prejudice to the
responsibility of the Issuer under the Prospectus.

To the fullest extent permitted by law, no Joint Lead Manager accepts any responsibility for the contents of
this Prospectus or for any other statement, made or purported to be made by a Joint Lead Manager or on its
behalf in connection with the Issuer or the issue and offering of the Securities. Each Joint Lead Manager
accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to
in this section) which it might otherwise have in respect of this Prospectus or any such statement. Neither the
delivery of this Prospectus nor the offering, sale or delivery of the Securities shall, in any circumstances,
create any implication that the information contained in this Prospectus is true subsequent to the date hereof
or that any other information supplied in connection with the Securities is correct at any time subsequent to
the date on which it is supplied or, if different, the date indicated in the document containing the same. The
statements made in this paragraph are made without prejudice to the responsibility of the Issuer under the
Prospectus.

No person is or has been authorised by the Issuer or any of the Joint Lead Managers to give any information
or to make any representation not contained in or not consistent with this Prospectus or any other information
supplied in connection with this Prospectus or the Securities and, if given or made, such information or
representation must not be relied upon as having been authorised by the Issuer or by any of the Joint Lead
Managers.

Neither this Prospectus nor any other information supplied in connection with this Prospectus or any
Securities (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a

1
recommendation or a statement of opinion (or a report on either of those things) by the Issuer or by any of the
Joint Lead Managers that any recipient of this Prospectus or any other information supplied in connection
with the Prospectus or any Securities should purchase any Securities. Each investor contemplating purchasing
any Securities should make its own independent investigation of the financial condition and affairs, and its
own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor any other information
supplied in connection with the issue of any Securities constitutes an offer or invitation by or on behalf of the
Issuer or any of the Joint Lead Managers to any person to subscribe for, or purchase, any Securities.

References in this section "Important Information" to a Joint Lead Manager shall also include such entity in
its capacity as a Joint Bookrunner or to the Issuer, as applicable.

This Prospectus contains or incorporates by reference certain statements that constitute forward-looking
statements. Such forward-looking statements may include, without limitation, statements relating to the
Issuer's business strategies, trends in its business, competition and competitive advantage, regulatory changes,
and restructuring plans.

Words such as believes, expects, projects, anticipates, seeks, estimates, intends, plans or similar
expressions are intended to identify forward-looking statements but are not the exclusive means of identifying
such statements. The Issuer does not intend to update these forward-looking statements except as may be
required by applicable securities laws.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in
forward-looking statements will not be achieved. A number of important factors could cause actual results,
performance or achievements to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements. These factors include: (i) the ability to maintain
sufficient liquidity and access to capital markets; (ii) market and interest rate fluctuations; (iii) the strength of
global economy in general and the strength of the economies of the countries in which the Issuer conducts
operations; (iv) the potential impact of sovereign risk in certain European Union countries; (v) adverse rating
actions by credit rating agencies; (vi) the ability of counterparties to meet their obligations to the Issuer; (vii)
the effects of, and changes in, fiscal, monetary, trade and tax policies, financial regulation and currency
fluctuations; (viii) the possibility of the imposition of foreign exchange controls by government and monetary
authorities; (ix) operational factors, such as systems failure, human error, or the failure to implement
procedures properly; (x) actions taken by regulators with respect to the Issuers business and practices in one
or more of the countries in which the Issuer conducts operations; (xi) the adverse resolution of litigation and
other contingencies; (xii) the Issuers success at managing the risks involved in the foregoing.

The foregoing list of important factors is not exclusive; when evaluating forward-looking statements,
investors should carefully consider the foregoing factors and other uncertainties and events, as well as the
other risks identified in this Prospectus.

This Prospectus contains various amounts and percentages which have been rounded and, as a result, when
those amounts and percentages are added up, they may not total.

IMPORTANT INFORMATION RELATING TO THE USE OF THIS PROSPECTUS AND

OFFER OF SECURITIES GENERALLY
This Prospectus has been approved for the purposes of the listing and admission to trading of the Securities on
the regulated market of Euronext Brussels and does not constitute an offer to sell or the solicitation of an offer
to buy any Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation
in such jurisdiction. The distribution of this listing Prospectus and the offer or sale of Securities may be
restricted by law in certain jurisdictions. Neither the Issuer nor any of the Joint Lead Managers represent that
this Prospectus may be lawfully distributed, or that any Securities may be lawfully offered, in compliance

2
with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption
available thereunder, or assume any responsibility for facilitating any such distribution or offering. In
particular, no action has been taken by the Issuer or any of the Joint Lead Managers which is intended to
permit a public offering of any Securities or distribution of this listing Prospectus in any jurisdiction where
action for that purpose is required. Accordingly, no Securities may be offered or sold, directly or indirectly,
and neither this Prospectus nor any advertisement or other offering material may be distributed or published
in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and
regulations. Persons into whose possession this Prospectus or any Securities may come must inform
themselves about, and observe, any such restrictions on the distribution of this Prospectus and the offering
and sale of Securities. In particular, there are restrictions on the distribution of this Prospectus and the offer or
sale of Securities in the United States, the United Kingdom, Hong Kong, Korea, the Republic of Singapore
and Peoples Republic of China (see Subscription and Sale below).

The Securities have not been and will not be registered under the United States Securities Act of 1933, as
amended, (the Securities Act). Subject to certain exceptions, the Securities may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under
the Securities Act (Regulation S)) (see Subscription and Sale below).

The Securities may not be a suitable investment for all investors. Each potential investor in the Securities
must determine the suitability of that investment in light of its own circumstances. In particular, each potential
investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Securities, the
merits and risks of investing in the Securities and the information contained or incorporated by
reference in this Prospectus;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Securities and the impact the Securities will have on
its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Securities, including where the currency for principal and/or interest payments is different from the
potential investors currency;

(iv) understand thoroughly the terms of the Securities and be familiar with the behaviour of any relevant
indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks.

The Securities are novel and complex financial instruments. Sophisticated institutional investors generally do
not purchase complex financial instruments as stand-alone investments. They purchase complex financial
instruments as a way to reduce risk or enhance yield with an understood, measured and appropriate addition
of risk to their overall portfolios. Each potential investor in the Securities should determine the suitability of
such investment in light of its own circumstances and have sufficient financial resources and liquidity to bear
the risks of an investment in the Securities, including the possibility that the entire principal amount of the
Securities could be lost. A potential investor should not invest in the Securities unless it has the knowledge
and expertise (either alone or with a financial advisor) to evaluate how the Securities will perform under
changing conditions, the resulting effects on the likelihood of a Principal Write-down or reaching the point of
non-viability and value of the Securities, and the impact of this investment on the potential investors overall
investment portfolio.

3
Legal investment considerations may restrict certain investments. The investment activities of certain
investors are subject to legal investment laws and regulations, or review or regulation by certain authorities.
Each potential investor should consult its legal advisers to determine whether and to what extent (i) Securities
are legal investments for it, (ii) Securities can be used as collateral for various types of borrowing and (iii)
other restrictions apply to its purchase or pledge of any Securities. Financial institutions should consult their
legal advisers or the appropriate regulators to determine the appropriate treatment of Securities under any
applicable risk-based capital or similar rules.

References in this Prospectus to euro or EUR are references to the currency introduced at the start of the
third stage of European monetary union, references to USD or U.S.$ are to the lawful currency of the
United States of America and references to "HUF" are to the lawful currency of Hungary.

4
 TABLE OF CONTENTS

Page

___________

IMPORTANT INFORMATION......................................................................................................................... 1

OVERVIEW OF THE SECURITIES................................................................................................................. 6

RISK FACTORS .............................................................................................................................................. 14

DOCUMENTS INCORPORATED BY REFERENCE.................................................................................... 36

TERMS AND CONDITIONS OF THE SECURITIES.................................................................................... 38

DESCRIPTION OF THE ISSUER................................................................................................................... 60

TAXATION.....................................................................................................................................................112

USE OF PROCEEDS......................................................................................................................................119

SUBSCRIPTION AND SALE ........................................................................................................................120

GENERAL INFORMATION ..........................................................................................................................123

____________

STABILISATION

In connection with the issue of the Securities, Goldman Sachs International, J.P. Morgan Securities plc,
Morgan Stanley & Co. International plc and UBS Limited (together the Stabilising Managers and
each, a Stabilising Manager) (or persons acting on behalf of a Stabilising Manager) may over-allot
Securities or effect transactions with a view to supporting the market price of the Securities at a level
higher than that which might otherwise prevail. However, there is no assurance that any of the
Stabilising Managers (or persons acting on behalf of a Stabilising Manager) will undertake any
stabilisation action. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the Securities is made and, if begun, may be ended at any time,
but it must end no later than the earlier of 30 days after the issue date of the Securities and 60 days
after the date of the allotment of the Securities. Any stabilisation action or over-allotment must be
conducted by a Stabilising Manager (or persons acting on behalf of a Stabilising Manager) in
accordance with all applicable laws, regulations and rules and any announcement relating to such
stabilisation action will be made in accordance with the rules and requirements for the time being of
Euronext Brussels.

5
 OVERVIEW OF THE SECURITIES

This overview should be read as an introduction to this Prospectus and any decision to invest in the Securities
should be based on a consideration of the Prospectus as a whole, including the documents
documents incorporated by
reference.

Words and expressions defined in the Terms and Conditions of the Securities
Securities below or elsewhere in this
Prospectus have the same meanings in this description. Reference to Conditions or Terms and
Conditions in this Prospectus are to the Terms and Cond
Conditions
itions of the Securities
Securities.

The Issuer KBC Gr Group NV, incorporated under the laws of Belgium, having its
registered
tered office at Havenlaan 2, 108
1080 Brussels,, Belgium and registered
with the Crossroads Bank for Enterprises under number 0403.227.515.
0403.227.515
Business of the Issuer The Issuer is a mixed financial holding company whose purpose is the
direct or indirect ownership and management of shareholdings in other
othe
companies, including but not limited to credit institutions, insurance
companies and other financial instiinstitutions.
tutions. The Issuer also aims to
provide support services for third parties, as agent or otherwise, in
particular for companies in which the Issuer, directly or indirectly, has
an interest. The Issuer further qualifies as a financial conglomerate for
purposes
ses of Article 49bis of the Banking Act (as defined below).
A simplified chart of KBC Groups le
legal
gal structure is provided below:

Risk Factors There are certain factors that may affect the Issuers ability to fulfil its
obligations under the Securities.. Certain of these factors are set out
under Risk
Risk Factors
Factors below and include, among others, risks relating to
regulatory and legislative changes, market, liquidity and legal risks and
the general economic situation. In addition, there are certain factors that
th
are material for purposes of assessing the risks associated with the
Securities
Securities.. These include that the Securities may not be a suitable
investment for all investors, certain risks relating to the structure of the
Securities (including that they are sub
subject
ject to a Principal Write-down)
Write
and certain market risks.
The Securities EUR 1,400,000,000 5.625 per cent. Undated Deeply Subordinated
Additional Tier 1 Fixed Rate Resettable Callable Securities (the
Securities
Securities).
Form of the Securities The Securities will be in dematerialised form in accordance with Article
468 et seq. of the Belgian Companies Code via a book-entry
book entry system
maintained in the records of the NBB as operator of the Securities
Settlement System.
Issue Date 19 March 2014.
Issue Price 100 per
er cent.

6
Denomination EUR 100,000 and integral multiples of EUR 1,000 in excess thereof.
Status of the Securities In the event of an order being made or an effective resolution being
passed for the liquidation, dissolution or winding-up of the Issuer by
reason of bankruptcy (faillissement/faillite) or otherwise (except, in any
such case, a solvent liquidation, dissolution or winding-up solely for the
purposes of a reorganisation, reconstruction or amalgamation of the
Issuer or the substitution in place of the Issuer of a successor in business
of the Issuer), the rights and claims of the holders against the Issuer in
respect of or arising under (including any damages awarded for breach
of any obligation under) the Securities shall, subject to any obligations
which are mandatorily preferred by law, rank (a) junior to the rights and
claims of all unsecured and unsubordinated creditors and to the rights
and claims of creditors in respect of all Subordinated Indebtedness
(including Tier 2 Capital instruments) but excluding the rights and
claims of creditors in respect of Parity Obligations and Junior
Obligations, (b) at least pari passu with the rights and claims of
creditors in respect of all Parity Obligations and (c) senior only to the
rights and claims of creditors in respect of Junior Obligations.
Maturity Date The Securities are perpetual and have no fixed maturity date.
Interest Subject as described under Interest Cancellation below, interest will
accrue on the outstanding Prevailing Principal Amount of the Securities
on a non-cumulative basis:
(a) from (and including) the Issue Date to (but excluding) the First
Call Date, at a fixed rate of 5.625% per annum; and
(b) from (and including) the First Call Date and thereafter, at a fixed
rate per annum reset on each Reset Date based on the prevailing
Euro 5-yr Mid Swap rate plus 4.759 per cent. (the Margin),
payable quarterly in arrear in equal instalments on 19 March, 19 June,
19 September and 19 December of each year (each an Interest
Payment Date).
Interest Cancellation The Issuer may, in its sole discretion (but subject at all times to the
requirements for mandatory cancellation of interest payments), at any
time before the relevant Interest Payment Date elect to cancel any
Interest Payment (in whole or in part) which is scheduled to be paid on
an Interest Payment Date.
Further, the Issuer shall cancel (in whole or in part, as applicable) any
Interest Payment otherwise due on an Interest Payment Date if and to
the extent that:
(a) the payment of such Interest Payment, when aggregated with any
interest payments or distributions which have been paid or made or
which are required to be paid or made on other own funds items in
the then current financial year (excluding any such interest
payments or distributions which (A) are not required to be made
out of Distributable Items or (B) have already been provided for,
by way of deduction, in the calculation of Distributable Items),
would cause the amount of Distributable Items (if any) then

7
 available to the Issuer to be exceeded; or
(b) the payment of such Interest Payment would cause, when
aggregated together with other distributions of the kind referred to
in Article 141(2) of the Capital Requirements Directive (or, if
different, any provision of Belgian law transposing or
implementing Article 141(2) of the Capital Requirements
Directive, as amended or replaced), the Maximum Distributable
Amount (if any) then applicable to the Issuer to be exceeded.
Any Interest Payment that has been cancelled is no longer payable by
the Issuer or considered accrued or owed to the Holders. Holders shall
have no right thereto whether in bankruptcy or dissolution, as a result of
the insolvency of the Issuer or otherwise.
Cancellation of any Interest Payment shall not constitute an event of
default or a breach of the Issuers obligations or duties or a failure to
perform by the Issuer in any manner whatsoever and shall not entitle
Holders to petition for the insolvency or dissolution of the Issuer.
See Condition 3.2 (Interest cancellation) in Terms and Conditions of
the Securities.
Trigger Event A Trigger Event will occur if the Issuers consolidated CET1 Ratio
as of any Quarterly Financial Period End Date or Extraordinary
Calculation Date, is less than 5.125 per cent. (all as defined in Condition
16 (Definitions) in Terms and Conditions of the Securities).
Principal Write-down On a Trigger Event Write-down Date, the Issuer shall:
(i) first, irrevocably cancel all interest accrued on each Security up to
(and including) the Trigger Event Write-down Date (whether or not
the same has become due at such time); and
(ii) secondly, irrevocably (without the need for the consent of holders)
reduce the then Prevailing Principal Amount of each Security by
the relevant Write-down Amount (such reduction being referred to
as a Principal Write-down, and Written Down being
construed accordingly), such Principal Write-down to be effected,
save as may be otherwise required by Applicable Banking
Regulations and/or the Lead Regulator, following or concurrently
with the write-down or conversion into equity of the entire (save
for any one cent. floor) outstanding principal amount of any Prior
Loss Absorbing Instruments pro rata and concurrently with the
Principal Write-down of the other Securities and the write-down or
conversion into equity (as the case may be) of any Similar Loss
Absorbing Instruments.
Write-down Amount means, on any Trigger Event Write-down Date,
the amount by which the then Prevailing Principal Amount of each
outstanding Security is to be Written Down and which is calculated per
Calculation Amount of such Security, being the minimum of:
(a) the amount per Calculation Amount (together with: (A) the
concurrent pro rata Principal Write-down of the other Securities
and the write-down or conversion into equity of any Similar Loss
Absorbing Instruments (based on the then prevailing principal

8

Principal Write-up
Issuer Call Option on and after
the First Call Date
amount of each Similar Loss Absorbing Instrument); and (B) the
prior or concurrent write-down or conversion into equity of the
entire (save for any one cent. floor) outstanding principal amount
of any Prior Loss Absorbing Instruments) that would be sufficient
to immediately restore the Issuers consolidated CET1 Ratio to not
less than 5.125 per cent.; or
(b) the amount necessary to reduce the Prevailing Principal Amount of
the Security to one cent.
A Principal Write-down may occur on one or more occasions and
accordingly the Securities may be Written Down on one or more
occasions (provided, however, that the principal amount of a Security
shall never be reduced to below one cent).
In addition, the Lead Regulator shall be entitled to write down the
Securities in accordance with its statutory powers, as more fully
described in the risk factors entitled Loss absorption at the point of
non-viability, The principal amount of the Securities may be reduced
(Written Down) to absorb losses and Change of law.
Any Principal Write-down of the Securities shall not constitute an event
of default or a breach of the Issuers obligations or duties or a failure to
perform by the Issuer in any manner whatsoever and shall not entitle
Holders to petition for the insolvency or dissolution of the Issuer.
See Condition 7.1 (Principal Write-down) in Terms and Conditions of
the Securities.
Subject to compliance with the Applicable Banking Regulations, if a
positive Consolidated Net Income of the Issuer is recorded (a Return
to Financial Health) at any time while the Prevailing Principal
Amount is less than the Original Principal Amount, the Issuer may, at its
full discretion and subject to the Maximum Distributable Amount (when
aggregated together with other distributions of the Issuer of the kind
referred to in Article 141(2) of CRD IV or, if different, any provision of
Belgian law transposing or implementing Article 141(2) of CRD IV) not
being exceeded thereby, increase the Prevailing Principal Amount of
each Security (a Principal Write-up) up to a maximum of its
Original Principal Amount, on a pro rata basis with the other Securities
and with any other Discretionary Temporary Write-down Instruments,
provided that the Maximum Write-up Amount is not exceeded.
The Maximum Write-up Amount means the Consolidated Net
Income multiplied by the aggregate issued original principal amount of
all Written-Down Additional Tier 1 Instruments, divided by the total
Tier 1 Capital of the Issuer as at the date of the then most recent
Quarterly Financial Period End Date.
See Condition 7.2 (Principal Write-up) in Terms and Conditions of the
Securities.
Subject to the Conditions for Redemption (as defined below), the Issuer
may, at its option, redeem the Securities on 19 March 2019 (the First
Call Date) or on any Interest Payment Date thereafter, in whole but not
in part, at their Prevailing Principal Amount, together with interest
9

Conditions for Redemption
Taxation
Tax Gross-up Call Option
Tax Deductibility Call Option
accrued to but excluding the date of redemption.
Any optional redemption of Securities or purchases pursuant to
Condition 5 (Redemption and Purchase) and any substitution or
variation of Securities pursuant to Condition 6 (Substitution and
Variation) are subject to compliance with any conditions prescribed
under Applicable Banking Regulations, including the prior approval of
the Lead Regulator (if required) (the Conditions for Redemption).
The Issuer shall not be entitled to redeem the Securities on the First Call
Date, on any Interest Payment Date thereafter or at any time due to a
Tax Gross-up Event, Tax Deductibility Event or Regulatory Event if, on
the relevant redemption date, the Prevailing Principal Amount of the
Securities is lower than their Original Principal Amount. See Condition
5.5 (Conditions to Redemption and Purchase) in Terms and Conditions
of the Securities.
Subject to certain conditions and exceptions, all payments in respect of
the Securities will be made free and clear of withholding or deduction
for or on account of any present or future taxes, duties, assessment or
governmental charges of whatever nature, imposed or levied by or on
behalf of Belgium (subject to certain customary exceptions), unless such
withholding or deduction is required by law. In that event, the Issuer
will (subject to certain customary exceptions) pay such additional
amounts (Additional Amounts) as shall be necessary in order that the
net amounts received by the Holders after such withholding or
deduction shall equal the respective amounts of principal and interest
which would otherwise have been receivable in respect of the Securities
in the absence of such withholding or deduction. See Condition 8
(Taxation) in Terms and Conditions of the Securities.
Subject to the Conditions for Redemption, the Issuer may at its option,
redeem the Securities (in whole but not in part), at any time at their
Prevailing Principal Amount, together with interest accrued to but
excluding the date of redemption, if:
(a) as a result of any change in, or amendment to, the laws or
regulations of Belgium, or any change in the application or official
interpretation of such laws or regulations, which change or
amendment becomes effective on or after the Issue Date (a
Change in Law), on the next Interest Payment Date the Issuer
has or will become obliged to pay Additional Amounts (as defined
below);
(b) such obligation cannot be avoided by the Issuer taking reasonable
measures available to it; and
(c) the Issuer is able to demonstrate to the satisfaction of the Lead
Regulator that the Change in Law was not reasonably foreseeable
as at the Issue Date and the relevant change in tax treatment is
material.
If, as a result of a Change in Law, on the next Interest Payment Date any
interest payable by the Issuer in respect of the Securities was but is no
longer or will no longer be deductible by the Issuer for Belgian
10
 corporate income tax purposes or such deductibility is reduced (a Tax
Deductibility Event), the Issuer may, at its option (but subject to the
Conditions for Redemption), redeem the Securities (in whole but not in
part) at any time at their Prevailing Principal Amount together with
interest accrued to but excluding the date of redemption, provided that
the Issuer is able to demonstrate to the satisfaction of the Lead
Regulator that the Change in Law was not reasonably foreseeable by the
Issuer as at the Issue Date and the relevant change in tax treatment is
material.
Regulatory Call Option The Issuer may at its option (but subject to the Conditions for
Redemption and the Issuer having demonstrated to the satisfaction of
the Lead Regulator that the change (or prospective change) in regulatory
classification of the Securities was not foreseeable as at the Issue Date)
redeem the Securities (in whole but not in part), at any time at their
Prevailing Principal Amount, together with interest accrued to but
excluding the date of redemption upon the occurrence of a Regulatory
Event.
Substitution and Variation Subject to the Conditions for Redemption, if a Regulatory Event, a Tax
Gross-up Event or a Tax-Deductibility Event has occurred and is
continuing, the Issuer may at its option, without any requirement for the
consent or approval of the Holders, substitute all (but not some only) of
the Securities or vary the terms of all (but not some only) of the
Securities so that they become or remain, Qualifying Securities.
The relevant notice to Holders shall specify the relevant details of the
manner in which such substitution or variation shall take effect and
where the Holders can inspect or obtain copies of the new terms and
conditions of the Securities. Such substitution or variation will be
effected without any cost or charge to the Holders.
Meeting of Holders and The Agency Agreement contains provisions for convening meetings of
Modification Holders to consider matters relating to the Securities, including the
modification of any provision of the Conditions or the Agency
Agreement, in accordance with the rules of the Belgian Companies
Code.
Subject to obtaining the approval therefor from the Lead Regulator if so
required, the Agent and the Issuer may agree, without the consent of the
Holders, to:
(i) any modification (except such modifications in respect of which an
increased quorum is required) of the Agency Agreement which is
not prejudicial to the interests of the Holders; or
(ii) any modification of the Conditions or the Agency Agreement
which is of a formal, minor or technical nature or is made to
correct a manifest error or to comply with mandatory provisions of
law.
Any such modification shall be binding on the Holders and any such
modification shall be notified to the Holders in accordance with
Condition 11 as soon as practicable thereafter.

11
Purchases Subject to the Conditions for Redemption, the Issuer or any of its
subsidiaries may at any time purchase Securities in any manner and at
any price. Such Securities may be held, reissued or, at the option of the
Issuer, surrendered to the Agent for cancellation.
Applicable Banking Regulations on the date of this Prospectus do not
permit purchases of the Securities by the Issuer or its subsidiaries
during the first five years after the Issue Date.
ISIN BE0002463389.
Common Code 104527639.
Listing and Admission to Application has been made to the Financial Services and Markets
Trading Authority (Autoriteit voor Financile Diensten en Markten/Autorit des
services et marchs financiers) (the FSMA) in its capacity as
competent authority under Article 23 of the Belgian Law dated 16 June
2006 concerning the public offer of investment securities and the
admission of investment securities to trading on a regulated market (the
Prospectus Law) to approve this document as a Prospectus for the
purposes of Article 23 of the Belgian Prospectus Law and Article 5.3 of
the Prospectus Directive (as defined herein). This approval cannot be
considered as a judgment by the FSMA as to the opportunity or the
quality of the transaction, nor on the situation of the Issuer.
Application has also been made to Euronext Brussels for the Securities
to be listed on Euronext Brussels. References in this Prospectus to the
Securities being listed (and all related references) shall mean that the
Securities have been listed on Euronext Brussels and admitted to trading
on the regulated market of Euronext Brussels. The regulated market of
Euronext Brussels is a regulated market for the purposes of the
Prospectus Directive.
Clearing Systems The dematerialised Securities will be represented exclusively by book
entries in the records of the X/N securities and cash clearing system
operated by the National Bank of Belgium (the NBB) or any
successor thereto (the Securities Settlement System). Access to the
Securities Settlement System is available through those of its Securities
Settlement System participants whose membership extends to securities
such as the Securities. Securities Settlement System participants include
certain banks, stockbrokers (beursvennootschappen/socits de bourse),
Euroclear Bank SA/NV (Euroclear) and Clearstream Banking,
socit anonyme, Luxembourg (Clearstream Luxembourg).
Accordingly, the dematerialised Securities will be eligible to clear
through, and therefore accepted by, Euroclear and Clearstream
Luxembourg, and investors can hold their dematerialised Securities
within securities accounts in Euroclear and Clearstream Luxembourg.
Joint Bookrunners and Joint Goldman Sachs International, J.P. Morgan Securities plc, KBC Bank
Lead Managers NV, Morgan Stanley & Co. International plc and UBS Limited.
Paying Agent KBC Bank NV.
Use of Proceeds The net proceeds from the issue of the Securities are expected to amount
to approximately EUR 1,386,750,000 (after deduction of fees and

12
 expenses). They will strengthen the Issuers Tier 1 capital base under a
fully loaded CRD IV approach (and also as contingent capital for the
purposes of testing under stressed conditions) and are part of the
Issuers long-term funding, which the Issuer uses to fund and manage its
activities.
The Issuer will on-lend the proceeds of the Securities to KBC Bank NV
under a loan agreement which will also qualify at the level of KBC
Bank NV as Additional Tier 1 capital for regulatory capital purposes.
Subject to market conditions, KBC Bank NV intends to use the proceeds
of the loan to redeem outstanding Tier 1 instruments which are
gradually being phased out under CRD IV.
Statutory Auditors Ernst & Young Bedrijfsrevisoren BCVBA, represented by Pierre
Vanderbeek, and/or Peter Telders, with offices at De Kleetlaan 2, B-
1831 Diegem (Brussels), Belgium.
Rating The Securities are expected to be rated BB by Standard & Poors Credit
Market Services Italy Srl, a subsidiary of Standard & Poors Financial
Services LLC, and BB by Fitch France S.A.S.
In general, European regulated investors are restricted under the
Regulation (EC) No 1060/2009, as amended, on credit rating agencies
from using credit ratings for regulatory purposes, unless such ratings are
issued by a credit rating agency established in the European Economic
Area and registered under such Regulation (and such registration has
not been withdrawn or suspended), subject to transitional provisions that
apply in certain circumstances whilst the registration application is
pending.
Governing Law Save for the provisions relating to form, status, meetings and
modification, which will be governed and construed in accordance with
Belgian law, the Securities will be governed by English law.

Selling Restrictions See Subscription and Sale.

13
 RISK FACTORS

The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Securities.
All of these factors are contingencies which may or may not occur and the Issuer is not in a position to
express a view on the likelihood of any such contingency occurring.

In addition, factors which are material for the purpose of assessing the market risks associated with the
Securities are also described below.

The Issuer believes that the factors described below represent the principal risks inherent in investing in the
Securities, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with
the Securities may occur for other reasons which may not be considered significant risks by the Issuer based
on the information currently available to it or which it may not currently be able to anticipate. The sequence
in which the risk factors are listed is not an indication of their likelihood to occur or of the extent of their
consequences. Prospective investors should also read the detailed information set out elsewhere in this
Prospectus (including any documents incorporated by reference herein) and reach their own views prior to
making any investment decision and consult with their own professional advisors (if they consider it
necessary).

The Group refers to KBC Group NV and its subsidiaries from time to time (including KBC Bank NV and
KBC Insurance NV).

Capitalised terms used herein and not otherwise defined shall bear the meanings ascribed to them in Terms
and Conditions of the Securities below.

Risks related to the Securities

The following does not describe all the risks of an investment in the Securities. Prospective investors should
consult their own financial and legal advisers about risks associated with investment in the Securities and the
suitability of investing in the Securities in light of their particular circumstances.

The Securities are complex instruments that may not be suitable for certain investors

The Securities are novel and complex financial instruments and may not be a suitable investment for all
investors. Each potential investor in the Securities should determine the suitability of such investment in light
of its own circumstances and have sufficient financial resources and liquidity to bear the risks of an
investment in the Securities, including the possibility that the entire principal amount of the Securities could
be lost. A potential investor should not invest in the Securities unless it has the knowledge and expertise
(either alone or with a financial advisor) to evaluate how the Securities will perform under changing
conditions, the resulting effects on the likelihood of a Principal Write-down or reaching the point of non-
viability (as discussed below in the risk factor Loss absorption at the point of non-viability on page 18 of
this Prospectus) and value of the Securities, and the impact of this investment on the potential investors
overall investment portfolio.

The Securities are deeply subordinated obligations

The Issuers obligations under the Securities are unsecured and deeply subordinated and will rank junior in
priority of payment to unsubordinated creditors of the Issuer and to ordinarily subordinated indebtedness of
the Issuer, as more fully described in the Terms and Conditions of the Securities.

If any judgment is rendered by any competent court declaring the judicial liquidation of the Issuer or if the
Issuer is liquidated for any other reason, the rights of payment of the holders of the Securities shall rank

14
senior in priority only to any payments to holders of Issuer Shares. In the event of incomplete payment of
unsubordinated creditors in the event of a liquidation, the obligations of the Issuer in connection with the
Securities will be terminated. Holders will be responsible for taking all steps necessary for the orderly
accomplishment of any collective proceedings or voluntary liquidation in relation to any claims they may
have against the Issuer.

Although the Securities may pay a higher rate of interest than comparable securities that are not subordinated,
there is a substantial risk that investors in deeply subordinated securities such as the Securities will lose all or
some of their investment should the Issuer become insolvent.

As the Issuer is a holding company, its ability to make interest payments on the Securities will depend
on a number of factors

The Issuer is the financial holding company of the Group and has two important subsidiaries, KBC Bank NV
and KBC Insurance NV. The main sources of operating funds for the Issuer are the dividends, distributions,
interest payments and any advances it receives from its operating subsidiaries and the amounts raised through
the issuance of debt instruments. The ability of the subsidiaries to make dividends and other payments to the
Issuer may depend on their profitability and may be subject to certain legal or contractual restrictions. The
extent to which the Issuer is able to receive or raise such funds will, in turn, affect its ability to make
payments on the Securities and any other debt instruments of the Issuer, which, in addition, may rank senior.

Moreover, the holders of Securities will be structurally subordinated to other creditors who hold debt
instruments at the level of one or more of the operating subsidiaries of the Issuer. The subsidiaries of the
Issuer generally hold more operational assets than the Issuer. If the assets of the Issuers subsidiaries were to
be realised, it is possible that, after such realisation, insufficient assets would remain available for distribution
to the Issuer in order to enable it to fulfil any payment obligations under the Securities.

The Issuer is not prohibited from issuing further debt, which may rank pari passu with or senior to
the Securities

There is no restriction on the amount of debt that the Issuer may issue that ranks senior to the Securities or on
the amount of securities that it may issue that rank pari passu with the Securities. The issue of any such debt
or securities may reduce the amount recoverable by investors upon the Issuer's bankruptcy. If the Issuer's
financial condition were to deteriorate, the holders could suffer direct and materially adverse consequences,
including suspension of interest and reduction of interest and principal and, if the Issuer were liquidated
(whether voluntarily or involuntarily), the holders could suffer loss of their entire investment.

The Terms and Conditions of the Securities do not provide for events of default allowing acceleration
of the Securities if certain events occur

The Terms and Conditions of the Securities do not provide for events of default allowing acceleration of the
Securities if certain events occur. Accordingly, if the Issuer fails to meet any obligations under the Securities,
including the payment of any interest, investors will not have the right of acceleration of principal which shall
be due only in the event of the Issuers dissolution or liquidation. Upon a payment default, the sole remedy
available to holders for recovery of amounts owing in respect of any payment of principal or interest on the
Securities will be the institution of proceedings to enforce such payment. Notwithstanding the foregoing, the
Issuer will not, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums sooner
than the same would otherwise have been payable by it.

In certain circumstances, the Issuer may decide not to pay interest on the Securities or be required by
the terms of the Securities not to pay such interest

15
The Issuer may elect, and in certain circumstances will be required, not to pay all or some of the Interest
Payments falling due on the Securities on any Interest Payment Date. The Issuer will be required to cancel the
payment of all or some of the Interest Payments falling due on the Securities in circumstances where the
relevant interest payment would either cause the applicable Distributable Items or, if certain capital buffers
are not maintained, the relevant Maximum Distributable Amount to be exceeded, as described in Condition
3.2(b) (Mandatory cancellation of interest). Distributable Items relate to the Issuers net income and reserves
determined on an unconsolidated basis. The Maximum Distributable Amount is a novel concept which will
apply in circumstances where the Issuer does not meet certain capital buffer requirements (see also below in
the risk factor Many aspects of the manner in which CRD IV will be implemented remain uncertain on page
18 of this Prospectus). It will, in such circumstances, limit the aggregate amount of distributions which the
Issuer can make on account of dividends, payments and write-up amounts on its Tier 1 instruments (including
the Securities) and certain bonuses. The Maximum Distributable Amount will have to be computed in
accordance with Article 141 of the Capital Requirements Directive and should be subject to transitional
provisions.

Any interest not so paid on any such Interest Payment Date shall be cancelled and shall no longer be due and
payable by the Issuer. A cancellation of interest pursuant to Condition 3.2 (Interest Cancellation) does not
constitute a default under the Securities for any purpose. Furthermore, it is possible that Interest Payments on
the Securities will be cancelled, while junior securities remain outstanding and continue to receive payments.

The new Belgian banking law also contemplates giving the regulator certain recovery powers which would
apply if the Issuer fails (or threatens to fail) to comply with applicable regulations. In such circumstances, the
regulator could suspend payments of interest on additional tier one instruments (including the Securities).

Any actual or anticipated cancellation of interest on the Securities will likely have an adverse effect on the
market price of the Securities. In addition, as a result of the interest cancellation provisions of the Securities,
the market price of the Securities may be more volatile than the market prices of other debt securities on
which interest accrues that are not subject to such cancellation and may be more sensitive generally to adverse
changes in the Issuers financial condition. Any indication that the Issuers consolidated CET1 Ratio is
trending towards the minimum applicable capital buffer may have an adverse effect on the market price of the
Securities.

The principal amount of the Securities may be reduced (Written Down) to absorb losses
The Securities are being issued for capital adequacy regulatory purposes with the intention and purpose of
being eligible as Tier 1 Capital of the Issuer. Such eligibility depends upon a number of conditions being
satisfied, which are reflected in the Terms and Conditions of the Securities. One of these relates to the ability
of the Securities and the proceeds of their issue to be available to absorb any losses of the Issuer. Accordingly,
if the Issuers then applicable consolidated CET1 Ratio falls below 5.125 per cent., the Prevailing Principal
Amount of the Securities will be reduced. See Condition 7 of the Securities (Principal Write-down and
Principal Write-up).

The Issuers current and future outstanding junior securities might not include write-down or similar features
with triggers comparable to those of the Securities. As a result, it is possible that the Securities will be subject
to a Principal Write-down, while junior securities remain outstanding and continue to receive payments.

Holders may lose all or some of their investment as a result of a Principal Write-down or of reaching the point
of non-viability (as discussed below in the risk factor Loss absorption at the point of non-viability on page
18 of this Prospectus). In addition, if any judgment is rendered by any competent court declaring the judicial
liquidation of the Issuer or if the Issuer is liquidated for any other reason prior to the Securities being written
up in full pursuant to Condition 7.2, holders claims for principal will be based on the reduced Prevailing

16
Principal Amount of the Securities. Further, during the period of any Principal Write-down pursuant to
Condition 7.1, interest will accrue on the Prevailing Principal Amount of the Securities.

The extent to which the Issuer makes a profit from its operations (if any) will affect whether the principal
amount of the Securities may be reinstated to their Original Principal Amount. The Issuers ability to write-up
the principal amount of the Securities will depend on certain conditions, such as there being sufficient
Consolidated Net Income and, if applicable, a sufficient Maximum Distributable Amount. No assurance can
be given that these conditions will ever be met. Moreover, even if met, the Issuer will not in any
circumstances be obliged to write up the principal amount of the Securities. However, if any write up were to
occur, it will have to be undertaken on a pro rata basis with any other Tier 1 instruments providing for a
reinstatement of principal amount in similar circumstances (see definition of Discretionary Temporary Write-
down Instrument in Condition 16 of the Securities (Definitions)). See Condition 7.2(a) of the Securities
(Principal Write-up).

The market price of the Securities is expected to be affected by fluctuations in the Issuers consolidated CET1
Ratio. Any indication that the Issuers consolidated CET1 Ratio is trending towards 5.125 per cent. may have
an adverse effect on the market price of the Securities. The level of the Issuers consolidated CET1 Ratio may
significantly affect the trading price of the Securities.

The Issuers consolidated CET1 Ratio will be affected by a number of factors, any of which may be
outside the Issuers control, as well as by its business decisions and, in making such decisions, the
Issuers interests may not be aligned with those of the holders of the Securities

The occurrence of a Trigger Event is inherently unpredictable and depends on a number of factors, any of
which may be outside the Issuers control. The calculation of the Issuers consolidated CET1 Ratio could be
affected by one or more factors, including, among other things, changes in the mix of the Groups business,
major events affecting its earnings, dividend payments by the Issuer, regulatory changes (including changes to
definitions and calculations of regulatory capital ratios and their components) and the Groups ability to
manage risk-weighted assets in both its ongoing businesses and those which it may seek to exit or enter. Such
ratio will also depend on the Groups decisions relating to its businesses and operations, as well as the
management of its capital position, and may be affected by changes in applicable accounting rules, or by
changes to regulatory adjustments which modify the regulatory capital impact of accounting rules. For
example, the Issuer may decide not to raise capital at a time when it is feasible to do so, even if that would
result in the occurrence of a Trigger Event. Moreover, the consolidated CET1 Ratio, Distributable Items and
any Maximum Distributable Amount will depend in part on decisions made by the Issuer and other entities in
the Group relating to their businesses and operations, as well as the management of their capital position. The
Issuer will have no obligation to consider the interests of holders in connection with its strategic decisions,
including in respect of its capital management. Holders will not have any claim against the Issuer or any other
member of the Group relating to decisions that affect the business and operations of the Group, including its
capital position, regardless of whether they result in the occurrence of a Trigger Event. Such decisions could
cause holders to lose all or part of the value of their investment in the Securities.

Due to the uncertainty regarding whether a Trigger Event will occur, it will be difficult to predict when, if at
all, the Prevailing Principal Amount of the Securities may be Written Down. Accordingly, the trading
behaviour of the Securities may not necessarily follow the trading behaviour of other types of subordinated
securities. Any indication that the Issuers consolidated CET1 Ratio is trending towards the minimum
applicable combined buffer may have an adverse effect on the market price of the Securities. Under such
circumstances, investors may not be able to sell their Notes easily or at prices that will provide them with a
yield comparable to more conventional investments.

17
Many aspects of the manner in which CRD IV will be implemented remain uncertain.

Many of the defined terms in the Conditions of the Securities depend on the final interpretation and
implementation of the Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013
on access to the activity of credit institutions on prudential requirements for credit institutions and investment
firms (CRD) and the Regulation (EU) n575/2013 of the European Parliament and of the Council of 26
June 2013 on prudential requirements for credit institutions and investment firms (CRR and together with
CRD, CRD IV). CRD IV is a recently-adopted set of rules and regulations that imposes a series of new
requirements, many of which will be phased in over a number of years. Certain portions of CRD require
transposition into Belgian law, and although CRR will be directly applicable in each Member State, CRR
leaves a number of important interpretational issues to be resolved through binding technical standards that
will be adopted in the future, and leaves certain other matters to the discretion of the regulator. In addition,
CRD IV contemplates that the European Central Bank will assume certain supervisory responsibilities
formerly handled by the National Bank of Belgium beginning in November 2014. The European Central Bank
may interpret CRD IV, or exercise discretion accorded to the regulator under CRD IV (including options with
respect to the treatment of assets of other affiliates) in a different manner than the National Bank of Belgium.

The consolidated CET1 Ratio which will be used for purposes of determining the occurrence of a Trigger
Event will take into account the Groups insurance business through the computation of the risk weighted
assets (and not by applying any deduction in respect thereto). To that effect, the Conditions specify that, as at
the date of the Prospectus, the risk weighted assets in respect of the insurance business will be calculated by
using both the so-called building block method and the alternative approach set out in Article 49 of the
Capital Requirements Regulation (commonly referred to as the Danish compromise method. See also
Description of the Issuer risk management Capital adequacy on page 86 of this Prospectus). The higher
of the two risk weighted assets calculations will be retained for purposes of computing the consolidated CET1
Ratio. The Groups insurance business may be subject to change in the way current regulation is being applied
and changing regulations more generally, which may have an impact for the purposes of computing the
consolidated CET1 Ratio. Moreover, the Issuer is currently able to account for its insurance business through
its risk weighted assets (as mentioned above) and not by means of a deduction from common equity. This
could change in the future under the European Central Bank, even though one should expect transitional
provisions to apply in such case.

In similar vein, the notion of Maximum Distributable Amount is a novel and complex concept. Its application
will depend on a number of factors which are difficult to predict. It will limit the aggregate amount of
distributions which the Issuer can make if and for so long as the Issuer does not meet the combined buffer
requirements. As at the date of this Prospectus, the combined buffer requirements are set at 2.5% of Common
Equity Tier 1 capital above the minimum regulatory CET1 requirement of 4.5% (or 7% in aggregate). This
may, however, change in the future. Furthermore, the concept of Maximum Distributable Amount will,
whenever applicable, leave certain discretion to the Issuer as to how certain payments are prioritised within
the permitted basket of Maximum Distributable Amount.

Loss absorption at the point of non-viability

In addition to being subject to a possible write down as a result of the occurrence of a Trigger Event in
accordance with the Conditions of the Securities, the Securities may also be subject to a Write-down in
circumstances where the competent resolution authority would, in its discretion, determine that the Issuer has
reached the point of non-viability.

Such statutory write down powers will be implemented in Belgium through the adoption of a new banking
law. These are based on the write down and resolution powers set out in a proposed directive of 6 June 2012
providing for the establishment of an EU-wide framework for the recovery and resolution of credit

18
institutions and investment firms (the RRD). A near-final draft of the directive was published by the
Council of the European Union on 18 December 2013.

The stated aim of the draft RRD is to provide relevant authorities with common tools and powers to address
banking crises pre-emptively in order to safeguard financial stability and minimise taxpayers exposure to
losses.

The powers provided to resolution authorities in the draft RRD include write down/conversion powers to
ensure that capital instruments (including Additional Tier 1 capital instruments such as the Securities) fully
absorb losses at the point of non-viability of the issuing institution. Accordingly, the draft RRD contemplates
that resolution authorities will be required to write down such capital instruments or convert them into
common equity tier 1 instruments, to the extent required and up to their capacity (RRD Non-Viability Loss
Absorption), immediately before the application of any other resolution action is taken (as described
below). The draft RRD currently provides, inter alia, that resolution authorities shall exercise the write down
power in a way that results in (i) common equity tier 1 instruments being written down first in proportion to
the relevant losses and (ii) thereafter, the principal amount of other capital instruments (including Additional
Tier 1 capital instruments such as the Securities) being written down potentially on a permanent basis or
converted into common equity tier 1. The draft RDD (and the draft new Belgian banking law) provides that
the resolution authority will be required to write down capital instruments (including the Securities) prior to
the exercise of any resolution power and in case the Issuer has reached the point of non-viability or has
benefited from public support. Furthermore, it provides that the resolution authority may write down capital
instruments (including the Securities) together with or independently from any resolution action. The new
Belgian banking law also contemplates giving the regulator certain recovery powers which would apply if the
Issuer fails (or threatens to fail) to comply with applicable regulations. In such circumstances, the regulator
could suspend payments of interest on additional tier one instruments (including the Securities).

The point of non-viability under the draft RRD is the point at which the national resolution authority
determines the institution has reached the condition for resolution, defined as:

(a) the institution is failing or likely to fail, which means

(i) the institution has incurred/is likely to incur in a near future losses depleting all or substantially
all its own funds; and/or

(ii) the assets are/will be in a near future less than its liabilities; and/or

(iii) the institution is/will be in a near future unable to pay its debts as they fall due; and/or

(iv) the institution requires public financial support (except when the Member State decides to
provide exceptional public support in the form defined in the draft RRD);

(b) there is no reasonable prospect that a private action would prevent the failure; and

(c) a resolution action is necessary in the public interest.

Except for an additional bail-in tool (which comprises a more general power for resolution authorities to write
down or convert into equity the claims of unsecured creditors of a failing institution, including senior debt,
which will apply in January 2016 at the latest), the draft RRD contemplates that its provisions (including the
RRD Non-Viability Loss Absorption with respect to capital instruments) will be applied in Member States in
January 2015.

The draft RRD currently represents the implementation in the European Economic Area of the non-viability
requirements set out in the press release dated 13 January 2011 issued by the Basel Committee on Banking
Supervision (the Basel Committee) entitled Minimum requirements to ensure loss absorbency at the point

19
of non-viability (the Basel III Non-Viability Requirements). The Basel III Non-Viability Requirements
form part of the broader Basel III package of new capital and liquidity requirements intended to reinforce
capital standards and to establish minimum liquidity standards for credit institutions.

The Basel Committee contemplated implementation of the Basel III reforms as of 1 January 2013. These
reforms in the European Economic Area are implemented by CRD IV. These texts were published in the
Official Journal of the European Union on 27 June 2013. They are applicable from 1 January 2014. CRR
provides that the Basel III Non-Viability Requirements are implemented in the European Economic Area by
way of the RRD and the RRD Non-Viability Loss Absorption.

In addition to RRD Non-Viability Loss Absorption, the draft RRD provides resolution authorities with
broader powers to implement other resolution measures with respect to distressed banks, which may include
(without limitation) the sale of the banks business, the separation of assets, the replacement or substitution of
the bank as obligor in respect of debt instruments, modifications to the terms of debt instruments (including
altering the maturity and/or the amount of interest payable and/or imposing a temporary suspension on
payments) and discontinuing the listing and admission to trading of financial instruments.

The draft RRD must be finalised and adopted by the European Parliament before it is transposed in national
legislations by the end of 2014. In similar vein, the new draft Belgian banking law is yet to be finalised and
adopted by the Belgian Parliament. It may also need to be amended depending on any further changes at the
European level. Accordingly, it is not yet possible to assess the full impact of the relevant loss absorption
provisions.

There can be no assurance that, once implemented, the existence of applicable loss absorption provisions or
the taking of any actions currently contemplated or as finally reflected in such provisions would not
materially adversely affect the price or value of a holder's investment in the Securities and/or the ability of the
Issuer to satisfy its obligations under the Securities.

No scheduled redemption

The Securities are undated securities in respect of which there is no fixed redemption or maturity date. The
Issuer is under no obligation to redeem the Securities at any time (see Condition 5 of the Securities
(Redemption and Purchase)). There will be no redemption at the option of the holders.

Moreover, Applicable Banking Regulations on the date of this Prospectus do not permit purchases of the
Securities by the Issuer or its subsidiaries during the first five years after the Issue Date.

The Securities are subject to early redemption at the fifth anniversary of the Issue Date, each Interest
Payment Date thereafter or at any time upon the occurrence of a Tax Gross-up Event, a Tax
Deductibility Event or a Regulatory Event, subject to certain conditions

The Issuer may, at its option, redeem all, but not some only, of the Securities on the First Call Date or on any
Interest Payment Date thereafter, or at any time upon the occurrence of a Tax Gross-up Event, a Tax
Deductibility Event or a Regulatory Event, in each case at their Prevailing Principal Amount plus accrued and
unpaid interest (if any); provided that any such redemption shall be subject to Condition 5.5 (Conditions to
Redemption and Purchase) which provides, amongst other things, that the Issuer shall not be entitled to
redeem the Securities at any time whilst the Prevailing Principal Amount of the Securities is lower than their
Original Principal Amount. The Original Principal Amount of a Security at any time is its full principal
amount upon issue (without regard to any subsequent principal write-down or principal write-up under the
terms of the Securities), and the Prevailing Principal Amount of a Security at any time is its Original Principal
Amount as reduced by any principal write-down and (if applicable) as subsequently increased by any
principal write-up, in each case in accordance with the terms of the Securities.

20
An optional redemption feature is likely to limit the market value of the Securities. During any period when
the Issuer may elect to redeem the Securities, the market value of the Securities generally will not rise
substantially above the price at which they can be redeemed. In addition, holders will not receive a make-
whole amount or any other compensation in the event of any early redemption of Securities.

If the Issuer redeems the Securities in any of the circumstances mentioned above, there is a risk that the
Securities may be redeemed at times when the redemption proceeds are less than the current market value of
the Securities or when prevailing interest rates may be relatively low, in which latter case holders may only be
able to reinvest the redemption proceeds in securities with a lower yield. Potential investors should consider
reinvestment risk in light of other investments available at that time.

Substitution and variation of the Securities without holder consent

Subject as provided in the Conditions, the Issuer may, at its option, and without the consent or approval of the
holders, elect either to substitute all (but not some only) of the Securities or vary the terms of all (but not
some only) of the Securities, so that they become or remain Qualifying Securities.

Save to the extent necessary to ensure they continue to comply with the then current requirements of the Lead
Regulator in relation to Additional Tier 1 Capital, Qualifying Securities are securities issued by the Issuer that
have terms not materially less favorable to the holders than the terms of the Securities (provided that the
Issuer shall have delivered a certificate to that effect signed by two of its Directors to the Agent). See
Condition 6 (Substitution and Variation).

Risk Relating to the Change in the Rate of Interest

The Rate of Interest of the Securities will be reset as from the First Call Date. Such Rate of Interest will be
determined by two Business Days before the relevant Reset Date and as such is not pre-defined at the date of
issue of the Securities; it may be different from the Initial Rate of Interest and may adversely affect the yield
of the Securities.

Change of law

The Terms and Conditions of the Securities will be governed by the laws of England, except for Conditions 1
(Form, Denomination and Title), 2 (Status of the Securities) and 12 (Meeting of holders and Modification)
which shall be governed by, and construed in accordance with, Belgian law. No assurance can be given as to
the impact of any possible judicial decision or change to the laws of England or Belgium or administrative
practice after the date of this Prospectus. Any such changes in law may include, but are not limited to, the
introduction of a variety of statutory resolution and loss-absorption tools which may affect the rights of
holders of securities issued by the Issuer, including the Securities. Such tools may include the ability to
suspend or cancel interest payments or write off sums otherwise payable on such securities (see risk factors
Loss absorption at the point of non-viability and Increased regulation of the financial services industry or
changes thereto could have an adverse effect on the Groups operations on respectively page 18 and 27 of
this Prospectus for further details).

Legal investment considerations may restrict certain investments

The investment activities of certain investors are subject to legal investment laws and regulations, or review
or regulation by certain authorities. Each potential investor should consult its legal advisers to determine
whether and to what extent (i) Securities are legal investments for it, (ii) Securities can be used as collateral
for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any Securities.
Financial institutions should consult their legal advisers or the appropriate regulators to determine the
appropriate treatment of Securities under any applicable risk-based capital or similar rules.

21
Taxation

Potential purchasers and sellers of the Securities should be aware that they may be required to pay taxes or
documentary charges or duties in accordance with the laws and practices of the country where the Securities
are transferred or other jurisdictions. In some jurisdictions, no official statements of the tax authorities or
court decisions may be available in relation to the tax treatment of financial instruments such as the
Securities. Potential investors are advised not to rely solely upon the tax summary contained in this
Prospectus but to ask for their own tax advisers advice on their individual taxation with respect to the
acquisition, holding, sale and redemption of the Securities. Only such adviser is in a position to duly consider
the specific situation of the potential investor. This risk factor should be read in connection with the taxation
sections of this Prospectus. See Taxation.

EU Savings Directive

Under EC Directive 2003/48/EC on the taxation of savings income (the Savings Directive), Member States
are required to provide to the tax authorities of another Member State details of payments of interest (or
similar income) paid by a person within their jurisdiction to an individual resident in that other Member State
or to certain limited types of entities established in that other Member State. However, for a transitional
period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to
operate a withholding system in relation to such payments (the ending of such transitional period being
dependent upon the conclusion of certain other agreements relating to information exchange with certain
other countries). In April 2013, the Luxembourg Government announced its intention to abolish the
withholding system with effect from 1 January 2015, in favour of automatic information exchange under the
Savings Directive. A number of non-EU countries and territories including Switzerland have adopted similar
measures (in the case of Switzerland a withholding system or exchange of information if the individual
resident in the Member State agrees to such exchange or information).

The European Commission has proposed certain amendments to the Savings Directive which may, if
implemented, amend or broaden the scope of the requirements described above.

If a payment were to be made or collected through a Member State which has opted for a withholding system
and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any
Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Security
as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in a
Member State that is not obliged to withhold or deduct tax pursuant to the Savings Directive.

Investors who are in any doubt as to their position should consult their professional advisers.

Financial Transaction Tax

The European Commission published a proposal for a Directive for a common financial transaction tax (the
FTT) in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia
(the participating Member States). The proposed FTT has very broad scope and could, if introduced in its
current form, apply to certain transactions relating to the Securities (including secondary market transactions)
in certain circumstances.

Under current proposals the FTT could apply in certain circumstances to persons both within and outside of
the participating Member States. Generally, it would apply to certain transactions relating to the Securities
where at least one party is a financial institution, and at least one party is established in a participating
Member State. A financial institution may be, or be deemed to be, "established" in a participating Member
State in a broad range of circumstances, including (i) by transacting with a person established in a
participating Member State or (ii) where the financial instrument which is the subject of the transaction is
issued in a participating Member State.

22
The FTT proposal remains subject to negotiation between the participating Member States and is the subject
of legal challenge. It may therefore be altered prior to any implementation, the timing of which remains
unclear. Additional Member States may decide to participate.

Prospective holders of the Securities are strongly advised to seek their own professional advice in relation to
the FTT.

Possible FATCA withholding after 2016

Certain provisions of the U.S. Internal Revenue Code of 1986, as amended, and Treasury regulations
thereunder, commonly referred to as FATCA, generally may impose a 30% withholding tax on payments to
the Issuer and certain of its subsidiaries unless it enters into an agreement (a FATCA Agreement) with the
Internal Revenue Service or are subject to the terms of an intergovernmental agreement (IGA) for the
implementation of FATCA. A foreign financial institution (such as the Issuer or a relevant intermediary)
that has entered into a FATCA Agreement will be required to perform certain diligence and reporting
obligations, and from 2017 may be required to withhold 30% from certain foreign passthru payments that it
makes. Under current guidance, the term foreign passthru payment is not defined and it is therefore not
clear whether or to what extent payments on the Securities would be considered foreign passthru payments.
Withholding on foreign passthru payments would not be required with respect to payments made before 1
January 2017. The United States has entered into an IGA and is exploring entering into IGAs with certain
jurisdictions in which intermediaries may be resident. Such IGAs may modify the FATCA withholding regime
described above. It is not yet clear how the IGAs between the United States and these jurisdictions will
address foreign passthru payments and whether such agreements may relieve Belgian (and financial
institutions from certain other jurisdictions) of any obligation to withhold on foreign passthru payments.
Prospective investors should consult their tax advisers regarding the consequences of FATCA, or any
intergovernmental agreement or non-U.S. legislation implementing FATCA, to their investment in the
Securities.

A holders actual yield on the Securities may be reduced from the stated yield by transaction costs

When Securities are purchased or sold, several types of incidental costs (including transaction fees and
commissions) are incurred in addition to the current price of the security. These incidental costs may
significantly reduce or even exclude the profit potential of the Securities. For instance, credit institutions as a
rule charge their clients for own commissions which are either fixed minimum commissions or pro-rata
commissions depending on the order value. To the extent that additional domestic or foreign parties are
involved in the execution of an order, including but not limited to domestic dealers or brokers in foreign
markets, holders must take into account that they may also be charged for the brokerage fees, commissions
and other fees and expenses of such parties (third party costs).

In addition to such costs directly related to the purchase of securities (direct costs), holders must also take into
account any follow-up costs (such as custody fees). Prospective investors should inform themselves about any
additional costs incurred in connection with the purchase, custody or sale of the Securities before investing in
the Securities.

Risks Related to the Market Generally

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk, interest
rate risk and credit risk.

The secondary market generally

The Securities may have no established trading market when issued, and one may never develop. If a market
does develop, it may not be very liquid. Therefore, investors may not be able to sell their Securities easily or

23
at prices that will provide them with a yield comparable to similar investments that have a developed
secondary market. Illiquidity may have a severely adverse effect on the market value of Securities.

Moreover, although pursuant to Condition 5.6 (Purchases) the Issuer can purchase Securities at any time, the
Issuer is not obliged to do so. Furthermore, Applicable Banking Regulations on the date of this Prospectus do
not permit purchases of the Securities by the Issuer or its subsidiaries during the first five years after the Issue
Date. Purchases made by the Issuer could affect the liquidity of the secondary market of the Securities and
thus the price and the conditions under which investors can negotiate these Securities on the secondary
market. Furthermore, the Securities may trade with accrued interest, which may be reflected in the trading
price of the Securities. However, if a payment of interest on any interest payment date is cancelled (in whole
or in part) as described herein and thus is not due and payable, purchasers of such Securities will not be
entitled to such interest payment on the relevant interest payment date.

In addition, holders should be aware of the prevailing and widely reported global credit market conditions
(which continue at the date of this Prospectus), whereby there is a general lack of liquidity in the secondary
market which may result in investors suffering losses on the Securities in secondary resales even if there is no
decline in the performance of the Securities or the assets of the Issuer. The Issuer cannot predict whether these
circumstances will change and whether, if and when they do change, there will be a more liquid market for
the Securities and instruments similar to the Securities at that time.

Although application has been made for the Securities to be listed and admitted to trading on the regulated
market of Euronext Brussels, there is no assurance that such application will be accepted or that an active
trading market will develop.

Exchange rate risks and exchange controls

The Issuer will pay principal and interest on the Securities in euro. This presents certain risks relating to
currency conversions if an investors financial activities are denominated principally in a currency or currency
unit (the Investors Currency) other than euro. These include the risk that exchange rates may significantly
change (including changes due to devaluation of the euro or revaluation of the Investors Currency) and the
risk that authorities with jurisdiction over the Investors Currency or the euro may impose or modify
exchange controls. An appreciation in the value of the Investors Currency relative to the euro would decrease
(i) the Investors Currency-equivalent yield on the Securities, (ii) the Investors Currency-equivalent value of
the principal payable on the Securities and (iii) the Investors Currency-equivalent market value of the
Securities.

Government and monetary authorities may impose (as some have done in the past) exchange controls that
could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal
than expected, or no interest or principal as measured in the Investors Currency.

Interest rate risks

An investment in the Securities involves the risk that subsequent changes in market interest rates may
adversely affect the value of them.

Credit ratings may not reflect all risks and may be lowered, suspended, withdrawn or not maintained

Each of S&P and Fitch has assigned or is expected to assign an expected rating to the Securities. In addition,
each of S&P and Fitch has assigned credit ratings to the Issuer. These ratings may not reflect the potential
impact of all risks related to structure, market, additional factors discussed above and other factors that may
affect the value of the Securities or the standing of the Issuer.

A rating is not a recommendation to buy, sell or hold securities and any rating agency may revise, suspend or
withdraw at any time the relevant rating assigned by it if, in the sole judgment of the relevant rating agency,

24
among other things, the credit quality of the Securities or, as the case may be, the Issuer has declined or is in
question. In addition, there is no guarantee that any rating of the Securities and/or the Issuer will be
maintained by the Issuer following the date of this Prospectus. In particular the ratings assigned to the
Securities by S&P may be altered as a result of any change to S&Ps methodologies arising from the outcome
of S&Ps request for comments paper dated 6 February 2014 entitled Assigning Credit Ratings to Banks and
Prudentially Regulated Finance Company Hybrid Capital Instruments. If any rating assigned to the
Securities and/or the Issuer is revised lower, suspended, withdrawn or not maintained by the Issuer, the
market value of the Securities may be reduced.

Reliance on the procedures of the Securities Settlement System, Euroclear and Clearstream
Luxembourg for transfer, payment and communication with the Issuer

The Securities will be issued in dematerialised form under the Belgian Companies Code and cannot be
physically delivered. The Securities will be represented exclusively by book entries in the records of the
Securities Settlement System. Access to the Securities Settlement System is available through its Securities
Settlement System participants whose membership extends to securities such as the Securities. Securities
Settlement System participants include certain banks, stockbrokers (beursvennootschappen/socits de
bourse), and Euroclear and Clearstream Luxembourg.

Transfers of interests in the Securities will be effected between the Securities Settlement System participants
in accordance with the rules and operating procedures of the Securities Settlement System. Transfers between
investors will be effected in accordance with the respective rules and operating procedures of the Securities
Settlement System participants through which they hold their Securities.

Neither the Issuer nor the Agent will have any responsibility for the proper performance by the Securities
Settlement System or the Securities Settlement System participants of their obligations under their respective
rules and operating procedures.

A holder must rely on the procedures of the Securities Settlement System, Euroclear and Clearstream
Luxembourg to receive payments under the Securities. The Issuer will have no responsibility or liability for
the records relating to the Securities within the Securities Settlement System.

The Agent is not required to segregate amounts received by it in respect of Securities cleared through
the X/N Securities Settlement System

The Conditions of the Securities and the Agency Agreement provide that the Agent will debit the relevant
account of the Issuer and use such funds to make payment to the holders. The Agency Agreement provides
that the Agent will, simultaneously with the receipt by it of the relevant amounts, pay to the holders directly
any amounts due in respect of the relevant Securities. However, the Agent is not required to segregate any
such amounts received by it in respect of the Securities, and in the event that the Agent were subject to
insolvency proceedings at any time when it held any such amounts, holders would not have any further claim
against the Issuer in respect of such amounts, and would be required to claim such amounts from the Agent in
accordance with applicable Belgian insolvency laws.

The Issuer, the Agent and the Joint Lead Managers may engage in transactions adversely affecting
the interests of the holders of Securities

The Agent, some of the Joint Lead Managers and their affiliates have engaged in, and may in the future
engage in, investment banking and other commercial dealings in the ordinary course of business with the
Issuer or its affiliates. They have received, or may in the future receive, customary fees and commissions for
these transactions. In addition, in the ordinary course of their business activities, the Joint Lead Managers and
their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including bank loans) for their own account and for

25
the accounts of their customers. Such investments and securities activities may involve securities and/or
instruments of the Issuer or its affiliates. The Joint Lead Managers and their affiliates may also make
investment recommendations and/or publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short
positions in such securities and instruments. Potential investors should be aware that the Issuer is the parent
company of KBC Bank NV and that the interests of KBC Bank NV may conflict with the interests of the
holders of the Securities. Moreover, the holders of securities should be aware that KBC Bank NV, acting in
whatever capacity, will not have any obligations vis--vis the holders of the Securities and, in particular, it
will not obliged to protect the interests of the holders of the Securities.

Risks related to the Issuer

Risks related to the market in which the Group operates

Economic and market conditions may pose significant challenges for the Group and may adversely
affect the results

The global economy, the condition of the financial markets and adverse macro-economic developments can
all significantly influence the Groups performance. In recent years, the financial markets have experienced
unprecedented levels of market volatility. The financial turbulence since 2008 and its after-effects on the
wider economy have led to more difficult earnings conditions for the financial sector. During such period,
numerous governments and central banks were forced into the role of lender of last resort as funding available
to financial institutions from lenders and institutional investors was scarce and threatened the continued
stability of the global financial system. The tightening of credit, increased market volatility and widespread
reduction of business activity generally adversely affected the Groups financial condition, results of
operations, liquidity and access to capital and credit.

Furthermore, certain countries in Europe have relatively large sovereign debts or fiscal deficits, or both,
which has in the recent past led to tensions in the EU bond markets, the interbank lending market and to credit
spread volatility and constrained the availability of wholesale debt funding at reasonable cost. The peripheral
crisis of 2010 also affected countries in which the Group operates, such as Ireland.

Since the Group conducts the majority of its business in Belgium, Czech Republic, Ireland, Hungary and the
other home markets, its performance is influenced by the level and cyclical nature of business activity in these
countries which is in turn affected by both domestic and international economic and political events. A
weakening in these economies may in particular have a negative effect on the Groups financial condition and
results of operations. Moreover, any deterioration in financial and credit market conditions could further
adversely affect the Groups business and, if they were to persist or worsen, could adversely affect the results
of operations and financial condition of the Group.

The losses and asset impairments resulting from the financial crisis forced many banks, including KBC Bank
NV, to raise additional capital in order to maintain appropriate capital adequacy and solvency ratios.
Nonetheless, the Issuer and/or certain of its regulated subsidiaries may need to raise additional capital, either
as a result of further asset impairments or other factors. Further infusions of additional equity capital, if
necessary, may be difficult to achieve. Any failure by a member of the Group to maintain its minimum
regulatory capital ratios could result in administrative actions or sanctions, which in turn may have a material
adverse effect on operating results, financial condition and prospects.

General business and economic conditions that could affect the Group include the level and volatility of short-
term and long-term interest rates, inflation, employment levels, bankruptcies, household income, consumer
spending, fluctuations in both debt and equity capital markets, liquidity of the global financial markets,

26
fluctuations in foreign exchange, the availability and cost of funding, investor confidence, credit spreads (e.g.,
corporate, sovereign), and the strength of the economies in which the Group operates.

In addition, the Groups business activities are dependent on the level of banking, finance and financial
services required by its customers. In particular, levels of borrowing are heavily dependent on customer
confidence, employment trends, the state of the economies in which the Group does business and market
interest rates at the time.

Market volatility can negatively affect the Groups banking and asset management activities through a
reduction in demand for products and services, a reduction in the value of assets held by the Group, a decline
in the profitability of certain assets and a loss of liquidity in certain asset classes.

Increased regulation of the financial services industry or changes thereto could have an adverse
effect on the Groups operations

There have been significant regulatory developments in response to the global crisis, including various
initiatives and measures taken at the level of the European Union or national governments, the stress test
exercise coordinated by the European Banking Authority in cooperation with the European Central Bank,
liquidity risk assessments on European and national levels and the adoption of new regulatory capital
requirements under Basel III and the Capital Adequacy Directive and Regulation, CRD IV, as well as RRD
and the new draft Belgian banking law. In addition, changes are also being made to the International Financial
Accounting Standards (IFRS). Although the Group works closely with its regulators and continually
monitors regulatory developments, there can be no assurance that additional regulatory or capital
requirements will not have an adverse impact on the Group, its business, financial condition or results of
operations.

Moreover, the Group may in the future be subject to certain restrictions in relation to, or be required to
seperate, certain trading activities, and may be prohibited from conducting certain proprietary trading
activities.

Moreover, there can be no assurance that implementation of these new standards, or any other new regulation,
will not require the Group to issue securities that qualify as regulatory capital or to liquidate assets or curtail
business, all of which may have adverse effects on its business, financial condition and results of operations.

The Group conducts its businesses subject to on-going regulation and associated regulatory risks, including
the effects of changes in the laws, regulations, policies and interpretations in Belgium and the other regions in
which the Group does business. Changes in supervision and regulation, in particular in Belgium and Central
& Eastern Europe (e.g. Hungary), could materially affect the Groups business, the products and services
offered by it or the value of its assets. In addition to the above, since the start of the global economic
downturn, there seems to be an increase in the level of scrutiny applied by governments and regulators to
enforce applicable regulations and calls to impose further charges on the financial services industry. There can
be no assurance that such increased scrutiny or charges, will not require the Group to take additional measures
which, in turn, may have adverse effects on its business, financial condition and results of operations.

Risk associated with the highly competitive environment in which the Group operates and which
could intensify further as a result of the global market conditions

As part of the financial services industry, the Group faces substantial competitive pressures that could
adversely affect the results of its operations in banking, insurance, asset management and other products and
services.

In its Belgian home market, the Group faces substantial competition, mainly from BNP Paribas Fortis, ING
Group and Belfius Bank. In addition, the Group faces increased competition in the Belgian savings market

27
from smaller-scale banking competitors (and internet bank competitors) seeking to enlarge their respective
market shares by offering higher interest rates. In Central & Eastern Europe, the Group faces competition
from the regional banks in each of the jurisdictions in which it operates and from international competitors
such as UniCredit, Erste Bank and Raiffeisen International. Competition is also affected by consumer
demand, technological changes, regulatory actions and/or limitations and other factors. These competitive
pressures could result in increased pricing pressures on a number of the Groups products and services and in
the loss of market share in one or more such markets.

Risks associated with liquidity and funding are inherent to the Groups business

The procurement of liquidity for the Groups operations and access to long term financings are crucial to
achieve the Groups strategic goals, as they enable the Group to meet payment obligations in cash and on
delivery, scheduled or unscheduled, so as not to prejudice the Groups activities or financial situation.

Although the Group currently has a satisfactory liquidity position (with a diversified core deposit base and a
large amount of liquid and/or pledgeable assets), its procurement of liquidity could be adversely impacted by
the inability to access the debt market, sell products or reimburse financings as a result of the deterioration of
market conditions, the lack of confidence in financial markets, uncertainties and speculations regarding the
solvency of market participants, rating downgrades or operational problems of third parties. In addition
thereto, the Groups liquidity position could be adversely impacted by substantial outflows in deposits and
asset management products and life insurance products.

Limitations of the Groups ability to raise the required funds on terms which are favourable for the Group,
difficulties in obtaining long-term financings on terms which are favourable for the Group or dealing with
substantial outflows could adversely affect the Groups business, financial condition and results of operations.
In this respect, the adoption of new liquidity requirements under Basel III and CRD IV must also be taken
into account since these could give rise to an increased competition resulting in an increase in the costs of
attracting the necessary deposits and funding.

Furthermore, protracted market declines can reduce the liquidity of markets that are typically liquid. If, in the
course of its activities, the Group requires significant amounts of cash on short notice in excess of anticipated
cash requirements, the Group may have difficulty selling investments at attractive prices, in a timely manner,
or both. In such circumstances, market operators may fall back on support from central banks and
governments by pledging securities as collateral. Unavailability of liquidity through such measures or the
decrease or discontinuation of such measures could result in a reduced availability of liquidity on the market
and higher costs for the procurement of such liquidity when needed, thereby adversely affecting the Groups
business, financial condition and results of operations.

Risks related to the Group and its business

The Group has significant credit default risk exposure

As a large financial organisation, the Group is subject to a wide range of general credit risks, including risks
arising from changes in the credit quality and recoverability of loans and amounts due from counterparties.
Third parties that owe the Group money, securities or other assets may not pay or perform under their
obligations. These parties include, among others, borrowers under loans made by the Group (in particular, by
KBC Bank NV), the issuers whose securities the Group holds, customers, trading counterparties,
counterparties under swaps and credit and other derivative contracts, clearing agents, exchanges, clearing
houses, guarantors and other financial intermediaries. These parties may default on their obligations to the
Group due to bankruptcy, lack of liquidity, downturns in the economy or real estate values, operational failure
or other reasons.

28
Credit institutions have witnessed a significant increase in default rates over the past few years as a result of
worsening economic conditions. This increase in the scope and scale of defaults is evidenced by the
significant increase in the amount of impaired loans in the portfolio of the Group. This trend remains visible,
particularly in Ireland. In some of the Central Eastern European countries where the Group is active in, credit
is also granted in a currency other than the local currency. Changes in exchange rates between the local and
such other currency can also have an impact on the credit quality of the borrower. Any further adverse
changes in the credit quality of the Groups borrowers, counterparties or other obligors could affect the
recoverability and value of its assets and require an increase in the Groups provision for bad and doubtful
debts and other provisions. In addition to the credit quality of the borrower, adverse market conditions such as
declining real estate prices negatively affect the results of the Groups credit portfolio since these impact the
recovery value of the collateral. All this could be further exacerbated in the case of a prolonged economic
downturn or worsening market conditions.

The Groups banking business makes provisions for loan losses which correspond to the provision for
impairment losses in its income statement in order to maintain appropriate allowances for loan losses based
on an assessment of prior loan loss experience, the volume and type of lending being conducted, industry
standards, past due loans, economic conditions and other factors related to the collectability of the loan
portfolio. This determination is primarily based on the Groups historical experience and judgment. Any
increase in the provision for loan losses, any loan losses in excess of the previously determined provisions
with respect thereto or changes in the estimate of the risk of loss inherent in the portfolio of non-impaired
loans could have a material adverse effect on the Groups business, results of operation or financial condition.

The Groups principal credit risk exposure is to retail and corporate customers, including in its mortgage and
real estate portfolio, as well as towards other financial institutions and sovereigns. As this credit risk reflects
some concentration, particularly in Belgium, Czech Republic, Ireland, Hungary and other of the home
markets where it is active, the Groups financial position is sensitive to a significant deterioration in credit and
general economic conditions in these regions. Moreover, uncertainty regarding the euro-area, the risk of
losses as a result of a countrys or a credit institutions financial difficulties or a downgrade in its credit rating
could have a significant impact on the Groups credit exposure, loan provisioning, results of operation and
financial position. In addition, concerns about, or a default by, one credit institution could lead to significant
liquidity problems, losses or defaults by other institutions, because the commercial and financial soundness of
many financial institutions are closely related as a result of their credit, trading, clearing and other
relationships.

The events described above have and may continue to adversely affect, the Groups ability to engage in
routine transactions as well as the performance of various loans and other assets it holds.

The Group is exposed to counterparty credit risk in derivative transactions

The Group executes a wide range of derivatives transactions, such as interest rate, exchange rate, share/index
prices, commodity and credit derivatives with counterparties in the financial services industry.

Operating in derivative financial instruments exposes the Group to market risk and operational risk, as well as
the risk that the counterparty defaults on its obligations or becomes insolvent prior to maturity when the
Group has an outstanding claim against that counterparty. Non-standardised or individually negotiated
derivative transactions can make exiting, transferring or settling the position difficult.

Counterparty credit risk has increased due to recent volatility in the financial markets and may be further
exacerbated if the collateral held by us cannot be realised or liquidated at a value that is sufficient to cover the
full amount of the counterparty exposure.

29
Changes in interest rates, which are caused by many factors beyond the Groups control, can have
significant adverse effects on its financial results

Fluctuations in interest rates affect the returns the Group earns on fixed interest investments. Interest rate
changes also affect the market values of the amounts of capital gains or losses the Group takes on and the
fixed interest securities it holds.

The results of the Groups operations are affected by its management of interest rate sensitivity. Interest rate
sensitivity refers to the relationship between changes in market interest rates and changes in net interest
income. The composition of the Groups assets and liabilities, and any gap position resulting from the
composition, causes the Groups operations net interest income to vary with changes in interest rates. In
addition, variations in interest rate sensitivity may exist within the repricing periods and/or between the
different currencies in which the Group holds interest rate positions. A mismatch of interest-earning assets and
interest-bearing liabilities in any given period may, in the event of changes in interest rates, have a material
effect on the financial condition or results of operations of the Groups businesses.

The Group is subject to foreign exchange risk

The Group pursues a prudent policy as regards its structural currency exposure, with a view to limit as much
as possible currency risk. Foreign exchange exposures in the asset-liability management (ALM) books of
banking entities with a trading book are transferred to the trading book where they are managed within the
allocated trading limits. Although the Group pursues a prudent policy with regard to foreign exchange risk,
there can still be a limited impact of this risk on the financial results of the Group.

The Group is subject to market risk

The most significant market risks the Group faces are interest rate, spread, foreign exchange and bond and
equity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate margin
realized between lending and borrowing costs. Changes in currency rates affect the value of assets and
liabilities denominated in foreign currencies and may affect income from foreign exchange dealing. The
performance of financial markets may cause changes in the value of the Groups investment and trading
portfolios.

The Group uses a range of instruments and strategies to partly hedge against certain market risks. If these
instruments and strategies prove ineffective or only partially effective, the Group may suffer losses.
Unforeseen market developments such as those in relation to the government bonds of various countries
which occurred in 2011 and 2012 may significantly reduce the effectiveness of the measures taken by the
Group to hedge risks. Gains and losses from ineffective risk-hedging measures may heighten the volatility of
the results achieved by the Group and could therefore have a material adverse effect on the Groups business,
results of operations and financial condition.

A downgrade in the credit rating of KBC Group NV or its subsidiaries may limit access to certain
markets and counterparties and may necessitate the posting of additional collateral to counterparties
or exchanges

The credit ratings of KBC Group NV and some of its subsidiaries are important to maintaining access to key
markets and trading counterparties. The major rating agencies regularly evaluate KBC Group NV, some of its
subsidiaries and their securities, and their ratings of debt and other securities are based on a number of factors,
including financial strength, as well as factors not entirely within the control of the Group, including
conditions affecting the financial services industry generally or the rating of the countries in which it operates.
In light of the difficulties in the financial services industry and the financial markets, there can be no
assurance that KBC Group NV or its subsidiaries will maintain the current ratings.

30
KBC Group NVs or its subsidiaries failure to maintain its credit ratings could adversely affect the
competitive position of the Group, make entering into hedging transactions more difficult and increase
borrowing costs or limit access to the capital markets or the ability of the Group to engage in funding
transactions. A further reduction in an entity of the Groups credit ratings also could have a significant impact
on certain trading revenues, particularly in those businesses where longer term counterparty performance is
critical. In connection with certain trading agreements, an entity of the Group may be required to provide
additional collateral in the event of a credit ratings downgrade.

The Groups risk management policies, procedures and methods may leave it exposed to unidentified,
unanticipated or incorrectly quantified risks, which could lead to material losses or material increases
in liabilities

The Group devotes significant resources to developing risk management policies and models, procedures and
assessment methods for its banking and asset management businesses, the Group applies both quantitative
and qualitative methods to arrive at quantifications of risk exposures. These include, amongst others, value-at-
risk (VaR) models, back testing, Probability of Default (PD) models, Loss Given Default (LGD)
models, asset valuation models and stress tests as well as risk assessment methods.

Nonetheless, such risk management techniques and strategies may not be fully effective in assessing risk
exposure in all economic and market environments or against all types of risk, including risks that the Group
fails to identify or anticipate. Some of the models and metrics used are based upon observed historical
behaviour as well as future predictions. Accordingly, the models used by the Group may fail to predict or
predict incorrectly future risk exposures and the Groups losses could therefore be significantly greater than
such measures would indicate. In addition, the risk management methods used by the Group do not take all
risks into account and could prove insufficient. If prices move in a way that the Groups risk modelling has
not anticipated, the Group may experience significant losses. These failures can be exacerbated where other
market participants are using models that are similar to those of the Group. In certain cases, it may also be
difficult to reduce risk positions due to the activity of other market participants or widespread market
dislocations. Furthermore, other risk management methods depend on the evaluation of information regarding
markets, customers or other publicly-available information. Such information may not always be accurate or
up-to-date.

Accordingly, the Groups losses could be significantly greater than such measures would indicate and
unanticipated or incorrectly quantified risk exposures could result in material losses in the Groups banking
and asset management businesses.

The Group is exposed to the risk of breaches of regulatory and compliance-related requirements in
connection with the exercise of its business activity

The possibility of inadequate or erroneous internal and external processes and systems, regulatory problems,
breaches of compliance-related provisions in connection with the exercise of business activities, such as rules
to prevent money laundering, human errors and deliberate legal violations such as fraud cannot be ruled out.
the Group endeavours to hedge such risks by implementing appropriate control processes tailored to its
business, the market and regulatory environment in which it operates. Nevertheless, it is possible that these
measures prove to be ineffective in relation to particular or all operational risks to which the Group is
exposed. Even though the Group endeavours to insure itself against the most significant operational risks, it is
not possible to obtain insurance cover for all the operational risks on commercially acceptable terms on the
market. Should one, some or all of the risks described in this paragraph materialise, the Group business,
results of operations and financial condition could be materially adversely affected.

31
Litigation or other proceedings or actions may adversely affect the Groups business, financial
condition and results of operations

The Groups business is subject to the risk of litigation by customers, employees, shareholders or others
through private actions, administrative proceedings, regulatory actions or other litigation. Given the
complexity of the relevant circumstances and corporate transactions underlying these proceedings, together
with the issues relating to the interpretation of applicable law, it is inherently difficult to estimate the potential
liability related to such liability risks, to evaluate the outcome of such litigation or the time when such
liability may materialise. Management makes estimates regarding the outcome of legal, regulatory and
arbitration matters and creates provisions when losses with respect to such matters are deemed probable and
can be reasonably estimated. Estimates, by their nature, are based on judgment and currently available
information and involve a variety of factors, including but not limited to the type and nature of the litigation,
claim or proceeding, the progress of the matter, the advice of legal counsel and other advisers, possible
defences and previous experience in similar cases or proceedings. Legal proceedings with remote or non
quantifiable outcomes are not provided for, and the Group may be required to cover litigation losses which
are not covered by such provision, including for example series of similar proceedings. As a result, there can
be no assurance that provisions will be sufficient to fully cover the possible losses arising from litigation
proceedings, and the Group cannot give any assurance that a negative outcome in one or more of such
proceedings would not have a material adverse effect on the Groups business, results of operations or
financial condition.

Furthermore, plaintiffs in legal proceedings may seek recovery of large or indeterminate amounts or other
remedies that may affect the Groups ability to conduct business, and the magnitude of the potential loss
relating to such actions may remain unknown for substantial periods of time. Also, the cost to defend future
actions may be significant. There may also be adverse publicity associated with litigation that could decrease
customer acceptance of its services, regardless of whether the allegations are valid or whether they are
ultimately found liable.

As a result, litigation may adversely affect the Groups business, financial condition and results of operations.

The Group is exposed to risks on account of direct and indirect pension obligations

The Group has various direct and indirect pension obligations towards its current and former staff. These
obligations therefore entail various risks which are similar to, amongst others, risks in a life insurance
company and risks involving a capital investment. Risks, however, may also arise due to changes in tax or
other legislation, and/or in judicial rulings, as well as inflation rates or interest rates. Any of these risks could
have a material adverse effect on the Groups business, results of operations and financial condition.

The Group is exposed to certain risks relating to its insurance operations, including underwriting risk

The main risks with which KBC Insurance NV is confronted are mortality and longevity risk in life insurance
business and catastrophe and non-catastrophe risks in the damage insurance business. Changes in the
frequency of the underlying risk factors may affect the level of liability of KBC Insurance NV and its realised
technical income. KBC Insurance NV has implemented risk management methods to reduce and control the
insurance risks to which it is exposed, as for example reinsurance programs, and the risks are constantly
measured and monitored.

Risks related to the Groups insurance business, including the impact of interest rate fluctuations

The Group is dependent on the level of insurance services required by its customers. the Groups insurance
business faces substantial competitive pressure that could adversely affect the results of its operations.
Moreover, its liquidity position could be adversely impacted by substantial outflows in life insurance
products.

32
The ECB is in the process of performing a comprehensive assessment of the Issuer and other
European banking groups, the outcome of which is uncertain

The ECB announced in October 2013 that it would commence a comprehensive assessment, including stress
tests and an asset quality review, of certain large European banking groups, including the Issuer. The findings
from this assessment, expected to be published in November 2014, may result in recommendations for
additional supervisory measures and corrective actions affecting the Issuer and the banking environment
generally. It is not yet possible to assess the impact of such measures, if any, on the Issuer or on the treatment
of capital instruments (such as the Securities). Furthermore, the disclosure of the ECBs findings or the
implementation of additional supervisory measures that are viewed by the market as unfavorable to the Issuer
or the Securities could adversely affect the trading price of the Securities. See also Description of the Issuer
Risk Management Credit Risk on page 75 to 77 of this Prospectus.

The EU Commission is currently in the process of introducing a new regime governing solvency
margins and provisions in relation to insurance undertakings, the effect of which is uncertain

The EU Commission is carrying out a wide-ranging review in relation to solvency margins and provisions
(the project being known as Solvency II). It is intended that the new regime for insurers and reinsurers
(apart from very small firms) will apply more risk-sensitive standards to capital requirements, bring insurance
regulation more closely in line with banking and security regulation with a view to avoiding regulatory
arbitrage, align regulatory capital with economic capital and introduce an enhanced degree of public
disclosure.

The European Parliament and Council of the European Union approved the directive containing the
framework principles of Solvency II in 2009. The new legislation is, subject to certain further amendments (in
particular in order to take into account the new supervisory structure for insurance, as set out in the so-called
Omnibus II proposed directive of January 2011) and to further implementation by the European Commission
through so-called level 2 rules, currently foreseen to become fully applicable on 1 January 2016. However,
quite a few uncertainties remain, including in relation to the implementing measures and the overall timing.

Accordingly, the Group can therefore not predict the exact impact of the rules on the Group, its insurance
business, capital requirements, financial condition, key risk management resources or results of operations.

Given the uncertainty of future implementation of Solvency II, there can be no assurance that the Group or its
insurance business will not need to strengthen its solvency if and when Solvency II enters into force.

Other risks related to the Group

Minimum regulatory capital and liquidity requirements

The Group is subject to the risk, inherent in all regulated financial businesses, of having insufficient capital
resources to meet the minimum regulatory capital requirements. Under Basel II and III, capital requirements
are inherently more sensitive to market movements than under previous regimes. Capital requirements will
increase if economic conditions or negative trends in the financial markets worsen. Any failure of the Group
to maintain its minimum regulatory capital ratios could result in administrative actions or sanctions, which in
turn may have a material adverse impact on the Groups results of operations. A shortage of available capital
may restrict the Group's opportunities for expansion.

The Issuer is required to meet certain capital and liquidity requirements under CRD IV, which implements the
Basel III proposals (Basel III). Such requirements will be gradually phased in and have an impact on the
Issuer and its operations, as it imposes higher capital requirements. Moreover, any failure of the Group to
maintain such increased capital and liquidity ratios could result in administrative actions or sanctions, which

33
may have an adverse effect on the Group's results of operations. The Issuer will also be subject to a leverage
ratio in the future.

The Group is highly concentrated in and hence vulnerable to European sovereign exposure, in
particular in its home country Belgium

The Group conducts the vast majority of its business in the European Union. Part of that business has led to
an exposure by the Group towards various countries in the European Union, including certain countries which
have come under market pressure. Given the recent political, economic and financial developments in most of
the European countries, the Group incurs a risk that those countries will no longer be able to comply with the
terms and conditions of their exposure vis--vis the Group. If such sovereign risk would materialise, the
Groups business, financial condition and results of operation could be materially adversely affected. See
further Description of the Issuer Risk management Sovereign debt exposure.

The Group is exposed to potential losses stemming from previous activities in structured products
portfolios, including its ABS and CDO portfolios

Structured credit activities of the Group entities relate to ABSs (Asset Backed Securities) and CDOs
(Collateralised Debt Obligations), which are defined as follows:

ABSs are bonds or notes backed by loans or accounts receivable originated by providers of credit, such
as banks and credit card companies. Typically, the originator of the loans or accounts receivable transfers the
credit risk to a trust, which pools these assets and repackages them as securities. These securities are then
underwritten by brokerage firms, which offer them to the public.

CDOs are a type of asset-backed security and a structured finance product in which a distinct legal
entity, a Special Purpose Vehicle (SPV), issues bonds or notes against an investment in an underlying asset
pool. Pools may differ with regard to the nature of their underlying assets and can be collateralized either by a
portfolio of bonds, loans and other debt obligations, or be backed by synthetic credit exposures through use of
credit derivatives and credit -linked notes.

The claims issued against the collateral pool of assets are prioritized in order of seniority by creating different
tranches of collateralised debt securities, including one or more investment grade classes and an equity/first
loss tranche. Senior claims are insulated from default risk to the extent that the more junior tranches absorb
credit losses first. As a result, each tranche has a different priority of payment of interest and/or principal and
may thus have a different rating.

Prior to the financial crisis, the Group was active in the field of structured credits, both as an originator and an
investor. Since mid-2007, the Group is no longer active as originator in this business segment. As an
originator, the Group also took on other roles such as sponsor, when it provided liquidity support to the
related SPVs. the Group also invested in structured credit products. However, a number of these investments
still appear on the Groups balance sheet. The risks linked to these structured products portfolios may have an
adverse effect on the Groups business, financial condition and results of operation. See further Description
of the Issuer Risk management Structured credit exposure.

Risks associated with the government support and the associated EU Plan

The acceptance of government support also includes the acceptance of related risks and obligations the
Groups ability to successfully execute its strategic plan is not assured.

The acceptance of government support and the approval of these measures under European Union State Aid
rules was subject to submission by the Belgian authorities of a restructuring plan for the Group containing
measures to safeguard its long-term viability and to ensure the Groups capacity to repay within a reasonable
timeframe the capital received. This restructuring plan was approved on 18 November 2009, as amended on

34
27 July 2011 and further amended on 20 December 2012 in relation to the State guarantee. Under the terms of
such approval, the European Commission has imposed a range of conditions on the Group, including
divestment, conduct of business and other restrictions, some of which could materially impact the Group or
result in dilution for the existing shareholders of the Group.

Approval by European Commission of the restructuring plan was also subject to the imposition of certain
behavioural commitments imposed on the Group, such as maintaining a minimum solvency ratio, respecting
certain limitations on executive compensation, restrictions on acquisitions, and adhering to a price leadership
ban subject to certain conditions. Furthermore, the acceptance of the government support has led to the
supervision of the European Union and the presence of government representatives on the board of directors
of the Group, thereby limiting the Groups autonomy.

Further, the strategic plan requires the Group and its subsidiaries to engage in a restructuring according to the
terms outlined in such plan, including the disposal and downsizing of a significant number of its businesses
(see Description of the Issuer General description of activities of the Group below). the Group has
implemented a range of initiatives to give effect to the plan, including some important steps to derisk aspects
of the (former) merchant banking business unit. Now the divestment plan is more or less fully implemented,
with the exception of WARTAs pension fund activities, KBC Bank Deutschland and Antwerp Diamond Bank
(for which sale agreements were signed, but for which completion is still pending and subject to the
satisfaction of certain conditions). For further information in respect of the aforementioned pending
divestments, please see the respective press releases dated 9 May 2013 (PTE Allianz Polska S.A. acquires
Wartas pension fund business in Poland), 24 September 2013 (KBC Announces Sale of KBC Bank
Deutschland) and 19 December 2013 (Yinren Group acquires Antwerp Diamond Bank from KBC),
available on www.kbc.com.

While the Group strictly manages its operational risks, these risks remain inherent to its business

The Group is exposed to many types of operational risks, including fraudulent and other criminal activities
(both internal and external), breakdowns in processes or procedures and systems failure or non-availability. In
addition, the Group may also be subject to disruptions of its operating systems, or of the infrastructure that
supports it, arising from events that are wholly or partially beyond the Groups control (for example natural
disasters, acts of terrorism, computer viruses, pandemics, transport or utility failures or external vendors not
fulfilling their contractual obligations) which could give rise to losses in service to our customers and to loss
or liability to the Group.

The operational risks that the Group faces include the possibility of inadequate or failed internal or external
processes or systems, human error, regulatory breaches, employee misconduct or external events such as
fraud or cyber crime. These events can potentially result in financial loss as well as harm to its reputation.
Additionally, the loss of key personnel could adversely affect the Groups operations and results.

The Group attempts to keep operational risks at appropriate levels by maintaining a sound and well controlled
environment in light of the characteristics of its business, the markets and the regulatory environments in
which it operates. While these control measures mitigate operational risks, they do not eliminate them.

35
 DOCUMENTS INCORPORATED BY REFERENCE

The following documents, which have previously been published or are published simultaneously with this
Prospectus and have been filed with the FSMA, shall be incorporated in, and form part of, this Prospectus:

(a) the audited consolidated annual financial statements of the Issuer for the financial years ended 31
December 2011 and 31 December 2012, together, in each case, with the related auditors report;

(b) the Extended Quarterly Report 3Q2013 of the Issuer;

(c) the Extended Quarterly Report 4Q2013 of the Issuer; and

(d) the press releases dated:

8 January 2014 KBC repays second instalment of 500 million euros in Flemish state aid again
ahead of schedule, fully respecting the capital requirements set by the regulator;

13 February 2014 2013: 1 billion euros profit. 2014: beyond restructuring at KBC; and

13 February 2014 KBC Group simplifies organisation and adapts composition of Executive
Committee.

Following the publication of this Prospectus, a supplement may be prepared by the Issuer and approved by the
FSMA in accordance with Article 16 of the Prospectus Directive. Statements contained in any such
supplement (or contained in a document incorporated by reference therein) shall, to the extent applicable, be
deemed to modify or supersede statements contained in this Prospectus or in a document which is
incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so
modified or superseded, constitute a part of this Prospectus.

Copies of documents incorporated by reference in this Prospectus can be obtained from the registered office
of the Issuer and the website of the Issuer at www.kbc.com/investors.

Audited consolidated annual financial statements of the Issuer and its consolidated
subsidiaries for the financial year ended 31 December 2012*
report of the board of directors 5-111
balance sheet 118
income statement 116
cash flow statement 120-121
notes to the financial statements 122-183
auditors report 114-115
statement of changes in equity 119
Audited consolidated annual financial statements of the Issuer and its consolidated
subsidiaries for the financial year ended 31 December 2011*
report of the board of directors 5-82
balance sheet 112
income statement 110
cash flow statement 114
notes to the financial statements 116-175
auditors report 108

36
 statement of changes in equity 113
Extended Quarterly Report 3Q2013 of the Issuer*
report on 3Q2013 and 9M2013 5-17
analysis of 3Q underlying results 18-33
consolidated financial statements according to IFRS 34-57
risk and capital management 58-65
Extended Quarterly Report 4Q2013 of the Issuer*
report on 4Q2013 and FY2013 4-17
underlying results per business unit 18-33
consolidated financial statements according to IFRS 34-55
risk and capital management 56-70
* Page references are to the English language PDF version of the relevant incorporated documents.

Information contained in the documents incorporated by reference other than information listed in the table above
is for informational purposes only.

37
 TERMS AND CONDITIONS OF THE SECURITIES

The following is the text of the Conditions of the Securities, save for the paragraphs in italics that shall not
form part of the Conditions of the Securities:

The 1,400,000,000 Undated Deeply Subordinated Additional Tier 1 Fixed Rate Resettable Callable
Securities (the Securities, which expression shall in these Conditions, unless the context otherwise requires,
include any further securities issued pursuant to Condition 13 and forming a single series with the Securities)
of KBC Group NV (the Issuer) are issued subject to and with the benefit of an Agency Agreement dated the
Issue Date (such agreement as amended and/or supplemented and/or restated from time to time, the Agency
Agreement) made between the Issuer and KBC Bank NV as paying agent and domiciliary agent (the
Agent which expression shall include any successor or replacement Agent and any other paying agents
appointed pursuant to the Agency Agreement, the Paying Agents).

The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and
definitions in the Agency Agreement. Copies of the Agency Agreement are available for inspection during
normal business hours by the holders at the specified office of each of the Paying Agents. The holders are
deemed to have notice of all the provisions of the Agency Agreement applicable to them. References in these
Conditions to the Agent and the Paying Agents shall include any successor appointed under the Agency
Agreement.

1. Form, Denomination and Title

The Securities are in dematerialised form in accordance with Articles 468 et seq. of the Belgian Companies
Code (the Code). The Securities will be represented by a book entry in the records of the clearing system
operated by the National Bank of Belgium (the NBB) or any successor thereto (the Securities Settlement
System). The Securities can be held by their holders through the participants in the Securities Settlement
System, including Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, socit anonyme
(Clearstream, Luxembourg) and through other financial intermediaries which in turn hold the Securities
through Euroclear and Clearstream, Luxembourg or other participants in the Securities Settlement System.
The Securities are transferred by account transfer.

Holders are entitled to exercise the rights they have, including but not limited to exercising their voting rights
and other associative rights (as defined for the purposes of Article 474 of the Code) against the Issuer upon
submission of an affidavit drawn up by the NBB, Euroclear, Clearstream, Luxembourg or any other
participant duly licensed in Belgium to keep dematerialised securities accounts showing their position in the
Securities (or the position held by the financial institution through which their Securities are held with the
NBB, Euroclear, Clearstream, Luxembourg or such other participant, in which case an affidavit drawn up by
that financial institution will also be required).

For such purposes, each person who is from time to time shown in the records of a participant, sub-participant
or the NBB as operator of the Securities Settlement System as the holder of a particular amount of Securities
shall be treated as the holder of those Securities and any certificate or other document issued by any
participant or the NBB shall be conclusive and binding.

The Securities cannot be physically delivered and may not be converted into bearer securities (effecten aan
toonder/ titres au porteur).

The Securities are issued in denominations of 100,000 and integral multiples of 1,000 in excess thereof up
to (and including) 199,000 and can only be settled through the Securities Settlement System in nominal
amounts equal to a whole denomination (or a whole multiple thereof).

38
2. Status of the Securities

2.1 Status

The Securities constitute direct, unconditional, unsecured and deeply subordinated obligations of the Issuer
and rank pari passu without any preference among themselves. The rights and claims of the holders are
subordinated as described in Condition 2.2.

2.2 Subordination

In the event of an order being made or an effective resolution being passed for the liquidation, dissolution or
winding-up of the Issuer by reason of bankruptcy (faillissement/faillite) or otherwise (except, in any such
case, a solvent liquidation, dissolution or winding-up solely for the purposes of a reorganisation,
reconstruction or amalgamation of the Issuer or the substitution in place of the Issuer of a successor in
business of the Issuer), the rights and claims of the holders against the Issuer in respect of or arising under
(including any damages awarded for breach of any obligation under) the Securities shall, subject to any
obligations which are mandatorily preferred by law, rank (a) junior to the rights and claims of all unsecured
and unsubordinated creditors and to the rights and claims of creditors in respect of all Subordinated
Indebtedness (including Tier 2 Capital instruments) but excluding the rights and claims of creditors in respect
of Parity Obligations and Junior Obligations, (b) at least pari passu with the rights and claims of creditors in
respect of all Parity Obligations and (c) senior only to the rights and claims of creditors in respect of Junior
Obligations.

2.3 No set-off

Subject to applicable law, no holder of a Security may exercise or claim any right of set-off in respect of any
amount owed to it by the Issuer arising under or in connection with the Securities and each holder of a
Security shall, by virtue of his subscription, purchase or holding of a Security, be deemed to have waived all
such rights of set-off.

2.4 Claims subject to Principal Write-down and subsequent Principal Write-up

Any claim of any holder in respect of or arising under the Securities for any amount of principal will be for
the Prevailing Principal Amount of such Securities, irrespective of whether the relevant Trigger Event Write-
down Notice has been given prior to or after the occurrence of any event described in Condition 10 or any
other event.

In respect of this Condition 2, reference is made to statutory loss absorption as more fully described in the
risk factors entitled Loss absorption at the point of non-viability, The principal amount of the Securities
may be reduced (Written Down) to absorb losses and Change of law.

3. Interest and interest cancellation

3.1 Interest

(a) Interest rate and Interest Payment Dates

The Securities bear interest on their outstanding Prevailing Principal Amount at the applicable Rate of Interest
from (and including) the Issue Date. Subject to cancellation of any interest payment (in whole or in part)
pursuant to Condition 3.2, interest shall be payable quarterly in arrear in equal instalments on each Interest
Payment Date.

The amount of interest per 1,000 in Original Principal Amount of the Securities payable on each Interest
Payment Date in relation to an Interest Period falling in the Initial Period will, provided there is no Principal

39
 Write-down pursuant to Condition 7 and subject to any cancellation of interest (in whole or in part) pursuant
to Condition 3.2, be 14.0625.

The Rate of Interest for each Interest Period commencing on or after the First Call Date will be the Reset Rate
of Interest applicable to the Reset Period during which such Interest Period falls plus the Margin, all as
determined by the Agent. The Agent will, as soon as practicable after 11:00 a.m. (Central European time) on
each Reset Rate of Interest Determination Date, determine the applicable Reset Rate of Interest.

(b) Interest Accrual

Subject always to Condition 7 and to cancellation of interest (in whole or in part) pursuant to Condition 3.1 or
3.2, each Security will cease to bear interest from and including its due date for redemption unless payment of
the principal in respect of the Security is improperly withheld or refused or unless default is otherwise made
in respect of payment.

In such event, interest will continue to accrue until whichever is the earlier of:

(i) the date on which all amounts due in respect of such Security have been paid; and
(ii) the date which is five days after the date on which the full amount of the moneys payable in respect of
such Securities has been received by the Agent and notice to that effect has been given to the holders
in accordance with Condition 11.
(c) Publication of Reset Rate of Interest and amount of interest
The Agent will cause each Reset Rate of Interest and the amount of interest payable per Calculation Amount
for each Reset Period commencing on or after the First Call Date determined by it to be notified to each
listing authority, stock exchange and/or quotation system (if any) by which the Securities have then been
admitted to listing, trading and/or quotation as soon as practicable after such determination but in any event
not later than the relevant Reset Date. Notice thereof shall also promptly be given to the holders in accordance
with Condition 11.

(d) Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given,
expressed, made or obtained for the purposes of this Condition 3 by the Agent will (in the absence of manifest
error) be binding on the Issuer, the Paying Agents and the holders and (subject as aforesaid) no liability to any
such person will attach to the Agent in connection with the exercise or non-exercise by it of its powers, duties
and discretions for such purposes.

(e) Calculation of interest amounts and any broken amounts

Save as provided above in respect of equal instalments, the amount of interest payable per Calculation
Amount (subject to Condition 7 and to cancellation in whole or in part pursuant to Condition 3.2) in respect of
each Security for any period (an Accrual Period, being the period from and including the date from which
interest begins to accrue to but excluding the date on which it falls due) shall be calculated by the Agent by:

(i) applying the applicable Rate of Interest to the Calculation Amount;

(ii) multiplying the product thereof by (A) the actual number of days in the Accrual Period divided by (b)
four times the actual number of days from and including the first day of the Accrual Period to but
excluding the next following Interest Payment Date; and

(iii) rounding the resulting figure to the nearest cent (half a cent being rounded upwards).

If the Prevailing Principal Amount of the Securities changes on one or more occasions during any Accrual
Period, the Agent shall separately calculate the amount of interest (in accordance with this Condition 3.1(e))

40
 accrued on each Security for each period within such Accrual Period during which a different Prevailing
Principal Amount subsists, and the aggregate of such amounts shall be the amount of interest payable (subject
to Condition 7 and to cancellation in whole or in part pursuant to Condition 3.2) in respect of a Security for
the relevant Accrual Period.

3.2 Interest cancellation

(a) Optional cancellation of interest

The Issuer may, in its sole discretion (but subject at all times to the requirements for mandatory cancellation
of interest payments in Condition 3.2(b), at any time before the relevant Interest Payment Date elect to cancel
any Interest Payment, in whole or in part, which is scheduled to be paid on an Interest Payment Date.

(b) Mandatory cancellation of interest

The Issuer shall cancel (in whole or in part, as applicable) any Interest Payment otherwise due on an Interest
Payment Date if and to the extent that:

(i) the payment of such Interest Payment, when aggregated with any interest payments or distributions
which have been paid or made or which are required to be paid or made on other own funds items in
the then current financial year (excluding any such interest payments or distributions which (A) are not
required to be made out of Distributable Items or (B) have already been provided for, by way of
deduction, in the calculation of Distributable Items), would cause the amount of Distributable Items (if
any) then available to the Issuer to be exceeded; or
(ii) the payment of such Interest Payment would cause, when aggregated together with other distributions
of the kind referred to in Article 141(2) of the Capital Requirements Directive (or, if different, any
provision of Belgian law transposing or implementing Article 141(2) of the Capital Requirements
Directive, as amended or replaced), the Maximum Distributable Amount (if any) then applicable to the
Issuer to be exceeded.

As used in these Conditions:

Distributable Items means, subject as otherwise defined in the Applicable Banking Regulations
from time to time:

(i) the amount of the Issuers profits at the end of the financial year immediately preceding the
financial year in which the relevant Interest Payment Date falls plus any profits brought forward
and reserves available for that purpose before distributions to holders of own funds instruments;
less

(ii) any losses brought forward, profits which are non-distributable pursuant to applicable Belgian
law and sums placed to non-distributable reserves in accordance with applicable Belgian law,

those profits, losses and reserves being determined on the basis of the Issuers non-consolidated
accounts; and

Maximum Distributable Amount means any maximum distributable amount relating to the Issuer
required to be calculated in accordance with Article 141(2) of the Capital Requirements Directive (or,
as the case may be, any provision of Belgian law implementing Article 141(2) of the Capital
Requirements Directive).

(c) Notice of cancellation of interest

Upon the Issuer electing (pursuant to Condition 3.2(a)) or determining that it shall be required (pursuant to
Condition 3.2(b)) to cancel (in whole or in part) any Interest Payment, the Issuer shall as soon as reasonably
practicable give notice to the holders in accordance with Condition 11, specifying the amount of the relevant

41
 cancellation and, accordingly, the amount (if any) of the relevant Interest Payment that will be paid on the
relevant Interest Payment Date; provided, however, that any failure to give such notice shall not affect the
validity of the cancellation of any Interest Payment in whole or in part and shall not constitute a default under
the Securities for any purpose.

In the absence of such notice being given, the fact of non-payment (in whole or in part) of the relevant
Interest Payment on the relevant Interest Payment Date shall be evidence of the Issuer having elected or being
required to cancel such Interest Payment in whole or in part, as applicable.

(d) Interest non-cumulative; no event of default

Any Interest Payment (or part thereof) not paid on any relevant Interest Payment Date by reason of
Condition 3.2(a), 3.2(b) or 7 shall be cancelled and shall not accumulate or be payable at any time thereafter.
Non-payment of any Interest Payment (or part thereof) in accordance with any of Condition 3.2(a), 3.2(b) or 7
will not constitute an event of default by the Issuer for any purpose or a breach of the Issuers other
obligations or duties or a failure to perform by the Issuer in any manner whatsoever, will not entitle holders to
petition for the insolvency or dissolution of the Issuer and the holders shall have no right to the Interest
Payment (or part thereof) not paid, whether in bankruptcy (faillissement/faillite) or dissolution or as a result of
the insolvency of the Issuer or otherwise.

4. Payments

4.1 Payments in respect of Securities

Without prejudice to Article 474 of the Code, payments of principal, interest and other sums due under the
Securities will be made in accordance with the rules of the Securities Settlement System. The payment
obligations of the Issuer will be discharged by payment to the Securities Settlement System in respect of each
amount so paid.

4.2 Payments on Business Days

If the due date for payment of any amount in respect of any Security is not a Business Day, the holder shall
not be entitled to payment of the amount due until the next succeeding such Business Day and shall not be
entitled to any further interest or other payment in respect of any such delay.

4.3 Payments subject to Applicable Laws

Payments in respect of principal of and interest on the Securities are subject in all cases to (i) any fiscal or
other laws and regulations applicable thereto in any jurisdiction, but without prejudice to the provisions of
Condition 8 and (ii) any withholding or deduction required pursuant to an agreement described in Section
1471(b) of the U.S. Internal Revenue Code of 1986 or otherwise imposed pursuant to Sections 1471 through
1474 of the U.S. Internal Revenue Code, any regulations or agreements thereunder, official interpretations
thereof, or (without prejudice to the provisions of Condition 8) any law implementing an intergovernmental
approach thereto.

5. Redemption and Purchase

5.1 No fixed maturity

The Securities are perpetual and have no fixed maturity date. The Securities will become repayable only as
provided in this Condition 5 and in Condition 10.

5.2 Redemption at the Option of the Issuer

Subject to Condition 5.5, the Issuer may, at its option, having given:

42
 (a) not less than 30 nor more than 45 days' notice to the holders in accordance with Condition 11; and

(b) notice to the Agent not less than 15 days before the giving of the notice referred to in (a),

(which notices shall, subject as provided in Condition 5.5, be irrevocable and shall specify the date fixed for
redemption), redeem all (but not some only) of the Securities on the First Call Date or on any Interest
Payment Date thereafter at their Prevailing Principal Amount together with accrued and unpaid interest
(excluding interest which has been cancelled in accordance with these Conditions) to, but excluding, the date
of redemption and any additional amounts payable in accordance with Condition 8.

5.3 Redemption for Taxation Reasons

(a) Redemption upon a Tax Gross-up Event

Subject to Condition 5.5, if:

(i) as a result of any change in, or amendment to, the laws or regulations of Belgium, or any change in the
application or official interpretation of such laws or regulations, which change or amendment becomes
effective on or after the Issue Date (a Change in Law), on the next Interest Payment Date the Issuer
has or will become obliged to pay additional amounts as provided or referred to in Condition 8; and
(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,
(together, a Tax Gross-up Event), the Issuer may, at its option, having given not less than 30 nor more than
60 days' notice to the holders in accordance with Condition 11 (which notice shall, subject as provided in
Condition 5.5, be irrevocable), redeem the Securities in whole (but not in part), at any time at their Prevailing
Principal Amount together with accrued and unpaid interest (excluding interest which has been cancelled in
accordance with these Conditions) to, but excluding, the date of redemption and any additional amounts
payable in accordance with Condition 8, provided that no such notice of redemption shall be given earlier
than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts,
were a payment in respect of the Securities then due.

(b) Redemption upon a Tax Deductibility Event

Subject to Condition 5.5, if, as a result of a Change in Law, on the next Interest Payment Date any interest
payable by the Issuer in respect of the Securities ceases (or will cease) to be deductible by the Issuer for
Belgian corporate income tax purposes or such deductibility is reduced (a Tax Deductibility Event), the
Issuer may, at its option, having given not less than 30 nor more than 60 days' notice to the holders in
accordance with Condition 11 (which notice shall, subject as provided in Condition 5.5, be irrevocable),
redeem the Securities in whole (but not in part), at any time at their Prevailing Principal Amount together with
accrued and unpaid interest (excluding interest which has been cancelled in accordance with these
Conditions) to, but excluding, the date of redemption and any additional amounts payable in accordance with
Condition 8, provided that no such notice of redemption shall be given earlier than 90 days prior to the first
scheduled Interest Payment Date in respect of which a deduction would not be available or would be reduced.

(c) Directors Certificate

Prior to the publication of any notice of redemption pursuant to this Condition 5.3, the Issuer shall deliver to
the Agent (i) a certificate signed by two Directors of the Issuer stating that the Issuer is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions precedent to the right of the
Issuer so to redeem have occurred and (ii) an opinion of independent legal advisers of recognised standing to
the effect that, as a result of the Change in Law, either (A) in the case of a redemption upon the occurrence of
a Tax Gross-up Event, the Issuer has or will become obliged to pay the relevant additional amounts, or (B) in
the case of a redemption upon the occurrence of a Tax Deductibility Event, any interest payable by the Issuer

43
 in respect of the Securities has ceased (or will cease) to be deductible by the Issuer for Belgian corporate
income tax purposes or such deductibility is, or would be, reduced.

5.4 Redemption upon a Regulatory Event

(a) Redemption
Subject to Condition 5.5, upon the occurrence of a Regulatory Event, the Issuer may at its option, having
given not less than 30 nor more than 60 days notice to the holders in accordance with Condition 11 (which
notice shall, subject as provided in Condition 5.5, be irrevocable), redeem the Securities, in whole (but not in
part), at any time at their Prevailing Principal Amount together with accrued and unpaid interest (excluding
interest which has been cancelled in accordance with these Conditions) to, but excluding, the date of
redemption and any additional amounts payable in accordance with Condition 8.

A Regulatory Event shall occur if there is a change (or prospective change which the Lead Regulator
considers to be sufficiently certain) in regulatory classification of the Securities that has resulted or would be
likely to result in them being fully excluded from the Additional Tier 1 Capital of the Issuer.

(b) Directors Certificate

Prior to the publication of any notice of redemption pursuant to this Condition 5.4, the Issuer shall deliver to
the Agent a certificate signed by two Directors of the Issuer stating that a Regulatory Event has occurred.

5.5 Conditions to Redemption and Purchase

(a) General conditions to redemption and purchase

Any optional redemption of Securities pursuant to Condition 5.2, 5.3 or 5.4 and any purchase of Securities
pursuant to Condition 5.6 are subject to the following, in each case only if and to the extent then required by
Applicable Banking Regulations:

(i) compliance with any conditions prescribed under Applicable Banking Regulations, including the prior
approval of the Lead Regulator (if required);

(ii) in the case of redemption upon the occurrence of a Tax Gross-up Event or a Tax Deductibility Event
only, the Issuer having demonstrated to the satisfaction of the Lead Regulator that (A) the Change in
Law was not reasonably foreseeable as at the Issue Date and (B) the relevant change in tax treatment is
material; and
(iii) in the case of redemption upon the occurrence of a Regulatory Event only, the Issuer having
demonstrated to the satisfaction of the Lead Regulator that the change (or prospective change) in the
regulatory classification of the Securities was not reasonably foreseeable as at the Issue Date.
(b) No redemption whilst the Securities are written down
The Issuer shall not be entitled to redeem the Securities pursuant to Condition 5.2, 5.3 or 5.4 if, on the
relevant redemption date, the Prevailing Principal Amount of the Securities is lower than their Original
Principal Amount (and any notice of redemption which has been given in such circumstances shall be
automatically rescinded and shall be of no force and effect).

(c) Determination of Trigger Event supersedes notice of redemption

If the Issuer has given a notice of redemption of the Securities pursuant to Condition 5.2, 5.3 or 5.4 and, after
giving such notice but prior to the relevant redemption date, the Issuer determines that a Trigger Event has
occurred, the relevant redemption notice shall be automatically rescinded and shall be of no force and effect,
the Securities will not be redeemed on the scheduled redemption date and, instead, a Principal Write-down
shall occur in respect of the Securities as described under Condition 7.

44
5.6 Purchases

Subject to Condition 5.5, the Issuer or any of its subsidiaries may at any time purchase Securities in any
manner and at any price. Such Securities may be held, reissued or, at the option of the Issuer, surrendered to
the Agent for cancellation.

Applicable Banking Regulations on the Issue Date do not permit purchases under this Condition 5.6 during
the first five years after the Issue Date.

5.7 Cancellations

All Securities which are redeemed, and all Securities which are purchased and surrendered to the Agent for
cancellation, will (subject to Condition 5.5) forthwith be cancelled.

5.8 Notices Final

Subject to Condition 5.5, upon the expiry of any notice as is referred to in Conditions 5.2, 5.3 or 5.4 the Issuer
shall be bound to redeem the Securities to which the notice refers in accordance with the terms of such
Condition.

6. Substitution and Variation

6.1 Substitution and variation

Subject to Condition 6.2 and 6.3, if a Regulatory Event, a Tax Gross-up Event or a Tax-Deductibility Event
(each a Special Event) has occurred and is continuing, the Issuer may at its option, without any
requirement for the consent or approval of the holders, upon not less than 30 nor more than 60 days notice to
the holders in accordance with Condition 11 (which notice shall, subject as provided in Condition 6.3, be
irrevocable), substitute all (but not some only) of the Securities (including for the purposes of Condition
7.2(g)) or vary the terms of all (but not some only) of the Securities so that they become or remain (as the
case may be) Qualifying Securities.

For the avoidance of doubt, neither the Trigger Event nor the provisions for the cancellation of Interest
Payments under Condition 3.2 will be amended or varied to the detriment of holders.

Any such notice shall specify the relevant details of the manner in which such substitution or variation shall
take effect and where the holders can inspect or obtain copies of the new terms and conditions of the
Securities.

Such substitution or variation will be effected without any cost or charge to the holders.

In these Conditions, Qualifying Securities means, at any time, any securities issued by the Issuer:

(i) that:
(A) contain terms which at such time comply with the then current requirements of the Lead
Regulator in relation to Additional Tier 1 Capital (which, for the avoidance of doubt, may result
in such securities not including, or restricting for a period of time the application of, one or
more of the Special Event redemption events which are included in the Securities);
(B) carry the same rights to redeem as set out in Condition 5.2 and the same rate of interest,
including for the avoidance of doubt any rate of interest reset provisions, from time to time
applying to the Securities prior to the relevant substitution or variation;
(C) rank pari passu with the Securities prior to the substitution or variation;
(D) shall not at such time be subject to a Special Event, and

45
 (E) have terms not otherwise materially less favourable to the holders than the terms of the
Securities, as reasonably determined by the Issuer, and provided that the Issuer shall have
delivered to the Agent a certificate to that effect signed by two of its Directors; and
(ii) that if (A) the Securities were listed or admitted to trading on a Regulated Market immediately prior to
the relevant substitution or variation, are listed or admitted to trading on a Regulated Market or (B) if
the Securities were listed or admitted to trading on a recognised stock exchange other than a Regulated
Market immediately prior to the relevant substitution or variation, are listed or admitted to trading on
any recognised stock exchange (including, without limitation, a Regulated Market), in either case as
selected by the Issuer.
6.2 Conditions to substitution and variation

Any substitution or variation of the Securities pursuant to Condition 6.1 is subject to compliance with any
conditions prescribed under Applicable Banking Regulations, including the prior approval of the Lead
Regulator (if required).

6.3 Determination of Trigger Event following notice of substitution or variation

If the Issuer has given a notice of substitution or variation of the Securities pursuant to Condition 6.1 and,
after giving such notice but prior to the date of such substitution or variation (as the case may be), the Issuer
determines that a Trigger Event has occurred, the Issuer shall:

(i) in consultation with the Lead Regulator, determine whether or not the proposed substitution or
variation (as the case may be) will proceed and, if so, whether any amendments to the substance and/or
timing of such substitution or variation (as applicable) will be made; and
(ii) as soon as reasonably practicable, give holders notice of the same in accordance with Condition 11
(such notice to specify the matters referred to in Condition 6.3(i) above).

7. Principal Write-down and Principal Write-up

7.1 Principal Write-down

(a) Trigger Event

Upon the occurrence of a Trigger Event, a Principal Write-down will occur on the relevant Trigger Event
Write-down Date, all in accordance with this Condition 7.1.

(b) Trigger Event Write-down Notice

Upon the occurrence of a Trigger Event, the Issuer shall:

(i) immediately notify the Lead Regulator that a Trigger Event has occurred;
(ii) give notice to holders (a Trigger Event Write-down Notice) in accordance with Condition 11,
which notice shall specify (A) that a Trigger Event has occurred, (B) the date on which the Principal
Write-down shall occur (the Trigger Event Write-down Date), which shall be no later than one
month from the occurrence of the Trigger Event or such shorter period as may be required by the Lead
Regulator and (C) if it has then been determined, the Write-down Amount; and
(iii) not later than the giving of the Trigger Event Write-down Notice, deliver to the Agent a certificate
signed by two Directors of the Issuer stating a Trigger Event has occurred.
If the Write-down Amount has not been determined at the time the Issuer gives the Trigger Event Write-down
Notice, the Issuer shall, as soon as reasonably practicable following such determination having been made,
give a further notice to holders in accordance with Condition 11, confirming the Write-down Amount.

46
(c) Cancellation of interest and Principal Write-down
On the Trigger Event Write-down Date, the Issuer shall:

(i) first, irrevocably cancel all interest accrued on each Security up to (and including) the Trigger Event
Write-down Date (whether or not the same has become due at such time); and
(ii) secondly, irrevocably (without the need for the consent of holders) reduce the then Prevailing Principal
Amount of each Security by the relevant Write-down Amount (such reduction being referred to as a
Principal Write-down, and Written Down being construed accordingly), such Principal Write-
down to be effected, save as may be otherwise required by Applicable Banking Regulations and/or the
Lead Regulator following or concurrently with the write-down or conversion into equity of the entire
(save for any one cent. floor) outstanding principal amount of any Prior Loss Absorbing Instruments,
pro rata and concurrently with the Principal Write-down of the other Securities and the write-down or
conversion into equity (as the case may be) of any Similar Loss Absorbing Instruments (based on the
then prevailing principal amount of each Similar Loss Absorbing Instrument).
(d) Write-down Amount
In these Conditions, Write-down Amount means, on any Trigger Event Write-down Date, the amount by
which the then Prevailing Principal Amount of each outstanding Security is to be Written Down and which is
calculated per Calculation Amount of such Security, being:

(i) the amount per Calculation Amount (together with: (A) the concurrent pro rata Principal Write-down
of the other Securities and the write-down or conversion into equity of any Similar Loss Absorbing
Instruments (based on the then prevailing principal amount of each Similar Loss Absorbing
Instrument); and (B) the prior or concurrent write-down or conversion into equity of the entire (save
for any one cent. floor) outstanding principal amount of any Prior Loss Absorbing Instruments) that
would be sufficient to immediately restore the Issuers consolidated CET1 Ratio to not less than 5.125
per cent.; or
(ii) if the amount determined in accordance with (i) above would be insufficient to restore the Issuers
consolidated CET1 Ratio to 5.125 per cent., the amount necessary to reduce the Prevailing Principal
Amount of the Security to one cent.
The Write-down Amount for each Security will therefore be the product of the amount calculated in
accordance with this Condition 7(d) per Calculation Amount and the Prevailing Principal Amount of each
Security divided by the Calculation Amount (in each case immediately prior to the relevant Trigger Event
Write-down Date). For the avoidance of doubt, the principal amount of a Security shall never be reduced to
below one cent. as a result of a Principal Write-down.

(e) Interpretation of pro rata Principal Write-down in the context of Full Loss Absorbing Instruments
If, in connection with a Principal Write-down pursuant to Condition 7.1(c)(ii) and the calculation of the Write-
down Amount pursuant to Condition 7.1(d)(i), there are outstanding at the relevant time any Similar Loss
Absorbing Instruments which (under their terms or otherwise) may be written down or converted to equity in
full (save for any one cent. floor) but not in part only (Full Loss Absorbing Instruments), then:

(i) the requirement in Condition 7.1(c)(ii) that a Principal Write-down of the Securities shall be effected
pro rata with the write-down or conversion into equity (as the case may be) of any Similar Loss
Absorbing Instruments (based on the then prevailing principal amount of each Similar Loss Absorbing
Instrument) shall not be construed as requiring the Securities to be Written Down to one cent. simply
by virtue of the fact that such Full Loss Absorbing Instruments will be written down or converted in
full; and

47
 (ii) for the purposes of calculating the Write-down Amount pursuant to Condition 7.1(d)(i), the Full Loss
Absorbing Instruments will be treated (for the purposes only of determining the relevant pro rata
amounts in Condition 7.1(d)(i)(A)) as if their terms permitted partial write-down or conversion into
equity, such that the write-down or conversion into equity of such Full Loss Absorbing Instruments
shall be deemed to occur in two concurrent stages:

(A) first, the principal amount of such Full Loss Absorbing Instruments shall be written down or
converted to equity pro rata with the Securities and all other Similar Loss Absorbing
Instruments to the extent necessary to restore the Issuers consolidated CET1 Ratio to 5.125 per
cent.; and
(B) secondly, the balance (if any) of the principal amount of such Full Loss Absorbing Instruments
remaining following (A) shall be written-off or converted into equity (as the case may be) with
the effect of increasing the Issuers consolidated CET1 Ratio above 5.125 per cent.

(f) No default; waiver of rights

Principal Write-down of the Securities shall not constitute an event of default in respect of the Securities or a
breach of the Issuers obligations or duties or a failure to perform by the Issuer in any manner whatsoever, and
shall not entitle holders to petition for the insolvency or dissolution of the Issuer.

The holders will be deemed to have automatically and irrevocably waived their right to receive, and shall no
longer have any rights against the Issuer (whether in a winding up or dissolution of the Issuer or otherwise)
with respect to, any interest cancelled and any principal Written Down in accordance with Condition 7.1(c)
(but without prejudice to their rights in respect of any reinstated principal following a Principal Write-up
pursuant to Condition 7.2).

(g) Principal Write-down may occur on one or more occasions

A Principal Write-down may occur on one or more occasions and accordingly the Securities may be Written
Down on one or more occasions (provided, however, that the principal amount of a Security shall never be
reduced to below one cent.).

(h) Similar Loss Absorbing Instruments and Prior Loss Absorbing Instruments
Following the giving of a Trigger Event Write-down Notice which specifies a Principal Write-down of the
Securities, the Issuer shall, save as may be otherwise required by Applicable Banking Regulations and/or the
Lead Regulator, procure that:

(i) a similar notice is, or has been, given in respect of any Similar Loss Absorbing Instruments and any
Prior Loss Absorbing Instruments (in accordance with their terms);
(ii) the prevailing principal amount of each series of Prior Loss Absorbing Instruments outstanding (if any)
is written down or converted into equity in accordance with their terms (and, for the avoidance of
doubt, the entire principal amount (subject to any one cent. floor) of such Prior Loss Absorbing
Instruments shall be written down or converted into equity, as the case may be, in circumstances where
the Write-down Amount in respect of the Securities is greater than nil); and
(iii) subject to Condition 7.1(e), the prevailing principal amount of each series of Similar Loss Absorbing
Instruments outstanding (if any) is written down or converted into equity on a pro rata basis and
concurrently with the Principal Write-down of the Prevailing Principal Amount of the Securities as
soon as reasonably practicable and subject to the terms thereof following the giving of such Trigger
Event Write-down Notice,
all in accordance with this Condition 7.1.

48
 In addition, the Lead Regulator shall be entitled to write down the Securities in accordance with its statutory
powers, as more fully described in the risk factors entitled Loss absorption at the point of non-viability,
The principal amount of the Securities may be reduced (Written Down) to absorb losses and Change of
law.

7.2 Principal Write-up

(a) Principal Write-up

Subject to compliance with the Applicable Banking Regulations, if a positive Consolidated Net Income is
recorded (a Return to Financial Health) at any time while the Prevailing Principal Amount of the
Securities is less than their Original Principal Amount, the Issuer may, at its full discretion but subject to
Conditions 7.2(b), 7.2(c) and 7.2(d), increase the Prevailing Principal Amount of each Security (a Principal
Write-up) up to a maximum of its Original Principal Amount, on a pro rata basis with the other Securities
and with any other Discretionary Temporary Write-down Instruments (based on the then prevailing principal
amount of each Discretionary Temporary Write-down Instrument).

For the avoidance of doubt, the principal amount of a Security shall never be increased to above its Original
Principal Amount.
(b) Maximum Distributable Amount
A Principal Write-up of the Securities shall not be effected in circumstances which (when aggregated together
with other distributions of the Issuer of the kind referred to in Article 141(2) of the Capital Requirements
Directive or, if different, any provision of Belgian law transposing or implementing Article 141(2) of the
Capital Requirements Directive) would cause the Maximum Distributable Amount to be exceeded.

(c) Maximum Write-up Amount

A Principal Write-up of the Securities will not be effected at any time in circumstances where the sum of:

(i) the aggregate amount of the relevant Principal Write-up on all the Securities;
(ii) the aggregate amount of any interest on the Securities that was paid or calculated (but disregarding any
such calculated interest which has been cancelled) on the basis of a Prevailing Principal Amount that is
lower than the Original Principal Amount at any time after the end of the then previous financial year;
(iii) the aggregate amount of the increase in principal amount of each Written-down Additional Tier 1
Instrument (other than the Securities) to be written-up at the time of the relevant Principal Write-up
and the increase in principal amount of the Securities or any Written-down Additional Tier 1
Instruments resulting from any previous write-up since the end of the then previous financial year; and
(iv) the aggregate amount of any interest payments on each Written-down Additional Tier 1 Instrument
(other than the Securities) that were paid or calculated (but disregarding any such calculated interest
which has been cancelled) on the basis of a prevailing principal amount that is lower than the original
principal amount at which such Written-down Additional Tier 1 Instrument was issued at any time
after the end of the then previous financial year,
would exceed the Maximum Write-up Amount.
In these Conditions, the Maximum Write-up Amount means the Consolidated Net Income multiplied by
the aggregate issued original principal amount of all Written-Down Additional Tier 1 Instruments divided by
the total Tier 1 Capital of the Issuer as at the then most recent Quarterly Financial Period End Date.

(d) Principal Write-up and Trigger Event

A Principal Write-up will not be effected whilst a Trigger Event has occurred and is continuing. Further, a
Principal Write-up will not be effected in circumstances where such Principal Write-up (together with the

49
 simultaneous write-up of all other Discretionary Temporary Write-down Instruments) would cause a Trigger
Event to occur.

(e) Principal Write-up pro rata with other Discretionary Temporary Write-down Instruments
The Issuer undertakes that it will not write up the principal amount of any Discretionary Temporary Write-
down Instruments unless it does so on a pro rata basis with a Principal Write-up on the Securities.

(f) Principal Write-up may occur on one or more occasions

Principal Write-up may be made on one or more occasions until the Prevailing Principal Amount of the
Securities has been reinstated to the Original Principal Amount.

Any decision by the Issuer to effect or not to effect any Principal Write-up on any occasion shall not preclude
it from effecting (in the circumstances permitted by this Condition 7.2) or not effecting any Principal Write-up
on any other occasion.

(g) Notice of Principal Write-up

The Issuer shall, as soon as reasonably practicable following its formal decision to effect a Principal Write-up
in respect of the Securities and in any event not later than five Business Days prior to the date on which the
Principal Write-up shall take effect, give notice of such Principal Write-up to the holders in accordance with
Condition 11. For operational reasons, a Principal Write-up may require the Securities Settlement System to
substitute each Security with a new security of the Prevailing Principal Amount (but otherwise on the same
terms) which could be identified by a different international securities identification number (ISIN). Such
notice shall confirm the amount of such Principal Write-up, the date on which such Principal Write-up is to
take effect and whether the ISIN is to change.

7.3 Foreign Currency Instruments

If, in connection with any Principal Write-down or Principal Write-up of the Securities, any instruments are
not denominated in the Accounting Currency at the relevant time (Foreign Currency Instruments, which
may include the Securities, any relevant Similar Loss Absorbing Instruments and/or any relevant Prior Loss
Absorbing Instruments, as applicable), the determination of the relevant Write-down Amount or Write-up
Amount (as the case may be) in respect of the Securities and the relevant write-down (or conversion into
equity) amount or write-up amount (as the case may be) of Similar Loss Absorbing Instruments and/or Prior
Loss Absorbing Instruments shall be determined by the Issuer based on the relevant foreign currency
exchange rate used by the Issuer in the preparation of its regulatory capital returns under the Applicable
Banking Regulations.

8. Taxation

8.1 Payment without Withholding

All payments of principal and/or interest in respect of the Securities by the Issuer will be made without
withholding or deduction for or on account of any present or future taxes, duties, assessments or other charges
of whatever nature imposed, levied or collected by or on behalf of Belgium, or any political subdivision or
any authority thereof or therein having power to tax unless such withholding or deduction is required by law.
In such event, the Issuer shall pay such additional amounts as shall be necessary in order that the net amounts
received by the holders after such withholding or deduction shall equal the respective amounts of principal
and interest which would otherwise have been receivable in respect of the Securities, as the case may be, in
the absence of such withholding or deduction; except that no such additional amounts shall be payable with
respect to any Security:

50
 (i) the holder of which is liable for such taxes, duties, assessments or other charges in respect of such
Security by reason of his having some connection with Belgium other than the mere holding of such
Security; or

(ii) where such withholding or deduction is imposed on a payment to an individual and is required to be
made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the
conclusions of the ECOFIN Council Meeting of 26-27 November 2000 on the taxation of savings
income or any law implementing or complying with, or introduced in order to conform to, such
Directive or any agreement between the EU and any other country or territory providing for similar
measures; or

(iii) where such withholding or deduction is imposed because the holder of the Security is not an Eligible
Investor (unless that person was an Eligible Investor at the time of its acquisition of the Security but
has since ceased (as such term is defined from time to time under Belgian law) being an Eligible
Investor by reason of a change in the Belgian tax laws or regulations or in the interpretation or
application thereof or by reason of another change which was outside that person's control), or is an
Eligible Investor but is not holding the Security in an exempt securities account with a qualifying
clearing system in accordance with the Belgian law of 6 August 1993 relating to transactions in certain
securities and its implementation decrees.

8.2 Additional Amounts

Any reference in these Conditions to any amounts in respect of the Securities shall be deemed also to refer to
any additional amounts which may be payable under this Condition 8.

9. Prescription

Claims for principal or interest shall become void ten or five years, respectively, after their due date, unless
application to a court of law for such payment has been initiated on or before such respective time.

10. Enforcement

If default is made in the payment of any principal or interest due in respect of the Securities or any of them
and such default continues for a period of 30 days or more after the due date, any holder may, without further
notice, institute proceedings for the dissolution or liquidation of the Issuer in Belgium. Any Interest Payment
not paid by reason of Condition 3 or Condition 7 shall not constitute a default under this Condition.

In the event of the dissolution or liquidation (other than on a solvent basis) of the Issuer (including, without
limiting the generality of the foregoing, bankruptcy (faillissement/faillite), and judicial or voluntary
liquidation (liquidation volontaire ou force/vrijwillige of gedwongen vereffening), under the laws of
Belgium), any holder may give notice to the Issuer that the Security is, and it shall accordingly forthwith
become, immediately due and repayable at its Prevailing Principal Amount, together with accrued and unpaid
interest (excluding interest which has been cancelled in accordance with these Conditions) to the date of
repayment and any additional amounts payable in accordance with Condition 8.

No remedy against the Issuer other than as referred to in this Condition 10 shall be available to the holders,
whether for recovery of amounts owing in respect of the Securities or in respect of any breach by the Issuer of
any of its obligations under or in respect of the Securities.

For the avoidance of doubt, the holders of the Securities waive, to the fullest extent permitted by law (i) all
their rights whatsoever pursuant to article 1184 of the Belgian Civil Code to rescind (ontbinden/rsoudre), or
to demand legal proceedings for the rescission (ontbinding/rsolution) of, the Securities and (ii), to the extent
applicable, all their rights whatsoever in respect of the Securities pursuant to Article 487 of the Code.

51
11. Notices

Notices to the holders shall be valid if delivered by or on behalf of the Issuer to the NBB for communication
by it to the participants of the Securities Settlement System. Any such notice shall be deemed given on the
date and at the time it is delivered to the Securities Settlement System. For so long as the Securities are
admitted to listing and trading on a regulated market, any notices to holders must also be published in
accordance with the rules and regulations of such market and, in addition to the foregoing, will be deemed
validly given on the date of such publication.

In addition to the above communications and publications, with respect to notices for meetings of holders,
convening notices for such meetings shall be made in accordance with Article 570 of the Code, which
currently requires an announcement to be published not less than fifteen days prior to the meeting, in the
Belgian Official Gazette (Moniteur belge/Belgisch Staatsblad) and in a newspaper with national distribution
in Belgium.

12. Meeting of holders and Modification

12.1 Meeting of holders

The Agency Agreement contains provisions for convening meetings of holders to consider matters relating to
the Securities, including the modification of any provision of these Conditions or the Agency Agreement, in
accordance with the rules of the Code.

All meetings of holders will be held in accordance with the provisions of Article 568 et seq. of the Code with
respect to bondholders meetings, provided however that the Issuer shall promptly convene a meeting of
holders upon the request in writing of holders holding not less than one-tenth of the aggregate principal
amount of the outstanding Securities. Subject to the quorum and majority requirements set out in Article 574
of the Code, and if required thereunder subject to validation by the court of appeal of Brussels, the meeting of
holders shall be entitled to exercise the powers set out in Article 568 of the Code and to modify or waive any
provision of these Conditions, provided however that any proposal (i) to change any date fixed for payment of
principal or interest in respect of the Securities, (ii) to alter the method of calculating the amount of any
payment in respect of the Securities or the date for any such payment; (iii) to alter any provision relating to
Principal Write-down or Principal Write-up; (iv) to change the currency of payments under the Securities; or
(v) to change the quorum requirements relating to meetings or the majority required to pass an extraordinary
resolution (each, a Reserved Matter)) may only be sanctioned by an extraordinary resolution passed at a
meeting of holders at which two or more persons holding or representing not less than three-quarters or, at
any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Securities form a
quorum. Any extraordinary resolution duly passed at any such meeting shall be binding on all the holders,
whether present or not.

Convening notices for meetings of holders shall be made in accordance with Article 570 of the Code, which
currently requires an announcement to be published not less than fifteen days prior to the meeting in the
Belgian Official Gazette (Moniteur belge/Belgisch Staatsblad) and in a newspaper of national distribution in
Belgium. Convening notices shall also be made in accordance with Condition 11.

The Agency Agreement provides that, if authorised by the Issuer, a resolution in writing signed by or on
behalf of the holders of not less than 75 per cent. in nominal amount of the Securities outstanding shall for all
purposes be as valid and effective as an extraordinary resolution passed at a meeting of holders duly convened
and held, provided that the terms of the proposed resolution have been notified in advance to the holders
through the relevant clearing system(s). Such a resolution in writing may be contained in one document or
several documents in the same form, each signed by or on behalf of one or more holders.

52
 Resolutions of holders will only be effective if such resolutions have been approved by the Issuer and, if so
required, by the Lead Regulator.

12.2 Modification

Subject to obtaining the approval therefor from the Lead Regulator if so required, the Agent and the Issuer
may agree, without the consent of the holders, to:

(i) any modification (except such modifications in respect of which an increased quorum is required, as
mentioned above) of the Agency Agreement which is not prejudicial to the interests of the holders; or

(ii) any modification of these Conditions or the Agency Agreement which is of a formal, minor or
technical nature or is made to correct a manifest error or to comply with mandatory provisions of law.

Any such modification shall be binding on the holders and any such modification shall be notified to the
holders in accordance with Condition 11 as soon as practicable thereafter.

13. Further Issues

The Issuer may from time to time without the consent of the holders create and issue further Securities,
having terms and conditions the same as those of the Securities, or the same except for the amount of the first
payment of interest, which may be consolidated and form a single series with the outstanding Securities.

14. Governing Law and Submission to Jurisdiction

14.1 Governing Law

The Agency Agreement and the Securities (except Conditions 1, 2 and 12) (and, in each case, any non-
contractual obligations arising therefrom or in connection therewith) shall be governed by, and construed in
accordance with, English law. Conditions 1, 2 and 12 of the Securities and any non-contractual obligations
arising therefrom or in connection therewith shall be governed by, and construed in accordance with, Belgian
law.

14.2 Jurisdiction of English Courts

The Issuer agrees, for the exclusive benefit of the holders that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with the Agency Agreement, the Securities
(including, in each case, any dispute relating to any non-contractual obligations arising therefrom or in
connection therewith) and that accordingly any suit, action or proceedings (together referred to as
Proceedings) arising out of or in connection with the Agency Agreement, the Securities (including, in each
case, any Proceedings relating to any non-contractual obligation arising therefrom or in connection therewith)
may be brought in such courts.

The Issuer hereby irrevocably waives any objection which it may have now or hereafter to the laying of the
venue of any such Proceedings in any such court and any claim that any such Proceedings have been brought
in an inconvenient forum and hereby further irrevocably agrees that a judgment in any such Proceedings
brought in the English courts shall be conclusive and binding upon it and may be enforced in the courts of any
other jurisdiction.

Nothing contained in this Condition shall limit any right to take Proceedings against the Issuer in any other
court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the
taking of Proceedings in any other jurisdiction, whether concurrently or not. The Issuer appoints KBC Bank
NV at its London branch at 111 Old Broad Street, London EC2N 1BR, England as its agent for service of
process for Proceedings in England, and undertakes that, in the event of KBC Bank NV, London branch

53
 ceasing so to act or ceasing to be registered in England, it will appoint another person as its agent for service
of process in England in respect of any Proceedings in England. Nothing herein shall affect the right to serve
proceedings in any other manner permitted by law.

15. Rights of Third Parties

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any
term of this Security, but this does not affect any right or remedy of any person which exists or is available
apart from that Act.

16. Definitions

In these Conditions:

5-year Mid-Swap Rate means, in relation to a Reset Period and the Reset Rate of Interest Determination
Date in respect of such Reset Period:

(i) the mid-swap rate for euro swaps with a term of 5 years which appears on the Screen Page as of 11:00
a.m. (Central European time) on such Reset Rate of Interest Determination Date; or

(ii) if such rate does not appear on the Screen Page at such time on such Reset Rate of Interest
Determination Date, the Reset Reference Bank Rate on such Reset Rate of Interest Determination
Date.

5-year Mid-Swap Rate Quotations means the arithmetic mean of the bid and ask rates for the semi-annual
fixed leg (calculated on a 30/360 day count basis) of a fixed-for-floating euro interest rate swap transaction
which:

(i) has a term of 5 years commencing on the relevant Reset Date;

(ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time
with an acknowledged dealer of good credit in the swap market; and

(iii) has a floating leg based on six-month EURIBOR (calculated on an Actual/360 day count basis).

Accounting Currency means euro or such other primary currency used in the presentation of the Issuers
accounts from time to time.

Accrual Period has the meaning given in Condition 3.1(e).

Additional Tier 1 Capital has the meaning given in the Applicable Banking Regulations from time to time.

Applicable Banking Regulations means, at any time, the laws, regulations, rules, guidelines and policies
of the Lead Regulator, or of the European Parliament and Council then in effect in Belgium, relating to capital
adequacy and applicable to the Issuer at such time (and, for the avoidance of doubt, including as at the Issue
Date the rules contained in, or implementing, CRD IV).

Business Day means a day on which (i) commercial banks and foreign exchange markets settle payments
and are open for general business (including dealing in foreign exchange and foreign currency deposits) in
Brussels and (ii) the TARGET System is operating.

Calculation Amount means, initially 1,000 in principal amount of each Security, or, following adjustment
(if any) downwards or upwards to Condition 7, the amount resulting from such adjustment.

54
Capital Requirements Directive means Directive (2013/36/EU) of the European Parliament and of the
Council on access to the activity of credit institutions and the prudential supervision of credit institutions and
investment firms dated 26 June 2013, as amended or replaced from time to time.

Capital Requirements Regulation means Regulation (EU) No 575/2013 of the European Parliament and
of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and
amending Regulation (EU) No 648/2012, as amended or replaced from time to time.

CET1 Capital means, as at any Quarterly Financial Period End Date or Extraordinary Calculation Date,
the sum, expressed in the Accounting Currency, of all amounts that constitute Common Equity Tier 1 capital
of the Issuer as at such date, less any deductions from Common Equity Tier 1 capital required to be made as
of such date, all as calculated by the Issuer on a consolidated basis in accordance with the Applicable Banking
Regulations on such Quarterly Financial Period End Date or Extraordinary Calculation Date, as the case may
be (which calculation shall be binding on the holders). The term "Common Equity Tier 1 capital" as used in
this definition shall have the meaning assigned to such term in the Applicable Banking Regulations from time
to time, and subject always to the transitional and grandfathering arrangements thereunder as interpreted by
the Lead Regulator.

As at the Issue Date, the Issuer is not required to make any deduction from its Common Equity Tier 1 capital
in respect of its insurance undertakings

CET1 Ratio means, as of any Quarterly Financial Period End Date or Extraordinary Calculation Date, as
the case may be, the ratio of CET1 Capital as at such date to the Risk Weighted Assets as of the same date,
expressed as a percentage.

Code means the Belgian Companies Code.

Consolidated Net Income means the consolidated net income (excluding minority interests) of the Issuer,
as calculated and set out in the last audited annual consolidated accounts of the Issuer adopted by the Issuer's
shareholders' general meeting.

CRD IV means, taken together, the (i) Capital Requirements Directive (ii) Capital Requirements
Regulation and (iii) Future Capital Instruments Regulations.

Discretionary Temporary Write-down Instrument means, at any time, any instrument (other than the
Securities and the Issuer Shares) which at such time (a) qualifies as Tier 1 Capital of the Issuer on a
consolidated basis; (b) has had all or some of its principal amount written-down and (c) has terms providing
for a write-up or reinstatement of its principal amount, at the relevant issuers discretion, upon a Return to
Financial Health;

Distributable Items has the meaning given in Condition 3.2(b).

Eligible Investor means a person who is entitled to hold securities through a so-called "X-account" (being
an account exempted from withholding tax) in a settlement system in accordance with Article 4 of the Belgian
Royal Decree of 26 May 1994 on the collection and refund of withholding tax (as amended or replaced from
time to time).

euro or means the currency introduced at the start of the third stage of European economic and
monetary union pursuant to the Treaty on the Functioning of the European Union, as amended.

Extraordinary Calculation Date means any day (other than a Quarterly Financial Period End Date) on
which the consolidated CET1 Ratio is calculated upon the instruction of the Lead Regulator.

First Call Date means 19 March 2019.

55
Foreign Currency Instruments has the meaning given in Condition 7.3.

Full Loss Absorbing Instruments has the meaning given in Condition 7.1(e).

Future Capital Instruments Regulations means any further Applicable Banking Regulations that come
into effect after the Issue Date and which prescribe (alone or in conjunction with any other rules or
regulations) the requirements to be fulfilled by financial instruments for their inclusion in the regulatory
capital of the Issuer (on a solo or consolidated basis) to the extent required by (i) the Capital Requirements
Regulation or (ii) the Capital Requirements Directive.

Holder means the holder from time to time of a Security as determined by reference to the records of the
relevant clearing systems or financial intermediaries and the affidavits referred to in Condition 1.

Initial Period means the period from (and including) the Issue Date to (but excluding) the First Call Date.

Initial Rate of Interest means 5.625 per cent. per annum.

Interest Payment means, in respect of an Interest Payment Date, the amount of interest which, subject to
Conditions 3.2 and 7, is payable for the relevant Interest Period in accordance with Condition 3.

Interest Payment Date means 19 March, 19 June, 19 September and 19 December in each year from (and
including) 19 June 2014.

Interest Period means each period from (and including) the Issue Date or any Interest Payment Date to
(but excluding) the next Interest Payment Date.

Issue Date means 19 March 2014.

Issuer Shares means any classes of equity share capital or other equity securities issued by the Issuer.

Junior Obligations means all unsecured, subordinated, obligations of the Issuer that rank, or are expressed
to rank, junior to the Issuers obligations under the Securities and all classes of share capital of the Issuer, and
shall include the Yield Enhanced Securities.

KBC Group means the Issuer and its subsidiaries taken as a whole.

Lead Regulator means the National Bank of Belgium or any successor or replacement entity having
primary responsibility for the prudential oversight and supervision of the Issuer.

Margin means 4.759 per cent.

Maximum Distributable Amount has the meaning given in Condition 3.2(b).

Maximum Write-up Amount has the meaning given in Condition 7.2(c).

Original Principal Amount means, in respect of a Security at any time the principal amount of such
Security at the Issue Date without having regard to any subsequent Principal Write-down or Principal Write-
up pursuant to Condition 7.

Parity Obligations means all obligations which constitute Additional Tier 1 Capital of the Issuer and all
other obligations of the Issuer which rank, or are expressed to rank, pari passu with the rights and claims of
the holders in respect of the Securities.

Prevailing Principal Amount means, in respect of a Security at any time, the Original Principal Amount of
such Security as reduced by any Principal Write-down of such Security (on one or more occasions) at or prior
to such time pursuant to Condition 7 and, if applicable following any Principal Write-down, as subsequently
increased by any Principal Write-up of such Security (on one or more occasions) at or prior to such time
pursuant to Condition 7.

56
Principal Write-down has the meaning given in Condition 7.1.

Principal Write-up has the meaning given in Condition 7.2.

Prior Loss Absorbing Instrument means, at any time, any instrument issued directly or indirectly by the
Issuer or any member of the KBC Group which has terms pursuant to which all or some of its principal
amount may be written-down (whether on a permanent or temporary basis) or converted into equity (in each
case in accordance with its conditions) on the occurrence, or as a result, of the Issuers consolidated CET1
Ratio falling below a level that is higher than 5.125 per cent.

Qualifying Securities has the meaning given in Condition 6.1.

Quarterly Financial Period End Date means the last day of each fiscal quarter.

Rate of Interest means:

(i) in the case of each Interest Period falling in the Initial Period, the Initial Rate of Interest; or

(ii) in the case of each Interest Period which commences on or after the First Call Date, the sum of (A) the
Reset Rate of Interest applicable to the Reset Period in which that Interest Period falls and (B) the
Margin,

all as determined by the Agent in accordance with Condition 3.

Regulated Market means a regulated market for the purposes of the Markets in Financial Instruments
Directive (Directive 2004/39/EC) as amended or replaced from time to time.

Regulatory Event has the meaning given in Condition 5.4(a).

Reserved Matter has the meaning given to such term in Condition 12.

Reset Date means the First Call Date and each date which falls five, or an integral multiple of five, years
after the First Call Date.

Reset Period means each period from (and including) a Reset Date to (but excluding) the next Reset Date.

Reset Rate of Interest means, in respect of any Reset Period, the 5-year Mid-Swap Rate determined on the
Reset Rate of Interest Determination Date applicable to such Reset Period, as determined by the Agent.

Reset Rate of Interest Determination Date means, in respect of the determination of the Reset Rate of
Interest applicable during any Reset Period, the day falling two Business Days prior to the Reset Date on
which such Reset Period commences.

Reset Reference Bank Rate means, with respect to a Reset Rate of Interest Determination Date, the
percentage rate determined on the basis of the 5-year Mid-Swap Rate Quotations provided by the Reset
Reference Banks to the Agent at approximately 11:00 a.m. (Central European time) on such Reset Rate of
Interest Determination Date. If at least three quotations are provided, the Reset Reference Bank Rate will be
the arithmetic mean of the quotations provided, eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two
quotations are provided, the Reset Reference Bank Rate will be the arithmetic mean of the quotations
provided. If only one quotation is provided, the Reset Reference Bank Rate will be the quotation provided. If
no quotations are provided, the Reset Reference Bank Rate will be (i) in the case of each Reset Period other
than the Reset Period commencing on the First Call Date, the 5-year Mid-Swap Rate in respect of the
immediately preceding Reset Period or (ii) in the case of the Reset Period commencing on the First Call Date,
0.866 per cent. per annum.

57
Reset Reference Banks means six leading swap dealers in the interbank market selected by the Agent in its
discretion after consultation with the Issuer.

Return to Financial Health has the meaning given in Condition 7.2(a).

Risk Weighted Assets means, as at any Quarterly Financial Period End Date or Extraordinary Calculation
Date (as the case may be), the risk weighted assets (within the meaning assigned to such term in the
Applicable Banking Regulations) of the Issuer on such Quarterly Financial Period End Date or Extraordinary
Calculation Date (as applicable), as calculated by the Issuer on a consolidated basis in accordance with the
Applicable Banking Regulations (which calculation shall be binding on the holders) and subject always to the
transitional and grandfathering arrangements thereunder as interpreted by the Lead Regulator.

As at the date of this Prospectus, the term "risk weighted assets"as used above means, as at any Quarterly
Financial Period End Date or Extraordinary Calculation Date, as the case may be, the sum of the aggregate
amount, expressed in the Accounting Currency, of:

(i) the risk weighted assets of the Issuer (excluding risk weighted assets of insurance undertakings forming
part of the Issuer, as at such date, as calculated by the Issuer on a consolidated basis in accordance with
the Applicable Banking Regulations on such date; and

(ii) the risk weighted equivalent amount in respect of each insurance undertaking in the Issuer equal to the
higher of:

(a) the amount determined by applying the risk weighting to the minimum capital required for such
insurance undertakings in accordance with the Applicable Banking Regulations on such date,
and

(b) the amount determined by applying the risk weight applied to the equity participations in such
insurance undertakings in accordance with the Applicable Banking Regulations on such date,

all as calculated by the Issuer on a consolidated basis in accordance with the Applicable Banking Regulations
on such date.

Screen Page means Bloomberg screen ICAE1 or such other page as may replace it on Bloomberg or, as
the case may be, on such other information service that may replace Bloomberg, in each case, as may be
nominated by the person providing or sponsoring the information appearing there for the purpose of
displaying rates comparable to the relevant 5-year Mid-Swap Rate.

Securities Settlement System has the meaning given in Condition 1.

Similar Loss Absorbing Instrument means at any time any instrument (other than the Securities and the
Issuer Shares) issued directly or indirectly by the Issuer or any member of the KBC Group which at such time
(a) qualifies as Additional Tier 1 Capital of the Issuer, and (b) which also has terms pursuant to which all or
some of its principal amount may be written-down (whether on a permanent or temporary basis) or converted
into equity (in each case in accordance with its conditions) on the occurrence, or as a result, of the Issuers
consolidated CET1 Ratio falling below 5.125 per cent.

As at the Issue Date, there are no Similar Loss Absorbing Instruments outstanding.

Special Event has the meaning given in Condition 6.1.

Subordinated Indebtedness means all indebtedness of the Issuer which is subordinated, in the event of the
bankruptcy (faillissement/faillite), dissolution or liquidation other than on a solvent basis under the laws of
Belgium of the Issuer, in right of payment to the claims of unsubordinated creditors of the Issuer and so that
indebtedness shall include all liabilities, whether actual or contingent.

58
TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer
(known as TARGET2) System which was launched on 19 November 2007 or any successor thereto.

Tax Deductibility Event has the meaning given in Condition 5.3(b).

Tax Gross-up Event has the meaning given in Condition 5.3(a).

Tier 1 Capital and Tier 2 Capital have the respective meanings given to such terms in the Applicable
Banking Regulations from time to time.

A Trigger Event will occur if the Issuers consolidated CET1 Ratio as of any Quarterly Financial Period
End Date or Extraordinary Calculation Date is less than 5.125 per cent.

Trigger Event Write-down Date has the meaning given in Condition 7.1(b).

Trigger Event Write-down Notice has the meaning given in Condition 7.1(b).

Write-down Amount has the meaning given in Condition 7.1(d).

Written-Down Additional Tier 1 Instrument means, at any time, any instrument (including the
Securities) issued directly or indirectly by the Issuer which qualifies as Additional Tier 1 Capital of the Issuer
and which, immediately prior to the relevant Principal Write-up of the Securities at that time, has a prevailing
principal amount that, due to it having been written-down, is lower than the original principal amount it was
issued with.

Yield Enhanced Securities means the non-voting core capital securities issued by KBC Group NV in 2009
and subscribed by the Flemish Regional Government.

The Lead Regulator has confirmed that the Yield Enhanced Securities have been grandfathered as Common
Equity Tier 1 capital under CRD IV.

59
 DESCRIPTION OF THE ISSUER

1. Issuer

General
KBC Group NV (the Issuer) is incorporated as a limited liability company (naamloze vennootschap) under
the laws of Belgium. Its registered office is at Havenlaan 2, B-1080 Brussels, Belgium and it can be contacted
via its Telecenter (+32) (0) 78 152 154.

Purpose (Article 2 of the Articles of Association)

The Issuer is a mixed financial holding company, which has as purpose the direct or indirect ownership and
management of shareholdings in other companies, including but not limited to credit institutions, insurance
companies and other financial institutions. The Group further qualifies as a financial conglomerate for
purposes of Article 49bis of the Banking Act (as defined below).

The Issuer also has the purpose to provide support services for third parties, as mandatary or otherwise, in
particular for companies in which it has an interest either directly or indirectly.

The purpose of the Issuer is also to acquire in the broadest sense of the word (including by means of purchase,
hire and lease), to maintain and to operate resources, and to make these resources available in the broadest
sense of the word (including through letting, and granting rights of use) to the beneficiaries referred to in the
previous paragraph.

In addition, the Issuer may function as an intellectual property company responsible for, among other things,
the development, acquisition, management, protection and maintenance of intellectual property rights, as well
as for making these rights available and/or granting rights of use in respect of these rights to the beneficiaries
referred to in the second paragraph above.

The Issuer may also perform all commercial, financial and industrial transactions that may be useful or
expedient for achieving its purpouse and that are directly or indirectly related to this purpose. The Issuer may
also by means of subscription, contribution, participation or in any other form participate in all companies,
businesses or institutions that have a similar, related or complementary activity.

In general, the Issuer may, both in Belgium and abroad, perform all acts which may contribute to the
achievement of its purpose.

History and development

KBC Group NV was incorporated in Belgium on 9 February 1935 for an indefinite duration in the form of a
public limited liability company (under number BE 0403.227.515) as Kredietbank NV. In 1998 Kredietbank
merged with CERA Bank and ABB (Insurance). A short history since then is provided below:

1998: Two Belgian banks (Kredietbank and CERA Bank) and a Belgian insurance company (ABB) merge to create the
KBC Bank and Insurance Holding Company.
KBCs unique bancassurance model is launched in Belgium
1999: The group embarks upon its policy of expansion in Central and Eastern Europe with the acquisition of SOB (in
the Czech Republic and Slovakia).
2000 The group continues to expand its position in the banking and insurance markets of Central and Eastern Europe
2005: by acquiring banks and insurance companies in Poland, Hungary, the Czech Republic and Slovakia.
The bancassurance model is gradually introduced to the home markets in Central and Eastern Europe.
2005: The KBC Bank and Insurance Holding Company merges with its parent company (Almanij) to create KBC Group

60
 NV. The benefits to the group include the addition of a network of European private banks.
2006: A new management structure is put in place, with five business units Belgium, Central & Eastern Europe and
Russia, Merchant Banking, European Private Banking and Shared Services & Operations being established, each
with its own management and objectives.
2007: KBCs presence in Central and Eastern Europe is stepped up through acquisitions in Bulgaria, Romania and
Serbia.
KBC establishes a presence on the Russian banking market.
2008: Add-on acquisitions/greenfield operations in various countries
Capital-strengthening measures with Belgian and Flemish governments (2008-2009)
2009: Renewed strategy focuses on home markets in Belgium and five countries in Central and Eastern Europe (the
Czech Republic, Slovakia, Hungary, Poland and Bulgaria)
2010: Start of divestment programme
2011 Strategic plan is amended (including planned sale of activities in Poland).
2012: Further execution of divestment programme
2012: Announcement of an updated strategy and management structure, comprising of four business units (Belgium,
Czech Republic, International Markets, International Product Factories) and support units (CFO Services, CRO
Services, Corporate Staff, Corporate Change and Support)
Repayment of the core capital securities subscribed by the Belgian Government
2013: Start of the updated strategy and structure
Divestment programme finished (except for finalization of two files)
Repayment of a portion of the core capital securities subscribed by the Flemish Government
2014 Announcement of a simplification of the management structure

Organisation
The Issuer has two main subsidiaries: KBC Bank NV (KBC Bank) en KBC Verzekeringen NV (KBC
Insurance), as shown in the simplified schematic below.

KBC Group means KBC Group NV including all group companies that are included in the scope of
consolidation.
KBC Group NV

100% 100%
KBC Bank NV KBC Insurance NV
various various
subsidiaries subsidiaries

A list containing the main group companies as at 31 December 2013 is set out further below.

Capital
The share capital of the Issuer consists of 417,364,358 ordinary shares with no nominal value. All ordinary
shares carry voting rights and each share represents one vote. The shares are listed on Euronext Brussels and
on the Luxembourg Stock Exchange.

As at 31 December 2013, the authorised share capital of the Issuer amounted to EUR 698,618,429.56.
Consequently, when taking into account the accounting par value of a share in the Issuer on 31 December
2013 (EUR 3.48), the board of directors of the Issuer is authorised to issue new shares up to a maximum of
200,752,422 shares. The authorisation to the board of directors of the Issuer to increase the share capital, as
provided in the articles of association of the Issuer, may be exercised until 20 May 2018. The Issuer does not
have any conditional share capital outstanding. However, it should be noted that, under certain conditions,
KBC Group may ask the Belgian State to meet its obligations as guarantor by subscribing to new shares of the

61
 Issuer at market value. For further information, please see Description of the Issuer Capital Transactions
and Guarantee Agreements with the Government in 2008 and 2009 on page 95-96 of this Prospectus.

In December 2012, the Issuer increased its capital by issuing approximately 59 million new shares following
the capital increase announced in December 2012 (+58,835,294 shares) and the capital increase reserved for
staff (+151,748 shares). In December 2013, the Issuer increased its capital by issuing 397,003 new shares
following the capital increase reserved for staff.

Since the end of 2008, the Issuer has issued 7 billion euros in perpetual, non-transferable, non-voting core-
capital securities that have been subscribed by the Belgian Federal and Flemish Regional governments (each
in the amount of 3.5 billion euros). The other features of the transactions are dealt with under Capital
transactions and guarantee agreements with the government in 2008 and 2009. In 2012, KBC repaid 3.5
billion euros to the Belgian Federal Government, along with a 15% penalty. In 2013, KBC repaid 1.17 billion
euros to the Flemish Regional Government, along with a 50% penalty, and early 2014, another 0.33 billion
euros, along with a 50% penalty. KBC aims to repay the outstanding balance of 2 billion euros, plus penalties,
to the Flemish Regional Government in equal instalments (the last in 2020, or earlier if its capital position so
allows and the National Bank of Belgium grants its approval).

In the first quarter of 2013, contingent Tier 2 capital notes were issued in an aggregate principal amount of
USD 1 billion. More information can be found in the press release of 18 January 2013 and in the prospectus
relating to the contingent Tier 2 capital notes of 21 January 2013, both available on www.kbc.com.

For the five years preceding the issuance of the Securities, the Issuer paid dividends on the ordinary shares as
follows: 2009: no dividends were paid; 2010: EUR 0.75 per ordinary share; 2011: EUR 0.01 per ordinary
share; 2012: EUR 1 per ordinary share. As for 2013 and 2015, the board of directors of the Issuer will propose
to the general meeting of shareholders of the Issuer not to pay a dividend. This has not yet been confirmed by
the general meeting of shareholders of the Issuer. Furthermore, the Issuer has the intention to prioritise
coupons on AT1 instruments such as the Securities over other discretionary distributions such as dividends.

2. Short presentation of the shareholder structure of KBC Group NV

The shareholder structure shown in the table below is based on the most recent notifications made under the
transparency rules or (if they are more recent) on disclosures made under the Act of 2 May 2007 concerning
the disclosure of significant participations in issuers whose shares are admitted to trading on a regulated
market.
Number of shares at % of the current
Shareholder structure of KBC Group NV (based on notifications)
the time of disclosure number of shares

KBC Ancora (on 19 November 2013) 77,516,380 18.6%

Cera (on 19 November 2013) 11,127,166 2.7%
MRBB (end 2013) 50,889,864 12.2%
Other core shareholders (mid-2013) 40,371,943 9.7%
Subtotal for core shareholders 179,905,353 43.1%
Free float* 237,459,005 56.9%
Total 417 364 358 100.0%
* In 2013 and early 2014, there were a number of notifications from BlackRock Inc. (see below)

A shareholder agreement was concluded between the core shareholders of the Issuer in order to support and
co-ordinate the general policy of the Group and to supervise its implementation (more information in the
Corporate Governance Charter, available on www.kbc.com). The agreement provides for a contractual
shareholder syndicate. The shareholder agreement includes stipulations on the transfer of securities and the
exercise of voting rights within the shareholder syndicate.

62
 Notifications received under the transparency rules are available on www.kbc.com. A summary of the
notifications received in 2013 and early 2014 follows in the table:

Notification received from Details Date Number of ordinary % of total

shares voting
rights

BlackRock Inc. Change in shareholding triggering a 13 February 2014 20 979 496 5.03%
move above the 5% notification
threshold.
BlackRock Inc. Change in shareholding triggering a 10 January 2014 20 700 804 4.96%
move below the 5% notification
threshold.
BlackRock Inc. Change in shareholding triggering a 7 January 2014 20 885 509 5.00%
move above the 5% notification
threshold.
BlackRock Inc. Change in shareholding triggering a 9 December 2013 20 714 324 4.97%
move below the 5% notification
threshold.
CERA CVBA and KBC Number of shares held by Cera and 19 November 2013 88 643 546 21,26%
ANCORA Comm. VA. KBC Ancora decreases following sale
(combined) on 19 November 2013. As a result, the
size of the combined Cera and KBC
Ancora shareholding moves below the
25% notification threshold
BlackRock Inc. Change in shareholding triggering a 23 July 2013 20 852 545 5.00%
move above the 5% notification
threshold.

3. The EU Plan of the Group

Since 2009, the Group has been working on a strategic analysis of its group-wide activities and of the
economic and financial environment the Group operates in. This effort has resulted in a strategic plan, which
has been tested under different macroeconomic scenarios. The plan analysed the Groups business and its
proposed future strategy, and also served as a basis for the European Commission to assess KBC Groups
capacity to redeem the capital securities subscribed by the Belgian State and the Flemish Region of Belgium
(the core capital securities or state aid, as described above) within a reasonable timeframe.

This is common practice for European financial institutions that have taken part in economic stimulus plans
launched by the EU Member States. The initial plan was cleared by European regulatory authorities on 18
November 2009. A number of changes were proposed later on and the amended plan was accepted by the EU
Commission on 27 July 2011 (the EU Plan).

In this strategy, basis for the EU Plan, the Group refocuses on its core bank-insurance activities in Belgium
and four selected countries in Central and Eastern Europe (Czech and Slovak Republics, Hungary and
Bulgaria). A number of subsidiaries and activities, many of which related to investment banking activities,
had to be scaled down or sold. International corporate lending outside the home markets had to be scaled
down.

More specifically, the restructuring plan agreed with the European Commission included a list of activities
that had to be divested. By year-end 2013, the Group had implemented all of this plan (for two divestment
files, however, the sale agreement has been signed, but the deals still need to be finalised).

The following list contains the principal divestments since 2010, based on the year in which the sale
agreement was concluded (not the year the deal was closed):

63
 2010: KBC Peel Hunt, various specialised merchant banking activities at KBC Financial Products,
Secura, KBC Asset Managements UK and Irish activities, KBC Securities Baltic Investment Company and
KBC Business Capital.

2011: Centea, KBC Concord Asset Management, KBC Securities Serbian and Romanian operations,
Fidea and KBL EPB.

2012: KBC Goldstate, WARTA, agiel, Kredyt Bank (via merger with Bank Zachodni WBK), KBC
Autolease Polska, KBC Lease Deutschland, participating interests held by KBC Private Equity, Absolut Bank,
and the minority stake in NLB.

2013: minority stake in Bank Zachodni WBK, KBC Banka, part of KBC Securities in Poland, WARTAs
pension fund activities (still to be finalised), KBC Bank Deutschland (still to be finalised) and Antwerp
Diamond Bank (still to be finalised). For further information in respect of the aforementioned pending
divestments, please see the respective press releases dated 9 May 2013 (PTE Allianz Polska S.A. acquires
Wartas pension fund business in Poland), 24 September 2013 (KBC Announces Sale of KBC Bank
Deutschland) and 19 December 2013 (Yinren Group acquires Antwerp Diamond Bank from KBC),
available on www.kbc.com.

4. The strategic plan of the Group beyond 2013

On 8 October 2012, the Group announced publically its strategic plan for the future (the Strategic Plan). Six
drivers define the Groups updated strategy:

The Group will focus first and foremost on the client. The Group aims at building and deepening
sustainable relationships with retail, SME (small and medium enterprises) and midcap clients. The
Groups competitive advantage is understanding local clients and tailoring to their local needs. Hence,
local responsiveness is the key strategic priority and thus the point of gravity is local.

The Group continues to focus on core bank and core insurance products and services. The Group
confirms its long-standing and long-term commitment to its integrated bank-insurance model, a model
which the Group has mastered and which has produced excellent results through the cycle.

The Group clearly defines its core markets as those markets where it is present with banking and
insurance companies. These core markets are Belgium, the Czech Republic, Hungary, Slovakia and
Bulgaria, where the group is strongly embedded in the local economies. In some of these markets the
Group has achieved a market leadership position. All activities which do not contribute to serving the
client relationships in the Groups core markets will be stopped in principle; Ireland remains an
exception: in the years ahead, KBC Bank Ireland will focus on raising profitability through the
provision of retail services.

The Group further mobilises cross-border co-operation and group leverage to create cost-efficiencies
throughout the group. International Product Factories and International Service Providers will focus on
offering products and services which support and are tailored to the distribution strategy of the
business units and help to increase local responsiveness. Exchange of know-how, best practices,
experience, products and services between the different business units and corporate functions will be
stimulated through communities.

The Group implements a new organisational structure that is fully aligned with the strategic choices
and which supports effective decision making and accountability. The new structure includes, among
other things, the creation of a new, separate business unit for the Czech Republic franchise, and
clarification of the future role of the former Merchant Banking Business Unit.

64
 The Group commits to a clearly defined group culture. The Group will strengthen its agility and
responsiveness by emphasising and streamlining performance management and accountability for all
staff. A clear link will be established between the strategic priorities and accountability (through key
performance indicators).

The Issuer also announced some of its financial aspirations for 2015: it plans to improve its cost/income ratio
to 55%, by both increasing revenues and improving efficiency and creating synergies. The combined ratio
target for insurance is set at 95% or less. The Issuer is also targeting a liquidity coverage ratio of 100% and a
net stable funding ratio of 105%.

Finally, as part of its target capital structure, the Group intends to issue additional tier one instruments up to
1.5% of its risk weighted assets.

5. Management Structure
The strategic choices are fully reflected in the management structure, which consists of a number of business
units and support services and which are presented in simplified form as follows:

The structure comprises:

the four business units, which focus on the local business and are expected to contribute to sustainable
earnings and growth:

Belgium.

Czech Republic.

International Markets: encompasses the other core countries in Central and Eastern Europe (Slovakia,
Hungary and Bulgaria). KBC Bank Ireland, and the remaining non-core entities for which the sale
agreement still needs to be finalised.

65
 International Product Factories: comprises group-wide product factories such as Asset Management,
Trade Finance, Consumer Finance, Markets and KBC Securities.

the auxiliary Corporate Change & Support, CRO Services and CFO Services pillars, which act as an
internal regulator, and whose main role is to support the business units.

the Corporate Staff pillar, which is a competence centre for strategic know-how and best practices in
corporate organisation and communication. It supports both the Group Executive Committee and the
business units, and is tasked to stimulate co-operation within the organisation.

Each business unit is headed by a Chief Executive Officer (CEO), and these CEOs, together with the Group
CEO, the Chief Risk Officer (CRO), the Chief Change Officer (CCO) and the Chief Financial Officer (CFO)
of KBC Group constitute the executive committee of the KBC Group.

Based on this management structure, the Group also reworked its financial segment reporting presentation.
More information on this can be found in the press release dd. 25 April 2013, available on www.kbc.com.

On 13 February 2014 the Group announced a simplification in the management structure that will become
effective in May 2014. See further Description of the Issuer - Recent events.

6. Network and ratings of KBC Group

Network (as at 31 December 2013)

Distribution network in Belgium:
Distribution network in Central and Eastern Europe
(Czech Republic, Slovakia, Hungary and Bulgaria):
Distribution network in the rest of the world:
827 bank branches, 470 insurance agencies, various
electronic channels
771 bank branches, insurance via various channels
(agents, brokers, multi-agents, ...), various electronic
channels
mainly 18 bank branches of KBC Bank and KBC Bank
Ireland

Long-term ratings of KBC Group NV, KBC Bank NV and KBC Insurance NV (as at 13 February 2014)
Long-term rating Outlook/watch/review Short-term rating
Fitch
KBC Bank NV A- (stable outlook) F1
KBC Insurance NV A- (stable outlook) -
KBC Group NV A- (stable outlook) F1
Moodys
KBC Bank NV A3 (stable outlook) P-2
KBC Group NV Baa1 (stable outlook) P-2
Standard & Poor's
KBC Bank NV A (stable outlook) A1
KBC Insurance NV A (stable outlook) -
KBC Group NV A- (stable outlook) A2

66
 Ratings are subject to change. Various ratings exist. Investors should look at www.kbc.com for the most
recent ratings and for the underlying full analysis provided by each rating agency to understand the
meaning of each rating.

Each of Fitch, Moodys and S&P is established in the European Union and is included in the updated list of
credit rating agencies registered under Regulation (EC) No. 1060/2009 (as amended) of the European
Parliament and of the Council of 16 September 2009 on credit rating agencies published on the European
Securities and Markets Authoritys (ESMA) website (http://esma.europa.eu/page/List-registered-and-
certified-CRAs).
Standard & Poor's Credit Market Services Italy Srl. (Standard & Poor's): An obligation rated 'A' is
somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on
the obligation is still strong. An obligation rated 'BBB' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation. (Source: www.standardandpoors.com).
Moody's France S.A.S. (Moody's): Obligations rated A are judged to be upper-medium grade and are
subject to low credit risk. The modifier 3 indicates a ranking in the lower end of that generic rating category.
Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may
possess certain speculative characteristics. The modifier 1 indicates that the obligation ranks in the higher end
of its generic rating category. (Source: www.moodys.com).
Fitch France S.A.S. (Fitch): A ratings denote expectations of low default risk. The capacity for payment of
financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher ratings. (Source: www.fitchratings.com).
The description of the ratings provided above has been extracted from the specified website of the relevant
rating agency. The Issuer confirms that such information has been accurately reproduced and that, so far as it
is aware and is able to ascertain from such sources, no facts have been omitted which would render the
reproduced information inaccurate or misleading. The web-site of the relevant rating agencies have been
provided as sources only, and no information from any such web-site is deemed to be incorporated in or
forms part of this Prospectus. The Issuer does not take any responsibility for the information contained in any
such website.

7. Main companies belonging to the Group (as of 31 December 2013)

Essentially, the Group's legal structure comprises KBC Group NV (including the former KBC Global
Services) which controls two large companies, being KBC Bank NV and KBC Insurance NV. Each of these
companies has several subsidiaries and sub-subsidiaries, the most important of which are listed in the table.

A full list of all companies belonging to the Group is available on www.kbc.com.

Ownership percentage at
Company Registered office Activity (simplified)
Group level

KBC BANK

Fully consolidated subsidiaries

Antwerp Diamond Bank NV (sale
agreement signed but not yet Antwerp BE 100,00 Credit institution
finalised)
CBC Banque SA Brussels BE 100,00 Credit institution

CIBANK EAD Sofia BG 100,00 Credit institution

SOB a.s. (Czech Republic) Prague CZ 100,00 Credit institution

67
 Ownership percentage at
Company Registered office Activity (simplified)
Group level

SOB a.s. (Slovak Republic) Bratislava SK 100,00 Credit institution

KBC Asset Management NV Brussels BE 100,00 Asset management

KBC Bank NV Brussels BE 100,00 Credit institution

KBC Bank Deutschland AG (sale
agreement signed but not yet Bremen DE 100,00 Credit institution
finalised)
KBC Bank Funding LLC & Trust
New York US 100,00 Issuance of preferred trust securities
(group)
KBC Bank Ireland Plc Dublin IE 100,00 Credit institution

KBC Commercial Finance NV Brussels BE 100,00 Factoring

KBC Credit Investments NV Brussels BE 100,00 Investment in credit-related securities

KBC Finance Ireland Dublin IE 100,00 Lending

KBC Financial Products (group) Various locations 100,00 Equities and derivatives trading
KBC Internationale
Rotterdam NL 100,00 Issuance of bonds
Financieringsmaatschappij NV
KBC Lease (group) Various locations 100,00 Leasing

KBC Securities NV Brussels BE 100,00Stock exchange broker, corporate finance

K&H Bank Rt. Budapest HU 100,00 Credit institution

KBC INSURANCE

Fully consolidated subsidiaries

ADD NV Heverlee BE 100,00 Insurance company

SOB Pojitovna (Czech
Pardubice CZ 100,00 Insurance company
Republic)
SOB Poistova a.s. (Slovak
Bratislava SK 100,00 Insurance company
Republic)
DZI Insurance Sofia BG 100,00 Insurance company

VAB Group Zwijndrecht BE 95,00 Automobile assistance

K&H Insurance Rt. Budapest HU 100,00 Insurance company

KBC Groep Re SA Luxembourg LU 100,00 Insurance company

KBC Insurance NV Leuven BE 100,00 Insurance company

Proportionately consolidated subsidiaries

NLB Vita d.d. Ljubljana SI 50,00 Insurance company

KBC GROUP NV (other direct subsidiaries)

Fully consolidated subsidiaries

KBC Group NV Brussels BE 100,00 Holding and cost sharing structure

8. General description of activities of the Group

The Group is an integrated bank insurance group, catering mainly for retail, private banking, SME and mid-
cap clients. Geographically, the Group focusses on its core markets of Belgium, the Czech Republic,

68
 Slovakia, Hungary and Bulgaria. Elsewhere in the world, the Group is present in Ireland and, to a limited
extent, in several other countries to support corporate clients from our core markets.

The Group's core business is retail and private bank-insurance (including asset management), although it is
also active in providing services to corporations and market activities. Across its home markets, the Group is
active in a large number of products and activities, ranging from the plain vanilla deposit, credit, asset
management and life and non-life insurance businesses to specialised activities such as, but not exclusively,
payments services, dealing room activities (money and debt market activities), brokerage and corporate
finance, foreign trade finance, international cash management, leasing etc.

As set out in the section The EU Plan of the Group above, the Group has in the past years refocused its
business on its core bank-insurance activities in Belgium and a number of countries in Central and Eastern
Europe (i.e. the home markets of Czech Republic, Slovakia, Hungary and Bulgaria). Therefore, a number of
subsidiaries and activities, many of which related to investment banking activities, have been downscaled or
sold. International corporate lending outside the home markets has also been downscaled.

Currently, all planned divestments are hence finalised, with the exception of WARTAs pension fund
activities, KBC Bank Deutschland and Antwerp Diamond Bank, for all of which a sale agreement has been
signed, but not yet finalised. For further information in respect of the aforementioned pending divestments,
please see the respective press releases dated 9 May 2013 (PTE Allianz Polska S.A. acquires Wartas pension
fund business in Poland), 24 September 2013 (KBC Announces Sale of KBC Bank Deutschland) and 19
December 2013 (Yinren Group acquires Antwerp Diamond Bank from KBC), available on www.kbc.com.

9. Principal markets and activities, per geography

Activities in Belgium
Position in the Belgian market in 2013*
827 bank branches
470 insurance agencies
Estimated market share of 20% for traditional bank products, 33% for investment funds, 17% for life
insurance and 9% for non-life insurance
Approx. 3.5 million customers
* Market shares and customer numbers: based on own estimates (mostly at 30 September). Share for traditional bank products: average
estimated market share for loans and deposits. Market share for life insurance: guaranteed-interest and unit-linked products (combined).

The Group has an extensive network of bank branches and insurance agencies in Belgium (of KBC Bank and
KBC Verzekeringen in the Dutchspeaking part of Belgium and of CBC Banque and CBC Assurances in the
French-speaking part of Belgium). Via this network (and a number of subsidiaries), the Group focusses on
providing clients in Belgium with a broad area of credit (including mortgage loans), deposit, investment fund
and other asset management products, life and non-life insurance products and other specialised financial
banking products and services. KBC Banks bricks-and-mortar networks in Belgium are supplemented by
electronic channels, such as ATMs, telephones and the Internet (including a mobile banking app). The Group
serves, based on its own estimates, approximately 3.5 million clients in Belgium.

The Group considers itself to be an integrated bank-insurer. Certain shared and support services are organised
at Group level, serving the entire Group, and not just the bank or insurance businesses separately. It is the
Group's aim to continue to actively encourage the cross-selling of bank and insurance products. The success
of the Group's integrated bank-insurance model is in part due to the cooperation that exists between the bank
branches of KBC Bank/CBC Banque and the insurance agents of KBC Insurance/CBC Assurance, whereby
the branches sell standard insurance products to retail customers and refer their customers to the insurance

69
agents for non-standard products. Claims-handling is the responsibility of the insurance agents, the call centre
and the head office departments at KBC Insurance.

End of 2013, the Group had (see table), based on its own estimates, a 20 % share of traditional banking
activities in Belgium (17 % share of the Belgian deposit market and a 23 % share of the lending market).
Over the past few years, KBC Bank has built up a strong position in investment funds too, and leads
according to its own estimates the Belgian market with an estimated share of some 33 %.

The Groups share of the insurance market came to an estimated 17 % for life insurance (guaranteed-interest
and unit-linked products, combined) and 9 % for non-life insurance.

The Group believes in the power of a physical presence through a branch and agency network that is close to
its clients. At the same time, however, it expects the importance of online and mobile bank-insurance to grow
further and it is constantly developing new applications in these areas. That includes the various mobile
banking apps for smartphones and tablets, which are being continuously improved and expanded. KBC-
Online too is providing clients with ever more information and facilities to perform their own banking and/or
insurance transactions.

In the Groups financial reporting, the Belgian activities are combined into a single Belgium Business Unit.
The results of the Belgium Business Unit essentially comprises the activities of KBC Bank NV and KBC
Insurance NV, and their Belgian subsidiaries, the most important of which are CBC Banque, KBC Asset
Management, KBC Lease Group (Belgium), KBC Securities and KBC Group Re.

Note: In November 2012, KBC Bank announced a programme for the issue of 10 billion euros worth of
Belgian covered bonds. In December 2012, it launched a first, highly successful issue of covered bonds, for
an amount of 1.25 billion euros and with a maturity of five years. A number of new issues with various
maturities followed in 2013, raising a total of approximately 2.7 billion euros.

Activities in Central & Eastern Europe

Market position in 2013* Czech
Hungary Slovakia Bulgaria
Republic

Bank branches 319** 220 128 104

Insurance agencies Various Various Various Various
distribution distribution distribution distribution
channels channels channels channels
Customers (millions) 4 1.6 0.6 0.5
Market shares
Bank products 19% 9% 10% 2%
Investment funds 28% 17% 7% -
Life insurance 6% 3% 5% 10%
Non-life insurance 6% 5% 3% 10%
*Market shares and customer numbers: based on own estimates. For bank products: average estimated market share for loans and
deposits. For life insurance: guaranteed-interest and unit-linked products (combined).
**CSOB Bank + Era.

In the Central and Eastern European region, the Group focuses on four home countries, being the Czech
Republic, Hungary, Slovakia and Bulgaria. The main Central and Eastern European entities in those home
markets are CIBANK and DZI Insurance (in Bulgaria), SOB and SOB Poistovna (in Slovakia), SOB
and SOB Pojistovna (in the Czech Republic), and K&H Bank and K&H Insurance (in Hungary), and their
respective subsidiairies. Note that the presence in other Central- and Eastern European countries (Absolut

70
Bank (in Russia), Nova Ljubljanska banka (NLB, in Slovenia; minority share), and Kredyt Bank and Warta
(both in Poland) and KBC Banka (Serbia)) has meanwhile been divested.

In its four home countries, the Group caters to an estimated 6.7 million customers. This customer base makes
KBC Group one of the larger financial groups in the Central & Eastern European region. The Group
companies focus on providing clients with a broad area of credit (including mortgage loans), deposit,
investment fund and other asset management products (the latter not in Bulgaria), life and non-life insurance
products and other specialised financial products and services. In most countries, KBC offers a broad product
offer, though in certain markets the focus lies on sub-markets or products segments. Just as in Belgium, the
bricks-and-mortar networks in Central and Eastern Europe are supplemented by electronic channels, such as
ATMs, telephone and the Internet.

The Groups bank-insurance concept has over the past few years been exported to its Central and Eastern
European entities. Contrary to the situation of KBC Bank in Belgium, the Groups insurance companies in
Central and Eastern Europe operate not only via tied agents (and bank branches) but also via other
distribution channels, such as insurance brokers and multi-agents.

The Groups estimated market share (the average of the share of the lending market and the deposit market,
see table) amounted to 19% in the Czech Republic, 10% in Slovakia, 9% in Hungary, and 2% in Bulgaria
(rounded figures). The Group also has a strong position in the investment fund market in Central and Eastern
Europe (estimated at 28% in the Czech Republic, 7% in Slovakia, and 17% in Hungary). The estimated
market shares in insurance are (figures for life and non-life insurance, respectively): Czech Republic: 6% and
6%; Slovakia: 5% and 3%; Hungary: 3% and 5%; and Bulgaria: 10% and 10%.

In the Groups financial reporting, the Czech activities are separated in a single Czech Republic Business
Unit, whereas the activities in the other Central and Eastern European countries, together with Ireland (see
further) are combined into the International Markets business unit. The Czech Republic Business Unit hence
comprises all KBCs activities in the Czech Republic, consisting primarily of the activities of the SOB
group (under the SOB, Era, Postal Savings Bank, Hypoteni banka and MSS brands), the insurer SOB
Pojitovna, SOB Asset Management and Patria Finance. The International Markets Business Unit
comprises the activities conducted by entities in the other (non-Czech) Central and Eastern European core
countries, namely SOB and SOB Poistova in Slovakia, K&H Bank and K&H Insurance in Hungary and
CIBank and DZI Insurance in Bulgaria, plus KBC Bank Irelands Irish operations. The remaining companies
whose planned divestment still has to be completed also belong to this business unit, but their results are
recognised under the Group Centre until they are sold.

Activities in the rest of the world

A number of companies belonging to the Group are also active in, or have outlets in, countries outside the
home markets (among which KBC Bank, KBC Lease, KBC Group Re, KBC IFIMA, KBC Financial
Products, KBC Securities, Antwerp Diamond Bank (sale agreement signed) etcetera). See also the list of main
companies or full list on www.kbc.com.

Of these, the main subsidiaries are KBC Bank Deutschland (for which a sale agreement has already been
signed) and KBC Bank Ireland.

The loan portfolio of KBC Bank Ireland stood at about 15 billion euros at the end of 2013, appromixately
80% of which relates to mortgage loans. The Group set aside 1.1 billion euros in loan loss provisions for its
Irish portfolio in 2013, considerably more than the 0.5 billion euros in 2012. The additional provisions were
recorded in the fourth quarter and resulted from the analysis of the loan portfolio in the light of factors such as
the European Banking Authoritys paper on forbearance and non-performing exposures and the anticipated
quality assessment of bank assets in 2014. At the end of 2013, some 26 % of the total Irish loan portfolio was
non-performing, compared with 23% at year-end 2012. In addition to the ongoing management of the

71
 problem real estate portfolio, the Group started work in 2013 on transforming and developing KBC in Ireland
into an important retail bank. The Group estimates its share of the Irish market in 2013 at 10% for retail
mortgage loans and 3% for deposits. It caters for around 0.2 million clients there. See also the press release
dated 13 February 2013, available on www.kbc.com.

The foreign branches of KBC Bank NV are located mainly in Western Europe, Southeast Asia and the U.S.
and focus on serving customers that already do business with KBC Banks Belgian or Central and Eastern
European network. In the past years, many of the other (niche) activities of these branches have been built
down, stopped or sold, and the pure international credit portfolio has been scaled down.

In the Groups financial reporting, KBC Bank Ireland is included in the International Markets Business Unit,
whereas KBC Banks foreign branches are included in the Belgium Business Unit.

10. Competition
All of the Groups operations face competition in the sectors they serve.

Depending on the activity, competitor companies include other commercial banks, saving banks, loan
institutions, consumer finance companies, investment banks, brokerage firms, insurance companies,
specialised finance companies, asset managers, private bankers, investment companies etc.

In both Belgium and Central & Eastern Europe, the Group has an extensive bankinsurance network of
branches, insurance agencies and other distribution channels. The Group believes most of its main companies
have strong name brand recognition in their respective markets.

In Belgium, KBC Group is perceived as one of the top three financial institutions (see market shares). For
certain products or activities, KBC Group estimates it has a leading position (e.g. in the area of investment
funds). The main competitors in Belgium are BNP Paribas Fortis, Belfius, ING, Ageas, Ethias and AXA,
although for certain products, services or markets, other financial institutions may also be important
competitors.

In its Central & Eastern Europe European home market KBC Group is one of the leading financial groups
(see market shares), occupying significant positions in banking and insurance (see market shares). In this
respect, the Group competes in each of these countries against local financial institutions, as well as
subsidiaries of other large foreign financial groups (such as Erste Bank, Unicredit and others).

In the rest of the world, the Groups presence primarily consists of a limited number of branches and
subsidiaries. In this case, the Group faces competition both from local companies and international financial
groups.

11. Staff
As at the end of 2013, the Group had, on a consolidated basis, about 36,000 employees (full-time or
equivalent, excluding the companies for which the sale agreement is not yet finalised), the majority of whom
were located in Belgium (largely in KBC Bank) and Central and Eastern Europe. In addition to talks at works
council meetings and at meetings with union representatives and with other consultative bodies, the Group
also works closely in other areas with employee associations. There are various collective labour agreements
in force.

12. Risk management

Mainly active in banking, insurance and asset management, the Group is exposed to a number of typical
industry-specific risks and uncertainties such as but not exclusively credit default risk, country risk,

72
movements in interest rates and exchange rates, liquidity risk, insurance underwriting risk, operational risks,
changes in regulations, customer litigation, as well as the economy in general. Obviously, the activities of a
large financial group such as the one the Issuer is part of are inherently exposed to other risks that only
become apparent with the benefit of hindsight.

This following description focuses on the Groups risk governance model and most of the material risks the
Group faces, namely credit risk, market risk, liquidity risk, technical insurance risk, operational risk, as well
as capital adequacy. More information is available in the 2012 Risk Report which is published on
www.kbc.com. See also the description in Part II (Risk Factors) of this Prospectus.

Risk Governance
Through its banking and asset management activities, the Group is exposed to a number of typical risks such
as but certainly not exclusively credit risk, market risk, liquidity risk, insurance underwriting risk and
operational risk. It is part of the business risk that the macroeconomic environment and the ongoing
restructuring under the Strategic Plan may have a negative impact on asset values or generate additional
charges beyond anticipated levels.

Below is a description of credit risk, market risk (trading & non-trading activities) liquidity risk, technical
insurance risk and operational risk. A selection of figures on credit risk, Asset and Liability Management
(ALM) and market risk in trading activities are provided further on.

Credit risk is the potential negative deviation from the expected value of a financial instrument arising
from the non-payment or non performance by a contracting party (for instance, a borrower, guarantor,
insurer or re-insurer, counterparty in a professional transaction or issuer of a debt instrument), due to
that partys insolvency, inability or lack of willingness to pay or perform, or to events or measures
taken by the political or monetary authorities of a particular country (country risk). Credit risk thus
encompasses default risk and country risk, but also includes migration risk, which is the risk for
adverse changes in credit ratings.

Market risk is defined as the potential negative deviation from the expected value of a financial
instrument (or portfolio of such instruments) due to changes in the level or in the volatility of market
prices, e.g., interest rates, exchange rates and equity or commodity prices. Market risk also covers the
risk of price fluctuations in negotiable securities as a result of credit risk, country risk and liquidity
risk. The interest rate, foreign exchange and equity risks of the non-trading positions in the banking
book and of the insurers positions are all included in ALM exposure.

Market risk in non-trading activities (also known as ALM) relates to the Groups structural exposure to
market risks. These risks include interest rate risk, spread risk, equity risk, real estate risk, foreign
exchange risk and inflation risk.

Liquidity risk is the risk that an organisation will be unable to meet its payment obligations as they
come due, without incurring unacceptable losses. The principal objective of the Groups liquidity
management is to be able to fund such needs and to enable the core business activities of the Group to
continue to generate revenue, even under adverse circumstances.

Technical insurance risk is the risk that the premium and provisions are insufficient to cover the
insurance claims made by policyholders.

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and
systems or from external events. Operational risks include the risk of fraud, and legal, compliance and
tax risks.

73
The Groups risk governance framework defines the responsibilities and tasks required to manage value
creation and the associated risks. During 2012, the Groups risk management framework underwent
significant changes with regard to governance and structure. The goal of these changes was to further improve
the Groups ability to deal decisively with major economic events in the future by creating an adjusted and
comprehensive integrated model that aligns all dimensions of risk, capital and value management.

Credit risk
Credit risk is managed at both transactional and portfolio level. Managing credit risk at the transactional level
means that sound practices, processes and tools are in place to identify and measure the risks before and after
accepting individual credit exposures. Limits and delegations (based on parameters such as internal risk class,
type of counterparty) are set to determine the maximum credit exposure allowed and the level at which
acceptance decisions are taken. Managing the risk at portfolio level encompasses inter alia periodic measuring
and analysing of risk embedded in the consolidated loan and investment portfolios and reporting on it,
monitoring limit discipline, conducting stress tests under different scenarios, taking risk mitigating measures
and optimising the overall credit risk profile.

Credit risk arises in both the banking and insurance activities of the Group. In separate sections below, a
closer look is given at the credit risk related to the insurance activities, the Groups investments in structured
credit products, government bonds, and the Groups Irish and Hungarian portfolios.

Looking at the banking activities first, the main source of credit risk is the loan and investment portfolio. This
portfolio has been built up mainly through what can be considered as pure, traditional lending activities. It
includes all retail lending such as mortgage loans and consumer loans, all corporate lending such as
(committed and uncommitted) working capital credit lines, investment credit, guarantee credit and credit
derivatives (protection sold) and all non-government debt securities in the investment books of the Group's
bank entities. The table below excludes other credit risks, such as trading exposure (issuer risk), counterparty
risk associated with interprofessional transactions, international trade finance (documentary credit, etc.) and
government bonds. These items are described separately below.

Loan and investment portfolio, banking 31-12-2012 30-09-2013

Total loan portfolio (in billions of EUR)

Amount granted ................................................................................... 167 165
1
Amount outstanding ........................................................................... 141 139
Loan & investment portfolio breakdown by business unit (as a per cent, of
the portfolio of credit outstanding)

Belgium 63 per cent. 63 per cent.

Czech Republic 15 per cent. 15 per cent.
International Markets 19 per cent. 19 per cent.
Group Centre 3 per cent. 3 per cent.
Total 100 per cent. 100 per cent.
Loan & investment portfolio breakdown by sector (selected sectors as a
per cent. of the portfolio of credit outstanding)2
Private individuals 42 per cent*. 43 per cent.
Financial and Insurance services 6 per cent*. 5 per cent.
Governments 4 per cent*. 4 per cent.
Corporates 48 per cent*. 48 per cent.

74
Loan and investment portfolio, banking 31-12-2012 30-09-2013

Non-financial services 11 per cent*. 11 per cent.

Retail and wholesale trade 7 per cent*. 7 per cent.
Real estate 8 per cent*. 8 per cent.
Construction 4 per cent*. 4 per cent.
Other 18 per cent*. 19 per cent.
Total 100 per cent*. 100 per cent.
Impaired loans (in millions of EUR or per cent.)
Amount outstanding 10,757 11,426
Specific loan impairments 4,614 4,799
Portfolio-based loan impairments 244 317
Credit cost ratio, per business unit
Belgium 0.28 per cent. 0.39 per cent.
Czech Republic 0.31 per cent. 0.24 per cent.
International Markets 2.26 per cent. 1.78 per cent.
3
Group Centre 1.06 per cent. 2.97 per cent.
3
Total 0.69 per cent. 0.71 per cent.
Non-performing (NP) loans (in millions of EUR or per cent.)
Amount outstanding 7,397 8,134
Specific loan impairments for NP loans 3,626 3,858
Non-performing ratio, per business unit
Belgium 2.3 per cent. 2.6 per cent.
Czech Republic 3.2 per cent. 3.2 per cent.
International Markets 17.6 per cent. 19.0 per cent.
Group Centre 1.3 per cent. 5.4 per cent.
Total 5.3 per cent. 5.8 per cent.
Cover ratio
Specific loan impairments for NP loans/Outstanding NP loans 49 per cent. 47 per cent.
Idem, excluding mortgage loans 63 per cent. 60 per cent.
Specific and portfolio-based loan impairments for performing and NP
loans/outstanding NP loans 66 per cent. 63 per cent.
Idem, excluding mortgage loans 91 per cent. 86 per cent.
For a definition of the above ratios, see the Glossary of ratios used.
1. Outstanding amount includes all on-balance sheet commitments and off-balance sheet guarantees.
2. The breakdown by sector is based on Q3 2013 data as the 2014 Annual Report has not yet been published.
3. Including IFRS 5 entities the CCR per 31-12-2013 would be 1.85% for Group Centre and 1.19% for the Total.
* Only these numbers are audited

The normal loan portfolio is split into internal rating classes ranging from 1 (lowest risk) to 9 (highest risk)
reflecting the probability of default (PD). An impaired loan is assigned an internal rating ranging from PD
10 to PD 12. PD class 12 is assigned when either one of the obligor's credit facilities is terminated by the
bank, or when a court order is passed instructing repossession of the collateral. PD class 11 is assigned to
obligors that are more than 90 days past due (in arrears or overdrawn), but that do not meet PD 12 criteria. PD
class 10 is assigned to obligors for which there is reason to believe that they are unlikely to pay (on time), yet
are still performing and do not meet the criteria for classification as PD 11 or PD 12. In respect of these

75
impaired loans (PD 10 to PD 12), specific loan impairments are recorded under the net present value of the
recoverable amount. In addition, a portfolio-based impairment for credit in PD classes 1 to 9 is recognised
(based on a formula).

The non-performing ratio is defined as the amount outstanding of non-performing loans (PD 11 and PD
12) divided by the total outstanding loan portfolio. The credit cost ratio is defined as net changes in
specific and portfolio-based impairment for credit risks divided by the average outstanding loan portfolio.

The following additional information for the loan and investment portfolio in Ireland and Hungary is provided
due to the specific situation on these markets.

Details for Irish and Hungarian portfolios 31-12-2012

KBC Bank Ireland (Ireland) - loan and investment porfolio1

Total portfolio (outstanding, in billions of EUR) 16
Breakdown by loan type
Home loans 78%
SME & coporate loans 11%
Real estate investment and real estate development 11%
Breakdown by risk class
Normal performing (PD 1-9) 72%
Impaired, still performing (PD 10) 5%
Impaired, non-performing (PD 11+12) 23%
2
Credit cost ratio 3.34%
Cover ratio [total impairment (for both performing and non-performing loans)]/[outstanding non
46%
performing loans]

Renegotiated distressed loans 14%

K&H Bank (Hungary) - loan and investment portfolio1
Total portfolio (outstanding, in billions of EUR) 5
Breakdown by loan type
Retail loans 49%
FX mortgage loans 29%
SME & corporate loans 51%
Breakdown by risk class
Normal performing PD (1-9) 88%
Impaired, still performing (PD 10) 1%
Impaired, non performing (PD 11+12) 11%
2
Credit cost ratio 0.78%
Cover ratio [total impairment (for both performing and non-performing loans)]/[outstanding non
67%
performing loans]

Renegotiated distressed loans 8%

1 For a definition, see Overview of credit risk exposure in the banking activities (i.e. excluding inter alia government bonds).
2 Unaudited.

As announced in November 2013, the Group has reassessed its loan book (with special attention to the Irish
loan portfolio) and set aside additional provisions due to the reclassification of 2 billion euros worth of

76
restructured mortgage loans. Given the slower-than-expected recovery of the SME sector in Ireland and a
more prudent outlook for future cashflows and collateral values, the Group has also set aside provisions in its
corporate loan book. This has led to an overall impairment charge in Ireland of 773 million euros for the
fourth quarter of 2013. The Groups guidance for loan loss provisions in Ireland for the coming years remains
at 150 to 200 million euros for 2014 and 50 to 100 million euros for both 2015 and 2016. For further
information, please also see Description of the Issuer Principal markets and activities activities in the
rest of the world and Description of the Issuer Recent Events KBC Group NV announces its 4Q and
FY2013 results on respectively page 72-73 and page 96-98 of this Prospectus.

In the Hungarian home loans portfolio, the more conservative assessment has led to a reclassification of part
of this portfolio to the default category. In addition thereto, provisions for this portfolio were set aside, the
amounts of which however being relatively limited in comparison to Ireland. As a consequence, the
Hungarian portfolio is now believed to be more resilient in light of the asset quality review.

Besides the credit risks in the loan and investment portfolio, credit risks also arise in other banking activities.
The main sources of other credit risk are:

Short-term commercial transactions. This activity involves export or import finance (documentary credit, pre-
export and post-import finance, etc.) and only entails exposure to financial institutions. The Group manages
risks associated with this activity by setting limits per financial institution and per country or group of
countries.

Trading book securities. These securities carry an issuer risk (potential loss on default by the issuer). The
Group measures exposure to this type of risk on the basis of the market value of the securities. Issuer risk is
curtailed through the use of limits both per issuer and per rating category. The exposure to asset-backed
securities and collateralised debt obligations in the trading book is not included in the figures shown in the
table, but is reported separately (see the 'Overview of outstanding structured credit exposure' section).

Interprofessional transactions (deposits with professional counterparties and derivatives trading). These
transactions result in counterparty risk. The amounts shown in the table are the Groups pre-settlement risks,
measured as the sum of the (positive) current replacement value (mark-to-market value) of a transaction and
the applicable add-on. Risks are curtailed by setting limits per counterparty. The Group also uses close-out
netting and collateral techniques. Financial collateral is only taken into account if the assets concerned are
considered eligible risk-mitigants for regulatory capital calculations (Basel II).

Government securities in the investment portfolio of banking entities. Exposure to governments is measured
in terms of nominal value and book value. Such exposure relates mainly to EU states (particularly Belgium).
The Group has put in place limiting caps for both non-core and core country sovereign bond exposure. Details
on the exposure of the combined banking and insurance activities to government bonds are provided in a
separate section below.

Other credit risks:

As mentioned above, the loan portfolio clearly constitutes the main source of credit risk for the Group.
However, a number of activities that are excluded from the credit portfolio figures also contain an element of
credit risk, such as short-term commercial exposure (this activity involves export or import finance
(documentary credit, pre-export and post-import finance, etc.) and only entails exposure to financial
institutions. Risks associated with this activity are managed by setting limits per financial institution and per
country or group of countries). Information on risks related to counterparty risk of inter-professional
transactions (refers to settlement and the pre-settlement risk of derivatives), trading book securities - issuer
risk (refers to the potential loss on default by the issuer of the trading securities) and the government
securities in the investment portfolio of banking entities, can be found in the 2012 annual report of the Issuer.

77
Other credit exposure, banking
31-12-2011 31-12-2012
(in billions of EUR)1 (audited)

Short-term commercial transactions 2.8 3.2

2
Issuer risk 0.3 0.3
3
Counterparty risk in interprofessional transactions 11.6 9.0
Sovereign bonds in the investment portfolio (nominal) 34.1 31.9
1 Excluding entities classified as disposal groups under IFRS 5. In 2011, these entitites (see Remark at the start of this section) were
exposed to an issuer risk of 0.8 billion euros and a counterparty risk of 1.6 billion euros. In 2012, the relevant entities (see Remark at the
start of this section) were exposed to a negligible issuer risk and a counterparty risk of 0.1 billion euros.
2 Excluding a nominative list of central governments, and all exposure to EU institutions and multilateral development banks.
3 After deduction of collateral received and netting benefits.

Sovereign debt exposure

KBC Group holds a significant portfolio of government bonds, primarily as a result of its considerable excess
liquidity position and for the reinvestment of insurance reserves into fixed instruments. A breakdown per
country is provided in the table below.

Overview of exposure to sovereign bonds at year-end 2013, carrying value1 (in millions of EUR) (audited)

Total (by remaining term to maturity)

Total (by portfolio)1
maturing in

Designated
at fair value For comparison
Available Held to through Loans and Held for purposes: total at 2016 and
for sale maturity profit or loss receivables trading Total 3Q2013 2014 2015 later

Southern
Europe and 1,324 425 0 0 3 1,752 1,631* 5 11 1,736
Ireland

Greece 0 0 0 0 0 0 0* 0 0 0
Portugal 40 36 0 0 0 77 90* 0 10 66
Spain 348 0 0 0 0 348 246* 0 0 348
Italy 783 80 0 0 1 865 840* 5 1 859
Ireland 153 308 0 0 1 462 456* 0 0 462

KBC core
11,754 23,980 288 118 2,241 38,381 38,153* 4,840 5,548 27,993
countries

Belgium 8,011 15,445 213 0 917 24,586 23,947* 3,739 2,678 18,168
Czech Rep. 2,309 5,573 66 29 993 8,970 9,159* 976 2,318 5,676
Hungary 235 1,677 8 88 258 2,267 2,441* 34 448 1,785
Slovakia 1053 1,269 0 0 73 2,395 2,464* 83 96 2,216
Bulgaria 146 16 0 0 0 162 142* 8 7 147

Other
4,822 5,298 482 0 141 10,743 10,398* 1,067 1,906 7,771
countries

France 1,058 2,251 0 0 3 3,312 3,375* 333 263 2,716

Poland 324 59 0 0 15 398 312* 27 1 371
Germany 364 532 16 0 30 942 1,075* 104 38 800
Austria 243 440 211 0 0 894 777* 43 6 845
Netherlands 239 453 100 0 5 797 728* 66 68 663
Finland 92 134 0 0 0 226 267* 33 67 126
Rest2 2,502 1,430 155 0 87 4,174 3,863* 461 1,462 2,250

Total 17,900 29,703 771 118 2,385 50,876 50,182* 5,912 7,464 37,499
1. Including entities classified as disposal groups under IFRS 5 (accounting for an aggregate 0.6 billion euros at first quarter-end 2013, 0.4 billion euros at
second, third and last quarter-end 2013).
2. Sum of countries whose individual exposure is less than 0.5 billion euros and also including 1.4 billion euros in deposits at the National Bank of Hungary
(compared to 1.2 billion euros in March, 1.4 billion euros in June and 1,1 billion euros in September).
* Unaudited figures

78
For the insurance activities, credit exposure exists primarily in the investment portfolio (towards issuers of
debt instruments) and towards reinsurance companies. The Group has guidelines in place for the purpose of
controlling credit risk within the investment portfolio with regard to, for instance, portfolio composition and
ratings.

Investment portfolio of KBC group insurance entities 31-12-2012 30-09-2013

(in millions of EUR, market value)1 (audited)5 (unaudited)

Per balance sheet item

Securities 19 634 18 818
Bonds and other fixed income securities 18 983 17 837
Held to maturity 5 788 6 806
Available for sale 13 190 11 030
At fair value through profit or loss and held for trading 0 0
As loans and receivables 5 0
Shares and other variable-yield securities 633 963
Available for sale 630 959
At fair value through profit or loss and held for trading 3 4
Other 18 18
Property and equipment and investment property 408 378
2
Investment contracts, unit-linked 11 847 12 659
Other 89 12
Total 31 978 32 461
Details for bonds and other fixed-income securities
By rating3, 4
Investment grade 95% 97%
Non-investment grade 1% 3%
Unrated 4% 0%
3
By sector
Governments 63% 60%
6
Financial 26% 21%
Other 11% 15%
3
By currency
Euro 94% 94%
Other European currencies 6% 6%
US dollar 0% 0%
3
By remaining term to maturity
Not more than 1 year 13% 18%
Between 1 and 3 years 19% 19%
Between 3 and 5 years 15% 17%
Between 5 and 10 years 33% 28%
More than 10 years 20% 17%
1 The total carrying value amounted to 31 277 million euros at year-end 2012.
2 Representing the assets side of unit-linked (class 23) products and completely balanced on the liabilities side. No credit risk involved for KBC Insurance.
3 Excluding investments for unit-linked life insurance. In certain cases, based on extrapolations and estimates.

79
4 External rating scale.
5 Excluding entitites classified as disposal groups under IFRS 5. In 2012, the relevant entities (see Remark at the start of this section) had an investment portfolio of
0.2 billion euros.
6 Including covered bonds and non-bank financial companies.

Structured credit exposure (CDOs and other ABS), 31 December 2013

Since 2008 the Group has a tight strategy in place related to structured credit products and gradually imposed
a ban on all origination and investment activity CDOs and ABS. Before this time the Group acted as an
originator of and investor in structured credit transactions. The remainder of the investments from before
2008 are referred to as legacy exposure. Three categories of legacy investments are distinguished:

The Group (via its subsidiary KBC Financial Products) acted as an originator when structuring CDO
(collateralized debt obligation) deals (based on third-party assets) for itself or for third party investors. For
several transactions, protection was bought from the US monoline credit insurer ('CDO exposure protected
MBIA in the table).

The Group invested in structured credit products, both in CDOs (notes and super senior tranches),

largely those originated by KBC Group itself (other CDO exposure' in the table); and

in other ABS ('other ABS exposure in the table).

In 2013, the Group decided to lift the strict ban on investments in ABS and to allow treasury investments
(treasury ABS exposure in the table) in liquid high quality non-synthetic European ABS, which are also
accepted as eligible collateral for the ECB. This allows a further diversification of the investment portfolios.

Important to note is that the internally imposed ban on CDOs and synthetic securitisations currently continues
to exist.
KBC investments in structured credit products (CDOs and ABS), in billions of EUR (unaudited) 31-12-2013

Total net exposure 7.5

o/w legacy CDO exposure protected with MBIA 5.3
o/w other legacy CDO exposure 1.1
o/w other legacy ABS exposure 1.2
o/w treasury ABS exposure 0.0
Cumulative value markdowns on outstanding legacy investments (mid 2007 to date)* -0.4
Value markdowns -0.3
for other legacy CDO exposure -0.2
for legacy ABS exposure -0.1
Credit value adjustment (CVA) on MBIA cover (related to legacy CDO exposure) -0.1
Cumulative value markdowns on treasury ABS 0.0
* Note that, value adjustments to KBCs CDOs are accounted for via profit and loss (instead of directly via shareholders equity), since
the groups CDOs are mostly of a synthetic nature (meaning that the underlying assets are derivative products such as credit default
swaps on corporate names). Their synthetic nature is also the reason why KBCs CDOs are not eligible for accounting reclassification
under IFRS in order to neutralise their impact.

As from 2Q 2013 on, the Group presents the net exposure instead of original notional amounts of its
remaining investment in CDOs or other ABS. With regard to CDOs this means that all claimed and settled
credit events, and all fully de-risked (i.e. riskless) positions are excluded. Over the fourth quarter of 2013 the
Groups legacy CDO and ABS portfolio reduced by an amount of -0,1 billion euros fully due to redemptions
in the other legacy ABS portfolio.

In the Groups treasury portfolio over the fourth quarter of 2013, investments of approximately 45 million
euros were done in two RMBS assets.

As stated above, the Group bought credit protection from MBIA for a large part of the (super senior) CDOs it
originated.

80
Moreover, the remaining risk related to MBIAs insurance coverage is to a large extent mitigated as it is
included in the scope of the Guarantee Agreement that was agreed with the Belgian State on 14 May 2009.
The contract with the Belgian State has a nominal value of 5.9 billion euro of which 5.3 billion euro relates to
the exposure insured by MBIA. It should be noted that the provisioning rate of MBIA was reduced from 80%
to 60% per end of June 2013 based on a fundamental internal analysis. The remaining euro 0.7 billion of
exposure covered by the contract with the Belgian State relates to part of the other CDO exposure. Of this
portfolio (i.e. CDO exposure not covered by credit protection by MBIA) the super senior assets have also
been included in the scope of current Guarantee Agreement with the Belgian State.

Market risk in trading activities

As already stated before, the Group has a number of money and debt capital market dealing rooms in Western
Europe, Central and Eastern Europe and Asia. The dealing room in Brussels accounts for the majority of the
limits and risks.

The tables below show the Historical Value-at-Risk (HVAR; 99 per cent. confidence interval, 1-day holding
period, historical simulation) and Stressed Value-at-Risk (SVAR; 99 per cent. confidence interval, 10-day
holding period, historical simulation) for the Groups dealing rooms on the money and capital markets, and
for KBC Financial Products. More details are available in the 2012 annual report of KBC Group.

Market risk HVAR1 (10-day holding period, in millions of EUR) (audited)

KBC
Financial
KBC Bank Products

Average, 1Q 2011................................................................................................ 13 16
Average, 2Q 2011................................................................................................ 13 16
Average, 3Q 2011................................................................................................ 14 22
Average, 4Q 2011................................................................................................ 26 8
End of period ................................................................................................ 28 18
Maximum in period....................................................................................... 33 29
Minimum in period ....................................................................................... 10 4
Average, 1Q 2012................................................................................................ 30 12
23
Average, 2Q 2012 .............................................................................................. 34 2
Average, 3Q 2012................................................................................................ 30 2
Average, 4Q 2012................................................................................................ 30 1
End of period ................................................................................................ 37 2
Maximum in period....................................................................................... 39 18
Minimum in period ....................................................................................... 23 1
Average, 1Q 2013................................................................................................ 37 1
Average, 2Q 2013................................................................................................ 37 1
Average, 3Q 2013................................................................................................ 34 1
4
Average, 4Q 2013 ................................................................................................ 29 -
4
End of period ............................................................................................... 28 -
Maximum in period....................................................................................... 50 5

81
 KBC
Financial
KBC Bank Products

Minimum in period4 ...................................................................................... 26 -

1
KBC Bank: excluding specific interest rate risk (measured using other techniques); swap basis risk has been included for the dealing
rooms in Brussels and at certain branches since the end of October 2011 (significant upward effect on HVaR), and extended to the
remaining subsidiaries since March 2012 (minor effect). KBC Financial Products: excluding Avebury and the fund derivatives business
line.
2
Change in scope as of 1 March 2012 when European equity derivatives moved from KBC Financial Products to KBC Bank.
3
Large decrease in the use of average HVaR at KBC Financial Products, due to simplification of the credit event settlement process.
4
The offsetting positions in the scope of KBC Financial Products HVaR model matched exactly as from October 2013 and consequently
the HVaR fell to zero. This means that all trading activity for the KBC group measured by HVaR is included in the 10-day HVaR for The
Group figure from that point on.

Regulatory Capital charges for market risk

Both KBC Bank and KBC Financial Products have been authorised by the Belgian regulator to use their
respective HVaR models to calculate regulatory capital requirements for part of their trading activities
(Approved Internal Models or AIM). SOB (Czech Republic) has also received approval from the local
regulator to use its HVaR model for capital requirement purposes. These models are also used for the
calculation of Stressed VaR (SVaR), which is one of the new CRD III Regulatory Capital charges that entered
into effect at year-end 2011. In addition, KBC Financial Products have models (as required by CRD III ) to
calculate and report an Incremental Risk Charge (IRC) for the credit risk positions that carry default and
migration risks (i.e. the single name corporate CDS) and a Comprehensive Risk Measure (CRM) is calculated
to cover all price risks in the bespoke CDO tranches.

The resulting capital requirements for trading risk at year-end 2011 and year-end 2012 are shown in the table
below. The trading regulatory capital requirements of local KBC entities not receiving approval from their
respective regulator to use an internal model for capital calculations, as well as the business lines not included
in the HVaR calculations, are measured according to the Standardised approach.

Trading Regulatory Capital Requirements by risk type for the Group (in millions of EUR)
Trading regulatory capital requirements, by risk type (in millions of EUR) (unaudited)

Comprehen-
Interest Commodity Incremental Re-
Equity risk FX risk sive Risk Total
rate risk risk Risk Charge Securitisation1
Measure

31-12-2011

HVaR 109 4 18 - 5 101 - 445

Market risks assessed by
159 6 43 -
internal model SVaR

Market risks assessed by 76 18 18 1 - - 216 329

the Standardised
Approach

Total 344 28 78 1 5 101 216 773

31-12-2012

HVaR 88 3 10 - 1 34 - 274
Market risks assessed by
internal model -
SVaR 114 4 20

Market risks assessed by 60 12 11 2 - - 340 425

the Standardised
Approach

Total 263 18 42 2 1 34 340 698

82
1
This is the (re)securitisation charge for all ABS and retained CDO positions held at KBC Financial Products.

Asset and Liability Management (market risks in non-trading activities)

The BPV (basis point value) below shows the amount with which the value of the economic portfolio
wouldbe impacted if interest rates were to fall by ten basis points across the entire curve including spread
(negative figures indicate a decrease in the value of the portfolio). More details are available in the 2012
annual report of KBC Bank.

BPV of the ALM-book of the Group (in millions of EUR) (audited)

Average, 1Q 2011 -61

Average, 2Q 2011 -62

Average, 3Q 2011 -58

Average, 4Q 2011 -45

End of period -40

Maximum in period -65

Minimum in period -40

Average, 1Q 2012 -52

Average, 2Q 2012 -49

Average, 3Q 2012 -49

Average, 4Q 2012 -47

End of period -39

Maximum in period -57

Minimum in period -39

Average, 1Q 2013 -33

Average, 2Q 2013 -27

Average, 3Q 2013 -21

Average, 4Q 2013 -22

The process of managing structural exposure to market risks (including interest rate risk, equity risk, real
estate risk, foreign exchange risk and inflation risk) is also known as Asset/Liability Management (ALM).

Structural exposure encompasses all exposure inherent in the Groups commercial activity or in the Groups
long-term positions (banking and insurance). Trading activities are consequently not included. Structural
exposure can also be described as a combination of:

mismatches in the banking activities linked to the branch networks acquisition of working
funds and the use of those funds (via lending, among other things);

mismatches in the insurance activities between liabilities in the non-life and life businesses and
the cover for these liabilities present in the investment portfolios held for this purpose;

83
 the risks associated with holding an investment portfolio for the purpose of reinvesting
shareholders equity;

the structural currency exposure stemming from the activities abroad (investments in foreign
currency, results posted at branches or subsidiaries abroad, exchange risk linked to the currency
mismatch between the insurers liabilities and its investments).

The main building blocks of KBCs ALM Risk Management Framework are:

a focus on economic value as the cornerstone of ALM policy, with attention also being paid to
criteria such as income, solvency and liquidity.

the use of a uniform ALM methodology for banking and insurance activities across the group,
based on fair value models that forecast the value of a product group under different market
scenarios and that are translated into replicating portfolios (combinations of market instruments
that allow the relevant product groups to be hedged with the lowest risk).

the use of a Value-at-Risk (VaR) measurement method for the various categories of risk
throughout the group for risk budgeting and limit-setting purposes. This VaR measures the
maximum loss that might be sustained over a one-year time horizon with a certain confidence
level, as a result of movements in interest rates and other fluctuations in market risk factors.
VaR losses are estimated based on a sample period of 20 years for the most significant risk
drivers.

the definition of an ALM VaR limit at group level and the breakdown of this limit into various
types of risk and entities.

the use of VaR, which is calculated using fair value models for non-maturing products, taking
into account different embedded options and guarantees in the portfolio.

the use of other risk measurement methods, such as Basis-Point-Value (BPV), notional
amounts, etc., to supplement VaR.

Technical insurance risk

Technical insurance risks stem from uncertainty regarding how often insured losses will occur and how
extensive they will be. All these risks are kept under control through appropriate underwriting, pricing, claims
reserving, reinsurance and claims handling policies of line management and through independent insurance
risk management.

The insurance risk management framework is designed primarily around the following building blocks:

Adequate identification and analysis of material insurance risks by, inter alia, analysing new
emerging risks, concentration or accumulation risks, and developing early warning signals.

Appropriate risk measurements and use of these measurements to develop applications aimed at
guiding the company towards creating maximum shareholder value. Examples include best
estimate valuations of insurance liabilities, ex post economic profitability analyses, natural
catastrophe and other life, non-life and health exposure modelling, stress testing and required
economic capital calculations.

Determination of insurance risk limits and conducting compliance checks, as well as providing
advice on reinsurance programmes.

84
Liquidity risk
Liquidity risk is the risk that an organisation will be unable to meet its payment obligations as they come due,
without incurring unacceptable losses.

The principal objective of the Groups liquidity management is to be able to fund the Group and to enable the
core business activities of the Group to continue to generate revenue, even under adverse circumstances.
Since the financial crisis, there has been a greater focus on liquidity risk management throughout the industry,
and this has been intensified by the minimum liquidity standards defined by the Basel Committee.

The Group is preparing for the Basel III era by incorporating Basel III concepts into its liquidity and funding
framework, as well as into its financial planning.

The Groups liquidity management framework and group liquidity limits are set by the Board of Directors.
Liquidity management is organised within the Group Treasury function, which is responsible for the overall
liquidity and funding management of the Group. The Group Treasury function monitors and steers the
liquidity profile on a daily basis and sets the policies and steering mechanisms for funding management
(intra-group funding, funds transfer pricing). These policies ensure that local management has an incentive to
work towards a sound funding profile. The local treasuries in the subsidiaries implement these policies and
report to the Group Treasury function, which in turn further centralises collateral management and the
acquisition of long-term funding. The local treasuries are directly responsible for liquidity management in
their respective entities. However, the liquidity contingency plan requires all significant local liquidity issues
to be escalated to group level.

The Groups liquidity risk management framework is based on the following pillars:

Contingency liquidity risk. This risk is assessed on the basis of liquidity stress tests, which
measure how the liquidity buffer of the Groups bank entities changes under extreme stressed
scenarios. This buffer is based on assumptions regarding liquidity outflows (retail customer
behaviour, professional client behaviour, drawing of committed credit lines, etc.) and liquidity
inflows resulting from actions to increase liquidity (repoing the bond portfolio, reducing
unsecured interbank lending, etc.). The liquidity buffer has to be sufficient to cover liquidity
needs (net cash and collateral outflows) over (i) a period that is required to restore market
confidence in the Group following a KBC-specific event, (ii) a period that is required for
markets to stabilise after a general market event and (iii) a combined scenario, which takes a
KBC-specific event and a general market event into account. The overall aim of the liquidity
framework is to remain sufficiently liquid in stress situations, without resorting to liquidity-
enhancing actions which would entail significant costs or which would interfere with the core
banking business of the Group.

Structural liquidity risk. The Group manages its funding structure so as to maintain substantial
diversification, to minimise funding concentrations in time buckets, and to limit the level of
reliance on short-term wholesale funding. The Group manages the structural funding position as
part of the integrated strategic planning process, where funding in addition to capital, profits
and risks is one of the key elements. At present, the Groups strategic aim for the next few
years is to build up a sufficient buffer in terms of the Basel III LCR and NSFR requirements via
a funding management framework, which sets clear funding targets for the subsidiaries (own
funding, reliance on intra-group funding) and provides further incentives via a system of intra-
group pricing to the extent subsidiaries run a funding mismatch.

Operational liquidity risk. Operational liquidity management is conducted in the treasury

departments, based on estimated funding requirements. Group-wide trends in funding liquidity
and funding needs are monitored on a daily basis by the Group Treasury function, ensuring that

85
 a sufficient buffer is available at all times to deal with extreme liquidity events in which no
wholesale funding can be rolled over.

Capital adequacy
Capital adequacy (or solvency) risk is the risk that the capital base of KBC Group NV, the bank or the insurer
might fall below an acceptable level. In practice, this entails checking solvency against the minimum
regulatory and in-house solvency ratios. Capital adequacy is approached from both a regulatory and an
internal (economic) perspective.

Solvency is reported at KBC Group NV, banking and insurance level, calculating it on the basis of IFRS
figures and the relevant guidelines issued by the Belgian regulator.

Under Basel II, for group solvency, the so-called building block method is used. This entails comparing
group regulatory capital (i.e. parent shareholders equity adjusted for a number of items (see table)), with the
sum of the separate minimum regulatory solvency requirements for KBC Bank and the holding company
(after deduction of intercompany transactions between these entities) and KBC Insurance. The total risk-
weighted volume of insurance companies is calculated as the required solvency margin under Solvency I
divided by 8%. Regulatory minimum solvency targets were amply exceeded in 2013, not only at year-end, but
also throughout the entire year.

Under Basel III, for group solvency, the so-called 'Danish compromise' method is used. This entails
comparing group regulatory capital (i.e. parent shareholders' equity adjusted for a number of items and after
deconsolidation of KBC Insurance), with the sum of the separate minimum regulatory solvency requirements
for KBC Bank and the holding company (after deduction of intercompany transactions between these entities)
and KBC Insurance. The total risk-weighted volume of insurance companies is calculated as a 370% risk
weight applied to the book value of the participation of KBC Group NV in KBC Insurance NV.

The Group is still required to report the solvency based on the so-called building block method. This entails
comparing group regulatory capital (i.e. parent shareholders equity adjusted for a number of items (see
table)), with the sum of the separate minimum regulatory solvency requirements for KBC Bank and the
holding company (after deduction of intercompany transactions between these entities) and KBC Insurance.
The total risk-weighted volume of insurance companies is calculated as the required solvency margin under
Solvency I divided by 8%.

In both methods regulatory minimum solvency targets were amply exceeded in 2013, not only at year-end,
but also throughout the entire year.

Furthermore, the Group has agreed with the NBB to maintain a minimum Basel III (fully loaded) CET1 ratio
(excluding reserves of available-for-sales assets) of 9.25%.

AT1 KBC Bank NV Loan

The Issuer will on-lend the proceeds of the Securities to KBC Bank NV under a loan agreement
(the AT1 Loan). The AT1 Loan will qualify at the level of KBC Bank NV as Additional Tier 1 capital for
regulatory capital purposes. The terms of the AT1 Loan mirror the Conditions of the Securities except that the
trigger event is situated on KBC Bank NV and KBC Group NV level. Subject to market conditions, KBC
Bank NV intends to use the proceeds of the AT1 Loan to redeem outstanding Tier 1 instruments which are
gradually being phased out under CRD IV.

86
13. Banking Supervision and regulation

Introduction
KBC Bank, a credit institution governed by the laws of Belgium, is subject to detailed and comprehensive
regulation in Belgium, and is supervised by the NBB, the Belgian central bank, acting as the supervisory
authority for prudential supervision of financial institutions. Since the implementation on 1 April 2011 of the
Twin Peaks Act, the powers relating to prudential supervision have been transferred from the Banking,
Finance and Insurance Commission (the CBFA) to the NBB.

The remaining supervisory powers previously exercised by the CBFA are now exercised by the Financial
Services and Markets Authority (the FSMA). This autonomous public agency is in charge of supervision
with regard to conduct of business rules for financial institutions and financial market supervision.

EU directives have had and will continue to have a significant impact on the regulation of the banking
business in the EU, as such directives are implemented through legislation adopted within each Member
State, including Belgium. The general objective of these EU directives is to promote the realisation of a
unified internal market and to improve standards of prudential supervision and market efficiency through
harmonisation of core regulatory standards and mutual recognition among EU Member States of regulatory
supervision, and in particular, licensing.

Supervision and regulation in Belgium

The banking regime in Belgium is governed by the Law on the Legal Status and Supervision of Credit
Institutions of 22 March 1993 and its subsequent modifications (the Banking Act). The Banking Act is
expected to be replaced by a new Law on the Legal Status and Supervision of Credit Institutions in the first
half of 2014. The new Law largely follows the evolution of European legislation. It will, among other things,
implement Directive 2013/36/EU of 26 June 2013 on access to the activity of credit institutions and the
prudential supervision of credit institutions and investment firms (CRD) and, where applicable, Regulation
(EU) n 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms
(CRR, together with CRD, CRD IV). CRR is directly applicable from 1 January 2014, subject to further
implementation and phased introduction of certain provisions, set out therein.

The Banking Act sets forth the conditions under which credit institutions may operate in Belgium and defines
the regulatory and supervisory powers of the NBB. The main objective of the Banking Act is to protect public
savings and the stability of the Belgian banking system in general.

Supervision of credit institutions

All Belgian credit institutions must obtain a license from the NBB before they may commence operations. In
order to obtain a license and maintain it, each credit institution must fulfil numerous conditions, including
certain minimum paid-up capital requirements. In addition, any shareholder holding 10 per cent. or more
(directly or indirectly, alone, together with affiliated persons or in concert with third parties) of the capital or
the voting rights of the institution must be of fit and proper character to ensure proper and prudent
management of the credit institution. The NBB therefore requires the disclosure of the identity and
participation of any shareholder with a 10 per cent. or greater capital or voting interest. If the NBB considers
that the participation of a shareholder in a credit institution jeopardizes its sound and prudent management, it
may suspend the voting rights attached to this participation and, if necessary, request that the shareholder
transfers to a third party its participation in the credit institution. Prior notification to and non-opposition by
the NBB is required each time a person intends to acquire shares in a credit institution, resulting either in the
direct or indirect ownership of a qualified holding of the capital or voting rights (i.e. 10 per cent. or more), or
in an increase of such qualified holding thereby attaining or surpassing 20 per cent., 30 per cent. or 50 per
cent., or when the credit institution would become his subsidiary. Furthermore, a shareholder who wishes to
directly or indirectly sell his participation or a part thereof, which would result in his shareholding dropping

87
below any of the above-mentioned thresholds, must notify the NBB thereof. The Belgian credit institution
itself is obliged to notify the NBB of any such transfer when it becomes aware thereof. Moreover, every
shareholder acquiring, decreasing or increasing its holding (directly or indirectly, alone, together with
affiliated persons or in concert with third parties) to 5 per cent. or more of voting rights or capital without
reaching the qualifying holding threshold of 10 per cent., must notify the NBB thereof within 10 working
days.

The Banking Act requires credit institutions to provide detailed periodic financial information to the NBB
and, under certain circumstances, the FSMA. The NBB also supervises the enforcement of laws and
regulations with respect to the accounting principles applicable to credit institutions. The NBB sets the
minimum capital adequacy ratios applicable to credit institutions. The NBB may also set other ratios, for
example, with respect to the liquidity and gearing of credit institutions. It also sets the standards regarding
solvency, liquidity, risk concentration and other limitations applicable to credit institutions. Pursuant to the
Banking Act, the NBB may, in order to exercise its prudential supervision, require that all information with
respect to the organisation, the functioning, the position and the transactions of a credit institution be provided
to it. Further, the NBB supervises, among other things, the management structure, the administrative
organisation, the accounting and the internal control mechanisms of a credit institution. The NBB may
supplement these communications and controls by on-site inspections. The NBB also exercises its
comprehensive supervision of credit institutions through Statutory Auditors who cooperate with the NBB in
its prudential supervision. A credit institution selects its Statutory Auditor from the list of auditors or audit
firms accredited by the NBB. Within the context of the European System of Central Banks, the NBB issues
certain recommendations regarding monetary controls.

If the NBB finds that a credit institution is not operating in accordance with the provisions of the Banking
Act, that its management policy or its financial position is likely to prevent it from honouring its
commitments, that it does not provide sufficient guarantees for its solvency, liquidity or profitability or that its
management structure, administrative and accounting procedures or internal control systems present serious
deficiencies, it will set a deadline by which the situation must be rectified. If the situation has not been
rectified by the deadline, the NBB has the power to appoint a special commissioner, to impose additional
requirements regarding solvency, liquidity, risk concentration and other limitations, to suspend or prohibit all
or part of the credit institutions activities (including a partial or complete suspension of the execution of
current contracts), to order the disposal of all or part of the credit institutions shareholdings, to impose a
replacement of the directors, and finally, to revoke the license of the credit institution. In urgent situations, the
NBB may even impose such measures immediately without regard to the deadline mentioned above.
Furthermore, if the circumstances as described in the previous paragraph are likely to impact the stability of
the Belgian or international financial system, every act of disposal regarding the credit institution can be taken
by Royal Decree, including the sale, transfer or contribution with regard to any or all assets, liabilities or
parts, or the shares of the credit institution. Such measures will not alter or end any contracts between the
credit institution and a third party. Similar measures can be taken if the credit institution violates the conduct
of business rules and thereby impairs the Belgian or international financial system.

Pursuant to Regulation (EU) n 1024/2013 of 15 October 2013 conferring specific tasks to the European
Central Bank concerning policies relating to the prudential supervision of credit institutions, the European
Central Bank (the ECB) will be the supervisory authority of KBC Bank as from 4 November 2014. The
supervisory powers conferred to the ECB will include, among other, the granting and withdrawal of
authorisations to and from credit institutions, the assessment of acquisitions and disposals of qualifying
holdings in credit institutions, ensuring compliance with the rules on equity, liquidity, statutory ratios and
conducting stress tests for credit institutions. The ECB will exercise these powers by issuing instructions and
guidelines to the national supervisory authorities (in casu the NBB), which must act in accordance with such
instructions.

88
Bank governance
Belgian law and regulatory practices make a fundamental distinction between the management of banking
activities, which is within the competence of the Executive Committee, and the supervision of management
and the definition of the credit institutions general policy, which is entrusted to the Board of Directors. In a
circular, the NBB recommends the implementation of this distinction (the Circular). The Circular also
contains other recommendations to assure the autonomy of the banking function and the proper governance of
the credit institution.

As required by the CBFA (now the NBB), KBC Bank has drafted an internal governance group memorandum
(the Governance Memorandum), which sums up the main characteristics of its policy structure. The
policy of a credit institution must meet the principles set out in the Circular. The Governance Memorandum
was approved by the Board of Directors of KBC Bank and KBC Group and has been submitted for approval
to the CBFA in 2008. An update to the Governance Memorandum was approved by the Board of Directors of
KBC Group and also submitted for approval to the CBFA in 2010. A third update is currently underway and
will subsequently be submitted for approval to the NBB.

Pursuant to the Banking Act, the members of the Executive Committee need to have the required professional
reliability and appropriate experience and the other managers of a credit institution need to have the required
expertise and appropriate experience.

Solvency supervision
Capital requirements and capital adequacy ratios are provided for in the Regulation (EU) n 575/2013 of
26 June 2013 on prudential requirements for credit institutions and investment firms (CRR, together with
CRD, CRD IV), transposing the Basel III regulation into European law. CRR is directly applicable from 1
January 2014, subject to further implementation and phased introduction of certain provisions, set out therein.
CRR requires that credit institutions must at all time comply with several minimum solvency ratios. These
ratios are defined as Common Equity Tier 1, Tier 1 or Total capital divided by risk weighted assets. The
absolute minimum is a Common Equity Tier 1 ratio of 4.5%. Risk weighted assets are the sum of all assets
and off-balance sheet items weighted according to the degree of credit risk that is inherent in it. The solvency
ratios also takes into account market risk with respect to the banks trading book (including interest rate and
foreign currency exposure) and operational risk in the calculation of the weighted risk. On top of the capital
requirements defined by the solvency ratios, the regulation imposes a capital conservation buffer, a systemic
risk buffer and in certain cases a countercyclical buffer.

Solvency is also limited by the leverage ratio, which compares Tier 1 capital to non-risk weighted assets. The
Belgian Banking act further stipulates that in no event the total capital of credit institutions may be less than
total fixed assets.

The payment of dividends by Belgian credit institutions is not limited by Belgian banking regulations, except
indirectly through capital adequacy and solvency requirements, and is further limited by the general
provisions of Belgian company law.

Large exposure supervision

European regulations ensure the solvency of credit institutions by imposing limits on the concentration of risk
in order to limit the impact of failure on the part of a large debtor. For this purpose, credit institutions must
limit the amount of risk exposure to any single counterparty to 25 per cent of the total capital. European
regulations also require that the credit institutions establish procedures to contain concentrations on economic
activity sectors and geographic areas.

89
Equity investments
Belgian credit institutions may make equity investments in commercial and industrial companies. However,
such investments (of 10 per cent. or more) may not exceed: (i) 15 per cent. of the shareholders equity of the
credit institution on a per investment basis, or (ii) 45 per cent. of the shareholders equity of the credit
institution in the aggregate.

Money laundering
Belgium has implemented Directive 2005/60/EC of the European Parliament and of the Council of 26
October 2005 on the prevention of the use of the financial system for the purpose of money laundering and
terrorist financing by adjusting an Act of 11 January 1993 (as amended from time to time). This legislation
contains a preventive system imposing a number of obligations in relation to money laundering and the
financing of terrorism. These obligations are related, among other things, to the identification of the client,
special attention for unusual transactions, internal reporting, processing and compliance mechanisms with the
appointment of a compliance officer, and employee training requirements. When, after investigation, a credit
or financial institution suspects money laundering to be the purpose of a transaction, it must promptly notify
an independent administrative authority, the Financial Intelligence Unit. This Unit is designated to receive
reports on suspicious transactions, to investigate them and, if necessary, to report to the criminal prosecutors
to initiate proceedings. The Belgian Prudential Supervisor has issued guidelines for credit and financial
institutions and supervises their compliance with the legislation. Belgian criminal law specifically addresses
criminal offences of money-laundering (Article 505, paragraph 1, 2, 3 and 4 of the Criminal Code) and
sanctions them with a jail term of a minimum of 15 days and a maximum of 5 years and/or a penalty of a
minimum of EUR 26 and a maximum of EUR 100,000 (to be increased with the additional penalty, or - in
other words - to be multiplied by 6).

Consolidated supervision - supplementary supervision

KBC Bank is subject to consolidated supervision on the basis of the consolidated financial situation of KBC
Group, which covers among other things solvency as described above, pursuant to Article 49, 4 of the
Banking Act. As a subsidiary of a mixed financial holding company (KBC Group NV) and part of a financial
conglomerate, KBC Bank is also subject to the supplementary supervision of the NBB, according to Directive
2011/89/EU of 16 November 2011 amending Directives 98/78/EC, 2002/87/EC, 2006/48/EC and
2009/138/EC as regards the supplementary supervision of financial entities in a financial conglomerate.

As mentioned above, a specific range of supervisory tasks in relation to the prudential supervision of
Eurozone banks, amongst which KBC Bank, will be transferred to the ECB. The ECB will also perform these
tasks at the level of the Group.

KBC Asset Management

As from June 2005, the status of KBC Asset Management has been changed from investment firm to a
management company of undertakings for collective investment in transferable securities (UCITS) (a
UCITS-management company). Its activities are, inter alia, the management of UCITS and the
management of portfolios of investments in accordance with mandates given by investors on a discretionary,
client-by-client basis. KBC Asset Management is subject to detailed, comprehensive regulation in Belgium,
supervised by the FSMA.

The UCITS-management company regime in Belgium is governed by the Law on certain forms of collective
management of investment portfolios of 3 August 2012 (Act of 3 August 2012). The Act of 3 August 2012
implements European Directive 2001/107/EC of 21 January 2002 relating to UCITS, as amended from time to
time. This Act regulates management companies and sets forth the conditions under which UCITS-
management companies may operate in Belgium; furthermore, it defines the regulatory and supervisory
powers of the FSMA.

90
 The regulatory framework concerning supervision on UCITS-management companies is mostly similar to the
regulation applicable to investment firms. The Act of 3 August 2012 contains, inter alia, the following
principles:

certain minimum paid-up capital requirements and rules relating to changes affecting capital structure;

obligation for management companies to carry out their activities in the interests of their clients or of
the UCITS they manage (e.g. creation of Chinese walls);

obligation to provide, on a periodic basis, a detailed financial statement to the FSMA;

supervision by the FSMA; and

subjection to the control of Statutory Auditors.

14. Insurance Supervision and regulation

Introduction
KBC Insurance, an insurance company governed by the laws of Belgium, is subject to detailed,
comprehensive regulation in Belgium, supervised by the NBB, the Belgian central bank.

Since the implementation on 1 April 2011 of the Twin Peaks Act, the powers relating to prudential
supervision have been transferred from the Banking, Finance and Insurance Commission (the CBFA) to the
NBB. The remaining supervisory powers previously exercised by the CBFA are now exercised by the
Financial Services and Markets Authority (the FSMA). This autonomous public agency is in charge of
supervision with regard to conduct of business rules and financial services providers (intermediaries).

EU directives have had and will continue to have a significant impact on the regulation of the insurance
business in the EU, as such directives are implemented through legislation adopted within each Member
State, including Belgium. The general objective of these EU directives is to promote the realisation of a
unified internal market and to improve standards of prudential supervision and market efficiency through
harmonisation of core regulatory standards and mutual recognition among EU Member States of regulatory
supervision, and in particular, licensing.

Supervision and regulation in Belgium

The insurance regime in Belgium is governed by the Insurance Supervision Act, as amended. The Insurance
Supervision Act, among other things, implements the European legislation as co-ordinated by, inter alia, EU
Directive 73/239 of 24 July 1973 on the co-ordination of laws, regulations and administrative provisions
relating to the conduct of the business of direct insurance, other than life insurance, as amended, and EU
Directive 2002/83 of 5 November 2002 concerning life insurance. It sets forth the conditions under which
insurance companies may operate in Belgium and defines the regulatory and supervisory powers of the NBB
and the FSMA. The regulatory framework is in some respects similar to the regulation applicable to banks in
Belgium.

Supervision of insurance companies

All Belgian insurance companies must obtain a licence from the NBB before they may commence operations.
In order to obtain a licence and maintain it, each insurance company must fulfil numerous conditions,
including the requirement to apply certain ''technical reserves'' for the adequate fulfilment of its contractual
and legal obligations, as well as a minimum ''solvency margin'' in order to cover any unforeseeable liabilities.
In addition, any shareholders holding (directly or indirectly, acting alone or in concert with third parties) a
substantial stake in the company (in general, this means 10% or more of the capital or the voting rights) must
be of ''fit and proper'' character to ensure proper and prudent management of the insurance company.

91
 Moreover, any shareholder wishing to increase such substantial stake to a 20%, 33% or 50% capital or voting
interest or to any stake that allows him to exercise control over the company, must disclose this to the NBB. If
the NBB considers that the influence of such a shareholder in an insurance company jeopardises its sound and
prudent management, it may suspend the voting rights attached to this participation. Furthermore, a
shareholder who wishes to sell his participation or a part thereof, which sale would result in his shareholding
dropping below any of the above-mentioned thresholds, must notify the NBB thereof one month in advance.
The Belgian insurance company itself is obliged to notify the CBFA of any such transfer when it becomes
aware of it.

The Insurance Supervision Act requires insurance companies to provide detailed periodic financial
information to the NBB. The NBB also supervises the enforcement of laws and regulations with respect to the
accounting principles applicable to insurance companies.

Pursuant to the Insurance Supervision Act, the NBB may, in order to exercise its prudential supervision,
require that all information with respect to the financial position and the transactions of an insurance company
be provided to it, either by the insurance company itself or by its affiliated companies. The NBB may
supplement these communications by on-site inspections. The NBB also exercises its comprehensive
supervision of insurance companies through Statutory Auditors who collaborate with the NBB in its
prudential supervision. An insurance company selects its Statutory Auditors from among the list of auditors or
audit firms accredited by the NBB.

If an insurance company does not provide for the required technical reserves, the NBB may restrict or prohibit
the company's free use of its assets. If an insurance company no longer meets the minimum solvency margin
requirements, the NBB may require that a recovery plan be prepared. In general, if the NBB finds that an
insurance company is not operating in accordance with the provisions of the Insurance Supervision Act, that
its management policy or its financial position is likely to prevent it from honouring its commitments or that
its administrative and accounting procedures or internal control systems present deficiencies, it will set a
deadline by which the situation must be rectified. If the situation has not been rectified by the deadline, the
NBB has the power to appoint a special commissioner to replace management, to prohibit or limit certain
activities, to dispose of all or part of its activities, and to order the replacement of the Board of Directors and
management, failing which it will itself appoint a provisional manager.

Insurance governance
Belgian law and regulatory practices make a fundamental distinction between the management of insurance
activities, which is the competence of the Executive Committee, and the supervision of management and the
definition of the insurance company's general policy, which is entrusted to the Board of Directors. In order to
ensure that such a distinction is maintained, Belgian regulatory practices require an insurance company and its
principal shareholders to underwrite "internal governance rules" in order to ensure the autonomy of the
insurance function and the proper governance of the insurance company. The rules also require the principal
shareholders of an insurance company to contribute to the institution's autonomy and stability.

Money laundering
Belgian insurance companies are also subject to the Act of 11 January 1993 referred to above.

15. Capital Transactions and Guarantee Agreements with the Government in 2008 and 2009
In order to maintain its capital base at a sufficiently high level, KBC Group in 2008 and 2009 issued EUR 3.5
billion worth of capital securities to each of the Belgian State and the Flemish Region. In addition it was
agreed with the Belgian State that it provide a guarantee relating to (originally) EUR 20 billion of CDO and
MBIA-related risk.

92
 The EUR 7 billion core capital securities subscribed by the Belgian State and the Flemish Region
of Belgium
Since the end of 2008, KBC Group has issued EUR 7 billion of perpetual, non-transferable core-capital
instruments with no voting rights, which rank equally with ordinary shares upon liquidation, to the Belgian
State (the Federale Participatie- en Investeringsmaatschappij) and the Flemish Region of Belgium (EUR 3.5
billion each). The transaction with the Belgian State was concluded in December 2008 and the transaction
with the Flemish Region of Belgium was closed in July 2009. KBC Group has used the proceeds of these
transactions to strengthen the core capital of its banking activities by in total EUR 5.5 billion via ordinary
capital increases in KBC Bank and to increase the solvency margin of its insurance activities by EUR 1.5
billion (via ordinary capital increases in KBC Insurance NV). The other features of these transactions are
described in the 2012 Annual Report of KBC Bank.

In 2012, KBC Group repaid EUR 3.5 billion (plus a 15% penalty) to the Belgian State (EUR 0.5 billion in the
beginning of the year, EUR 3.0 billion at the end). Furthermore, KBC Group repaid EUR 1.5 billion (plus a
50% penalty) to the Flemish Region of Belgium by way of two accelerated payments (EUR 1.17 billion in
July 2013, EUR 0.33 billion in January 2014). The agreement with the European Commission involves
repaying the outstanding balance of EUR 2 billion between 2015 and 2020 in six equal instalments of EUR
0.33 billion (plus penalty), with each repayment being made before 31 December of the relevant year.
However, KBC Group may opt to further accelerate these repayments, if its capital position so allows and the
National Bank of Belgium grants its approval.

The Guarantee Agreement relating to (originally) EUR 20 billion of CDO and MBIA-related risk
In May 2009, KBC Group reached an agreement with the Belgian State regarding a guarantee arrangement
for a substantial part of its structured credit exposure. In brief and simplified, the guarantee relates to an
original notional amount of EUR 20 billion for the whole KBC Group (EUR 5.9 billion net exposure as at 30
June 2013), comprising a notional amount of EUR 5.5 billion of super senior CDO investments and EUR 14.4
billion of counterparty risk on MBIA (the U.S. monoline insurer). For payment of a fee, a guarantee from the
State was bought covering 90 per cent. of the default risk beyond a set first loss. The original figures have
meanwhile changed (due to a decrease in CDO-exposure); this is reflected in the structure of the guarantee
transaction as set out below (currently meaning as at the end of December 2013). Note that the CDO
portfolio consists of several CDOs; the guarantee structure applies to each CDO; the mentioned figures refer
to the aggregate notional amount at risk of all CDOs to which the guarantee relates:

First Tranche of originally EUR 3.2 billion (currently EUR 0.8 billion): credit losses to be borne by
KBC Group.

Second Tranche of originally EUR 2 billion (currently EUR 0.7 billion): credit losses to be borne by
KBC Group. KBC Group can ask the Belgian State to subscribe to new KBC Group shares at market
value, for an amount equalling 90 per cent. of the loss in this tranche (10 per cent. of the risk to be
retained by KBC Group).

Third Tranche of originally EUR 14.8 billion (currently EUR 4.4 billion): credit losses of 90 per cent.
to be compensated for by the Belgian State in cash (10 per cent. of the loss to be retained by KBC
Group).

16. Recent Events

Information about recent events in relation to the Issuer can be found in the following sections: The EU Plan
of the Group, the strategic plan of the Group, general description of the activities of the Group,
principal markets and activities, per geography, Risk management, Banking supervision and
regulation, Insurance supervision and regulation and litigation.

93
Detailed information is set out in KBC Groups press releases and financial reports, all of which are available
on www.kbc.com. For the avoidance of doubt, the information available on KBC Groups website,
www.kbc.com, shall not be incorporated by reference in, or form part of, this Prospectus (other than as
referred to in the section Documents incorporated by reference).

Simplification of organisationand changes to the Executive Committee

With effect from 1 May 2014, the KBC organisational structure will be further simplified and adapted to the
reduced size of the group and the new situation:

Merger of International Markets and International Product Factories business units; and

Separate Corporate Change & Support Unit will cease to exist; entities will be integrated into
existing organisation.

Changes to the composition of the KBC Group Executive Committee to reflect the adapted structure and
situation as of 1 May 2014:

6 instead of 8 Group Executive Committee members;

Marko Volj and Danny De Raymaeker leave KBC Group Executive Committee;

John Hollows to succeed Pavel Kavnek as CEO of the Czech Republic Business Unit; and

Christine Van Rijsseghem to join KBC Group Executive Committee as CRO (Chief Risk Officer)

For more information please see the press release dated 13 February 2014, available on www.kbc.com.

KBC Group NV announces its 4Q and FY 2013 results

KBC ended 2013 with a net profit of 1,015 million euros, compared with 612 million euros in 2012.

In the fourth quarter of 2013, KBC incurred a net loss of 294 million euros, as opposed to a net profit of 272
million euros in the third quarter and 240 million euros a year earlier.

After excluding the impact of the legacy business (CDOs, divestments) and the valuation of own credit risk,
adjusted net profit came to 960 million euros for 2013, compared with 1,496 million euros in 2012. For the
last quarter of the year, the adjusted net profit stood at -340 million euros, as opposed to +457 million euros in
the third quarter and +279 million euros in the last quarter of 2012.

Quote from Johan Thijs, group-CEO:

Recent indicators are confirming that the economic recovery, which had been gradually building up in 2013,
is continuing into 2014. Against this background of improving economic conditions, KBC posted a net result
of 1 015 million euros for full-year 2013, or 960 million euros on an adjusted-profit basis. The result for the
fourth quarter was influenced primarily by the announced impairment charges on Irish loans, which led to a
net loss of 294 million euros, or 340 million euros on an adjusted-profit basis. Excluding this one-off
additional impairment (a post-tax figure of 688 million euros), the net result amounted to 394 million euros,
while the adjusted net result came to 348 million euros. When compared with the previous quarter, the group
managed to increase the net interest margin further, with deposits and mortgages going up in several
countries. We also collected higher revenues from fees and commissions, maintained a good combined ratio
as well as an excellent cost/income ratio. However, loan loss impairment charges were somewhat higher
(when Ireland is disregarded), while operating expenses increased somewhat due to seasonal effects.

In the quarter under review, the Belgium Business Unit generated a net result of 376 million euros,
substantially above the figure of 295 million euros for the last quarter of 2012. Compared with the third
quarter, the fourth quarter was characterised by higher net interest income, stable net fee and commission

94
income, good life insurance sales, though a weaker non-life combined ratio due to higher claims, lower
operating expenses and a higher level of loan loss impairment charges. The banking activities accounted for
85% of the net result in the quarter under review, and the insurance activities for 15%.

The Czech Republic Business Unit posted a net result of 119 million euros, slightly above the figure for the
last quarter of 2012. In general, the results have been impacted by a weaker Czech koruna in the last three
months of the year. Compared with the third quarter, this quarter included a decline in net interest income, an
improved combined ratio in non-life insurance, increased unit-linked life insurance sales, higher net fee and
commission income, higher operating expenses due to seasonal effects and higher loan loss impairment
charges. Banking activities accounted for 92% of the net result in the quarter under review, and the insurance
activities for 8%.

The International Markets Business Unit recorded a net result of -731 million euros, a one-off low. Compared
with the previous quarter, the fourth quarter was affected predominantly by impairment charges of 773
million euros recorded for the Irish loan portfolio. Besides this, net interest income was lower (due to
Ireland), but net fee and commission income substantially higher (thanks to Hungary). Seasonal effects and a
higher cost base in Ireland meant that costs were also higher. Overall, the banking activities accounted for a
negative net result of -735 million euros (the positive results in Hungary (with its adverse tax environment),
Slovakia (where profit growth was robust) and Bulgaria were wiped out by the negative result in Ireland),
while the insurance activities accounted for a positive net result of 4 million euros.

As announced in November 2013, we have reassessed our loan book, paying specific attention to the Irish
loan portfolio, and set aside additional provisions due to the reclassification of 2 billion euros worth of
restructured

mortgage loans. Given the slower-than-expected recovery of the SME sector in Ireland and a more prudent
outlook for future cashflows and collateral values, we have also added provisions in our corporate loan book.
This has led to an overall impairment charge in Ireland of 773 million euros for the fourth quarter of 2013.
Our guidance for loan loss provisions in Ireland for the coming years remains at 150 to 200 million euros for
2014 and 50 to 100 million euros for both 2015 and 2016. This guidance is based on current economic
projections. As regards the other countries, the estimated impact is considered to be immaterial at present.

We also finalised our divestment plan. In December, we completed the sale of KBC Banka and announced that
an agreement had been reached to sell Antwerp Diamond Bank to the Yinren Group. As announced before, we
reached an agreement in September to sell KBC Bank Deutschland AG. These deals will ultimately improve
KBC's tier-1 ratio (Basel II) by around 0.3%.

We have collapsed one CDO in the first quarter of 2014, which will lead to a further decrease in exposure of
our legacy assets of roughly 2 billion euros in nominal value.

On the subject of capital management, 0.7 billion euros in loans that KBC had granted to Cera and KBC
Ancora was repaid during the fourth quarter. The proceeds of the sale of some of the KBC Group shares
owned by these two entities were used to finance this operation. This reduction improved regulatory capital by
0.7 billion euros and the common equity ratio (Basel III fully loaded) by 0.7%.

At the beginning of 2014, we repaid a second instalment (0.5 billion euros, comprising 0.33 billion euros in
principal plus a penalty of 50%) to the Flemish Regional Government. This repayment was again ahead of
the schedule agreed with the European Commission and was made possible on account of KBC's robust
capital position. The remaining state aid now amounts to 2 billion euros.

The liquidity position of our group remains very strong, with both the LCR and NSFR being well above
100%.

95
 Our capital position also continues to be very robust, as illustrated by a pro forma tier-1 ratio of 15.6% (Basel
II). This calculation takes into account the repayment of 0.5 billion euros to the Flemish Regional
Government at the beginning of January and the divestments for which agreements have been signed. At year-
end 2013, our common equity ratio under Basel III stood at 12.5% (fully loaded, pro forma, Danish
compromise method), well above our goal of maintaining a target common equity ratio under Basel III (fully
loaded) of 10%.

As regards to future dividend pay-outs, we will propose to the respective Annual General Meetings of
Shareholders that no dividend be paid over accounting years 2013 and 2015. This would imply that no coupon
will be paid on the outstanding core capital securities subscribed to by the Flemish Regional Government over
those accounting years. In relation to accounting year 2014, the intention is to propose to pay, out of the
available profits generated in that accounting year, a dividend of up to 2 euros per share. From accounting
year 2016 onwards, it is the intention to resume regular dividend payments. The precise dividend policy from
then on will be presented at the KBC investor day in June 2014. Despite the fact that no coupons would be
paid on the core capital securities in relation to accounting year 2013 and 2015, the return which the Flemish
Region will receive on these instruments will remain well in excess of the minimum guaranteed return of 10%
per year for the full holding period. Any dividend payment will of course be subject to the usual approval of
the regulator.

For more information please see the press release dated 13 February 2014, available on www.kbc.com.

17. Trend Information

The latest sentiment indicators for the European economy point to a sustained recovery and are at levels
consistent with expanding economic activity. Real GDP growth in the Economic and Monetary Union (the
EMU) has turned positive since the second quarter of 2013, after six consecutive quarters of shrinking
economic output. The gradual improvement, which will most likely be sustainable albeit at a modest pace, is
also becoming visible in KBC Groups Central European home markets, which are also gradually leaving
their recessions behind.

Political risks remain present in the EMU, with lingering political instability in Italy and Greece, and
European elections that may bring more euro sceptical parties to the fore. Nevertheless recent political
tensions did not result in new turmoil on European bond markets with rising intra-EMU spreads and fears of a
partial break-up of the Eurozone. The availability of the Outright Monetary Transactions-tool for the ECB,
which was created in the Summer of 2012 and provides for the possibility for the ECB to buy unlimited
quantities of sovereign debt of member states in distress, seems to have succeeded in permanently reducing
the risk of a break-up of the Eurozone in the perception of the bond markets.

18. Material Contracts

Except as stated in the paragraph below, the Issuer has not entered into any material contracts outside the
ordinary course of its business which could result in any member of the Group being under an obligation or
entitlement that is material to the Issuers ability to meet its obligations to Holders.

The Issuer has concluded certain transactions with the Belgian State and the Regional Flemish government in
order to strengthen its capital and to secure credit protection for a large part of KBC Groups structured credit
exposure. The content of these transactions has been summarised in section 15 above (Capital Transactions
and Guarantee Agreements with the Government in 2008 and 2009).

19. Management of KBC Group NV

96
 The Board of Directors
The Board of Directors of the Issuer consists of 20 members as listed below:

Expiry date
Name and address Position mandate External mandates

LEYSEN Thomas Chairman 2015 Chairman of the Board of Directors of

KBC Group NV Umicore NV
Havenlaan 2 Chairman of the Board of Directors of
1080 Brussel Corelio NV
Belgium Director of De Vijver NV
Managing Director of Mediacore NV
Managing Director of Tradicor NV
Managing Director of Booischot
NVChairman of the Board of Directors of
KBC Verzekeringen NV
Chairman of the Board of Directors of KBC
Bank NV
Director of Mediahuis NV
Chairman of the Board of Directors and
Managing Director of Maxcore NV
VLERICK Philippe Vice-Chairman 2017 Director of Concordia Textiles NV
Ronsevaalstraat 2 Chairman of the Board of Directors of Indus
8510 Bellegem Kamdhenu Fund
Belgium Managing Director of Lurick NV
Managing Director of THERICK NV
Chairman of the Board of Directors of
Vlerick Investeringsmaatschappij CVBA
Chairman of the Board of Directors of
Vlerick Vastgoed NV
Chairman of the Board of Directors of
Raymond Uco denim Private Ltd.
Director of B.M.T. NV
Director of ETEX GROUP SA
Member of the Board of Directors of IVC NV
Chairman of the Board of Directors of
BATIBIC NV
Chairman of the Board of Directors of Vobis
Finance NV
Director of HAMON & CIE
(INTERNATIONAL) SA
Chairman of the Board of Directors of UCO
NV
Director of KBC Verzekeringen NV

97
 Expiry date
Name and address Position mandate External mandates

Vice-Chairman of the Board of Directors of

Durabilis NV
Managing Director of Point NV
Managing Director of CECAN Invest NV
Chairman of the Board of Directors of
TESSA LIM NV
Chairman of the Board of Directors of
Midelco NV
Vice-Chairman of the Board of Directors of
Spector Photo Group NV
Director of BESIX Group NV
Director of EXMAR NV
Chairman of the Board of Directors of VIT
NV
Managing Director and Chairman of the
Board of Directors of B.I.C. Carpets NV
Director of LVD Company NV
Vice Chairman of the Board of Directors of
CORELIO NV
Chairman of the Board of Directors of
Pentahold NV
Managing Director of CECAN NV
Managing Director of Lutherick NV
Vice-Chairman of the Board of Directors of
De Robaertbeek NV
Director of Bareldam SA
Chairman of the Board of Directors of
Sapient Investment Managers Ltd
Deputy Chairman of the Board of Directors
of KBC Bank NV
BOSTOEN Alain Director 2014 Managing Director of Quatorze Juillet BVBA
Coupure 126 Managing Director of AGROBOS
9000 Gent NVDirector of KBC Verzekeringen NV
Belgium Managing Director of Christeyns NV and its
subsidiaries
Managing Director of ALGIMO
NVPermanent Representative of Peritus
Brands NV
Managing Director of Klenzan ltd
Managing Director of Alex Reid ltd
Director of KBC Bank NV

98
 Expiry date
Name and address Position mandate External mandates

DEPICKERE Franky Director 2015 Managing Director of Almancora

Cera Beheersmaatschappij NV
Philipssite 5/10 Director of Commercial bank Absolut Bank
3001 Leuven (ZAO)
Belgium Managing Director of Cera cvba
Independent Director of MIKO NV
Managing Director of Cera
Beheersmaatschappij NV Managing Director
CBC BANQUE SA
Director of Euro Pool System International
BVDirector of KBC Verzekeringen NV
Director of KBC Bank NV
DISCRY Luc Director 2015 Director of Cera CVBA
Cera Director of KBC Verzekeringen NV
Philipssite 5 B 10 Non-executive Director of KBC Bank NV
3001 Leuven Director and Managing Director of
Belgium Almancora Beheersmaatschappij NV
Managing Director of Cera
Beheersmaatschappij NV
Director of Precura Verzekeringen NV
DONCK Frank Director 2015 Managing Director of 3D NV
Floridalaan 62 Director of 3D Private Equity NV
1180 Ukkel Director of Iberanfra BVBA
Belgium Managing Director of Ibervest NV
Chairman of the Board of Directors of Ter
Wyndt NV
Chairman of the Board of Directors of Ter
Wyndt CVBA
Director of Zenitel NV
Director of Aspel Slovakia sro
Director of Anchorage NV
Chairman of the Board of Directors of Atenor
Group NV
Director of Hof Het Lindeken CVBA
Managing Director of Huon & Kauri NV
Director of Greenyard Foods NV
Managing Director of Tris NV
Director of Winge Golf NV
Director Plastiflex Group NV
Chairman of the Board of Directors of
Telenet NV

99
 Expiry date
Name and address Position mandate External mandates

Chairman of the Board of Directors of

Telenet Group Holding NV
Chairman of the Board of Directors of
Telenet Vlaanderen NVDirector of KBC
Verzekeringen NV
Director of KBC Bank NV
HOLLOWS John Managing Director 2015 Managing Director of KBC Verzekeringen
KBC Group NV NV
Havenlaan 2 Managing Director of KBC Bank NV
1080 Brussel Directors of KBC Global Services NV
Belgium
MORLION Lode Director 2016 Managing Director of M&D Invest NV
Weststraat 18 Chairman of the Board of Directors of Cera
8647 Lo-Reninge Beheersmaatschappij NV
Belgium Director of Woonmaatschappij Ijzer en Zee
CVBADirector of Gaselwest CVBA
Director of KBC Verzekeringen NV
Director of KBC Bank NV
POPELIER Luc Managing Director 2015 Managing Director of KBC Verzekeringen
KBC Group NV NV
Havenlaan 2 Managing Director of KBC Global Services
1080 Brussel NV
Belgium Managing Director of KBC Bank NV
Director of KBC Financial Products UK
Limited
ROUSSIS Theodoros Director 2016 Director of K&H Bank Zrt
Poederstraat 51 Director of Ravago Holding America, Inc.
2370 Arendonk Director of Plastomark (Proprietary) Ltd.
Belgium CEO of Ravago SADirector of KBC
Verzekeringen NV
Director of KBC Bank NV
THIJS Johan Managing Director 2016 Director of CBC BANQUE SA
KBC Group NV (CEO) Managing Director of KBC Global Services
Havenlaan 2 NV
1080 Brussel Managing Director of KBC Verzekeringen
NV
Director of FBD Holding Plc
Director of KBC Bank NV
Director of Assuralia
TYTGADT Alain Director 2017 Chairman of the Board of Directors and
Prinses Executive Director of Metalunion CVBA

100
 Expiry date
Name and address Position mandate External mandates

Josephinelaan 7 Chairman of the Board of Directors of Hallex

8300 Knokke-Heist NV
Belgium Managing Director of Hallex Nederland BV
Director of Sloestaal BV
Chairman of the Board of Directors of
Sinfonia Investments NV
Chairman of the Board of Directors of
Sobemetal NVNon-executive Director of
KBC Verzekeringen NV
Non-executive Director of KBC Bank NV
Managing Director of CENTEA NV
VAN KERCKHOVE Director 2016 Director of Almancora Beheersmaatschappij
Ghislaine NV
Wegvoeringstraat 62 Vice-Chairman of the Board of Directors of
9230 Wetteren Cera Beheersmaatschappij NVDirector of
Belgium KBC Bank NV
Director of KBC Verzekeringen NV
VANTHEMSCHE Piet Director 2014 Chairman of the Board of Directors of Gimv-
MRBB Agri+ Investment Fund NV
Diestsevest 40 Director of KBC Bank NV
3000 Leuven Chairman of the Board of Directors of
Belgium M.R.B.B. cvba - Maatschappij voor Roerend
Bezit van de Boerenbond
Chairman of the Board of Directors of Agri
Investment Fund CVBA
Chairman of the Board of Directors of BB-
Patrim CVBA
Director of KBC Verzekeringen NV

101
 Expiry date
Name and address Position mandate External mandates

WITTEMANS Marc Director 2014 Director of Agro Services CVBA

MRBB cvba Director of Aktiefinvest CVBA
Diestsevest 40 Chairman of the Board of Directors of Arda
3000 Leuven Immo NV
Belgium Director of Acerta CVBA
Director of Acerta Consult CVBA
Director of SBB Accountants en
Belastingconsulenten BV cvba
Managing Director of M.R.B.B. cvba -
Maatschappij voor Roerend Bezit van de
Boerenbond
Director of Covalis NV
Director of Agri Investment Fund CVBA
Director of SBB Bedrijfsdiensten BV CVBA
Director of KBC Verzekeringen NV
Director of KBC Bank NV
DE CEUSTER Marc Director 2014 -
KBC Bank NV
Havenlaan 2
1080 Brussel
Belgium
DECHAENE Tom Director 2016 Independent Director of Agenus
KBC Bank NV IncRepresentative of Bourn Hall International
Havenlaan 2 ltd
1080 Brussel Director of Surfcast Inc
Belgium
KIRALY Julia Independent 2014 -
KBC Bank NV Director
Havenlaan 2
1080 Brussel
Belgium
PAPIRNIK Val Independent 2016 -
KBC Group NV Director
Havenlaan 2
1080 Brussel
Belgium
CORNU Jozef Independent 2016 Director of Belgacom NV
KBC Bank NV Director Director of Mercodi BVBA
Havenlaan 2 Director of Agfa-Gevaert NV
1080 Brussel CEO of Nationale Maatschappij der
Belgium Belgische Spoorwegen (NMBS)

102
The Board of Directors does not include any legal persons among its members and its Chairman may not be a
member of the Executive Committee. A mandate is no longer than six years (in practice four years). Directors
can be re-elected when their term expires. The mandate of non-executive directors comes to an end at the date
of the annual meeting following the day on which they reach the age of 70, save for exceptional situations.
The mandate of executive directors ends at the end of the month when they reach the age of 65, save for
exceptional situations.

The Board of Directors is responsible for determining the overall strategy and monitoring the executive
management. It meets at least eight times a year and decides by simple majority. The activities of the Board
are governed by Belgian company law and by the statutes of the Issuer.

Committees of the Board of Directors

The Committees of the Board of Directors are extensively dealt with in the Corporate Governance Charter of
KBC Group NV. The Charter is published on www.kbc.com.

This Prospectus only includes the main charachteristics of said Committees.

The Board of Directors includes the following committees: an Audit, Risk and Compliance Committee, a
Nomination Committee and a Remuneration Committee.

The Audit, Risk and Compliance Committee (ARC-Committee) supervises the integrity, efficiency and
effectiveness of the internal control measures and the risk management in place, paying special attention to
accurate and correct financial reporting and overseeing the processes set up by the Issuer to comply with laws
and other regulations. In order to do this, the ARC-Committee has unlimited access to all information and
may start up investigations for all domains it is responsible for. Such investigations can be carried out by
internal or external parties but in any case the chairman of the Executive Committee needs to be informed.

The most important tasks of the ARC-Commettee are: (i) reviewing, at least once a year, the quality of
internal controls; (ii) supervising the integrity of the Issuer's financial statements and financial reporting
process; (iii) monitoring the asset liability management, market, credit, insurance and operational risks; the
ART-Committee is informed periodically about risk management systems of the KBC Group with the view
identify and manage the key risks within the business, in particular the system for value and risk management;
(iv) advising the Board of Directors regarding limits; (v) controlling/monitoring the performance of the
internal audit function within the KBC Group with particular attention for expertise and independence; (vi)
supervising the compliance by the KBC Group with legal, regulatory and statutory requirements and
procedures and overseeing compliance with KBC Groups policy regarding whisteleblowers; and (vii)
monitoring the statutory auditors activities. The ARC-Committee takes note of the studies and
recommendations of supervisors and ensures timely and appropriate response and is regularly kept informed
of pending lawsuits.

The members of the ARC-Committee at this moment are: Franky Depickere, Frank Donck, Marc Wittemans,
Vladimira Papirnik, Marc De Ceuster, Jlia Kirly and Tom Dechaene.

The Nomination Committee submits its recommendations on appointments, reappointments and dismissals of
directors, members of the ARC-Committee, Nomination Committee, Remuneration Committee and of the
Executive Committee for approval to the Board of Directors. The Nomination Committee considers proposals
made by relevant parties, including management and shareholders.

The Remuneration Committee advises the Board of Directors in defining and implementing its remuneration
policy. The chairman of the Remuneration Committee is one of the independent directors. The chairman of
the Executive Committee participates in the meetings with advisory vote when the remuneration of the other
members of the Executive Committee are handled. The Remuneration Committee also makes

103
recommendations on the remuneration of the directors. The Committee submits the annual remuneration
report to the Board of Directors.

Executive Committee

The Board of Directors has delegated its management powers to the Executive Committee in accordance with
article 524bis of the Belgian Companies Code. The Executive Committee exercises such powers
autonomously, but always within the framework of the strategy adopted by the Board of Directors. The
delegation does not extend to the general policy or matters assigned by law to the Board of Directors. The
Executive Committee consists of 8 members appointed by the Board of Directors and is chaired by the CEO
of KBC Group NV.

Johan Thijs Danny De Daniel Luc Gijsens John Luc Marko Voljc Pavel
Raymaeker Falque Hollows Popelier Kavanek

In service In service In service In service In service In service In service In service

since 1988 since 1984 since 2009 since 1977 since 1996 since 1988 since 2004 since 1972

CEO (Chief CEO CEO CEO CRO (Chief CFO (Chief CCO (Chief CEO Czech
Executive International Belgium International Risk Officer) Financial Corporate Republic
Officer) Markets Business Product Officer) Change & Business
KBC Group Business Unit Factories Support Unit
NV Unit Business Officer)
Unit

As of 1 May 2014, the composition of the Groups Executive Committee will change to reflect the adapted
structure and situation:

the number of members of the Groups Executive Committee will diminish from 8 to 6;

Marko Volj and Danny De Raymaeker will leave the Groups Executive Committee;

John Hollows will succeed Pavel Kavnek as CEO of the Czech Republic Business Unit; and

Christine Van Rijsseghem will join the Groups Executive Committee as CRO (Chief Risk Officer).

Corporate Governance
The Issuer uses the Belgian Corporate Governance Code 2009 (Code) as reference code. The Code seeks to
ensure transparency in the area of corporate governance through the publication of information in the
Corporate Governance Charter (Charter) and the Corporate Governance Statement (Statement).

The Charter sets out the main aspects of the policy of the KBC Group in the area of corporate governance,
such as the governance structure, the internal regulations of the Board of Directors, its committees and the
Executive Committee, and other important topics.

The Charter is published on www.kbc.com.

The Statement is published in the annual report and contains more factual information about the corporate
governance of the Group, including a description of the composition and functioning of the Board, relevant
events during the year, provisions of the Code which may be waived, the remuneration report and a
description of the main features of the internal control and risk management systems.

104
 Conflict of interests policy
The information related to the policy of the Issuer conflict of interests can be found in the chapter "Corporate
Governance Statement" of the annual reports of the Issuer. A distinction is made between (i) the statutory
regulation of conflict of interests, namely the conflict of interests falling under Article 523 and 524ter of the
Belgian Companies Code (and Article 524 of the Belgian Companies Code regarding intra-group conflicts)
and, (ii) transactions and other contractual relationships between the Issuer (including its affiliates) and its
directors, not falling under (i) and for which the Issuer has developed its own policy on the basis of the Code,
which was included in the Charter.

Neither in 2011, nor in 2012, one of both types of conflict of interest rules had to be invoked.

In 2013, the directors representing CERA CVBA and KBC Ancora Comm VA abstained from participating in
the deliberation and voting concerning the sale by KBC bank NV of the loans the latter granted to CERA
CVBA and KBC Ancora Comm VA, and this in application of the above mentioned conflict of interest rule set
out under point (ii).

The Issuer is not aware of any potential conflicts of interests between the obligations which a director has
with respect to the Issuer and the personal interests and / or other obligations of that director.

20. Litigation
The following describes material litigation to which KBC Group NV or any of its companies (or certain
individuals in their capacity as current or former employees or officers of KBC Group NV or any of its
companies) are party. It describes all claims, quantified or not, that could lead to the impairment of the
relevant companys reputation or to a sanction by an external regulator or governmental authority, or that
could present a risk of criminal prosecution for that corporation, its members of the board or its management.

Although the outcome of these matters is uncertain and some of the claims concern relatively substantial
amounts in damages, the management does not believe that the liabilities arising from these claims will
adversely affect KBC Groups consolidated financial position or results, given the provisions that, where
necessary, have been set aside for these disputes.

Judicial inquiries and criminal proceedings

From late 1995 until early 1997, Kredietbank NV the predecessor of KBC Bank NV and KB Consult NV
("KB Consult") were involved in the sale of "cash companies" to various purchasers. A "cash company" is
characterised by the fact that a substantial majority of the assets consist of accounts receivable, fixed financial
assets, cash and other highly liquid assets. KB Consult acted as an intermediary between the seller and the
purchaser of the cash companies. The involvement of KB differed from sale to sale, but generally related to
the handling of payments and the granting of loans. The transfer of a cash company is in principle a legal
transaction. However, in March 1997, KB and KB Consult discovered that certain purchasers of these cash
companies failed to reinvest such companies cash in qualifying assets and to file tax returns for the cash
companies they purchased in order to thereby defer the taxes owed by such companies. KB and KB Consult
immediately took the necessary measures to preclude any further involvement with these parties. The
activities of KB Consult were subsequently wound up.

(i) KBC Bank and KB Consult were summoned separately or jointly to court in 28 legal actions. This
resulted in 20 lawsuits of which 18 are still pending before the courts. In one lawsuit the court ruled
that KB Consult was summoned as third party without cause and therefore the claim was dismissed. In
another lawsuit the claim of the Belgian State was dismissed and the judgment is definite.
Subsequently the provision for these cases was offset in the accounts. KB Consult was placed under
suspicion by an investigating magistrate in December 2004. A provision of EUR 31.4 million (status as

105
 at 31 December 2013) has been constituted to cover the potential impact of any liability with respect to
these actions.

In addition to KB Consult and KBC Bank, KBC Group was also summoned before the Chambers
section of the Court of First Instance in Bruges on 25 February 2009. The charges against the aforesaid
KBC entities relate only to the use of false documents. The trial was postponed several times. On 9
November 2011 a judgment ordered KBC Bank and KB Consult be prosecuted together with 21 other
parties indicted of various crimes with regard to tax fraud. The claim against KBC Group was
dismissed. An appeal was lodged against this dismissal by the Prosecutor and two civil parties. There
is still no hearing date set.

(ii) In 2003, an important case of fraud perpetrated by an employee, Atilla Kulcsr, involving about
140.6 million, came to light at K&H Equities in Hungary. Orders and portfolio statements of clients
were forged. Many clients suffered substantial losses in their portfolio as a result of unauthorised
speculation and the misappropriation of funds. On 28 August 2008 a Budapest court sentenced Atilla
Kulcsr to eight years imprisonment and a fine of 230 million forints. The court acquitted Tibor E.
Rejto, former CEO of K&H Bank, who had also been charged with embezzlement as an accomplice.
Other persons involved were sentenced to severe punishments.

The Public Prosecutor and all the persons which had been found guilty filed an appeal before the Court
of Appeal. On 27 May 2010, the Court of Appeal annulled the first instance court verdict and ordered a
complete retrial. The new trial before the first instance court started on 1 December 2010 and is
ongoing.

Almost all claims have already been settled, either amicably or following an arbitral decision. The sole
pending claim, DBI Kft. (Betonut) is the most important case. Appropriate provisions have been set
aside for this claim still outstanding, taking into account compensation provided by an external insurer.
A judgment in the first instance is to be expected by the end of 2014.

Other litigation
(i) In March 2000, the Belgian State, Finance Department, summoned Rebeo (currently Almafin Real
Estate Services) and Trustimmo, two former subsidiaries of former Almafin, currently KBC Real
Estate, a Belgian subsidiary of KBC Bank, before the civil court in Brussels, together with four former
directors of Broeckdal Vastgoedmaatschappij (a real estate company), for not paying approximately
EUR 16.7 million in taxes due by Broeckdal Vastgoedmaatschappij. In November 1995, this company
had been converted into a cash company and sold to Mubavi Belgi (currently BeZetVe), a subsidiary
of Mubavi Nederland (a Dutch real estate investment group). According to the Belgian State, Finance
Department, Mubavi Belgi did not make real investments and failed to file proper tax returns. A
criminal investigation is pending. However Broeckdal Vastgoedmaatschappij contested the tax claims
and in December 2002 commenced a lawsuit before the civil court in Antwerp against the Belgian
State, Finance Department.

The civil lawsuit pending in Brussels has been suspended pending a final judgment in the tax lawsuit
in Antwerp. An adjusted provision of EUR 30 million (as at 31 December 2013) has been reserved to
cover the potential impact of liability with respect to these actions.

In July 2003, Broeckdal Vastgoedmaatschappij, Mubavi Belgi and Mubavi Nederland summoned
KBC Bank, KB Consult, Rebeo and Trustimmo before the commercial court in Brussels in order to
indemnify them against all damages the former would suffer if the tax claims were approved by the
court in Antwerp. In March 2005, Mubavi Nederland was declared bankrupt by the court of s-
Hertogenbosch in the Netherlands.

106
 In November 2005, KBC Bank, KB Consult, Rebeo and Trustimmo and the four former directors of
Broeckdal Vastgoedmaatschappij summoned the auditor of Broeckdal Vastgoedmaatschappij, Deloitte
& Touche, before the civil court in Brussels in order to indemnify them for any amount they should be
ordered to pay as a result of the aforementioned claims. In November 2008 Mubavi Belgi (currently
BeZetVe) was also declared bankrupt by the commercial court in Antwerp.

On 2 November 2010 Broeckdal Vastgoedmaatschappij was declared dissolved by the commercial

court in Antwerp and the liquidation of the company was closed by judgment of 13 September 2011 by
the same court.

(ii) In March 2008, KBC Group, KBC Bank, KBL and Kredietrust were summoned to appear before the
commercial court in Brussels by the British company Beverly Securities Limited. This company has
made reference to business relations that KBC / KBL are said to have had with the Republic of South
Africa almost 20 years ago, at the time of apartheid and the trade embargo recommended by the UN.

The company is seeking payment of a substantial commission linked to a business transaction totally
foreign to KBC and KBL. In the past it has already tried to obtain payment of this commission from
third parties through legal proceedings launched in South Africa and France, where on each occasion
the case was dismissed. It is now attempting to obtain payment on the pretext of having opened an
account with KBL more than 17 years ago.

Even if it is true that during this period KBC and KBL maintained business relations with South
Africa, this in no way supports the allegations made in the summons. After a thorough examination
carried out on the basis of the documents and archives still available, and having obtained two legal
opinions from highly respected law firms, particularly in relation to the embargo, KBC and KBL are
reassured of their position and of the fact that they respected all the laws applicable to them at the time.

KBC and KBL consider the complaint to be totally unjustified and they claimed damages from the
plaintiff for a frivolous and vexatious action.

A judgment was rendered on 26 March 2010 whereby the court considered the actions inadmissible
and granted damages for the defendants.

Beverly Securities Limited lodged an appeal on 2 July 2010. Written arguments have been exchanged.
Court dates for pleading the case have been set for in January 2014 & February 2014. A judgment in
appeal is expected at the earliest in Spring 2014.

(iii) KBC Bank and subsidiaries such as K&H Bank and CSOB SK received numerous complaints about
CDO notes issued by KBC Financial Products that were sold to private banking and corporate clients
and which have now been downgraded. Such clients have been asking for their notes to be bought back
at their original value.

KBC Bank decided to examine all CDO related files with respect to private banking and retail clients
on a case-by-case basis and to settle the disputes as much as possible out of court.

In Belgium settlements were signed with clients in KBC Bank Private Banking and Retail, which
represent 99% of the private banking and retail clients involved. In the only judicial case that is still
ongoing, the court of first instance of Kortrijk ruled in favour of KBC Bank and dismissed the claim
on 24 November 2011. The counterparty lodged an appeal on 12 January 2012. Written arguments are
currently being exchanged.

As a result of complaints, some Corporate Banking files were also examined. Subsequently
negotiations started in the files where a decision to propose a settlement was taken and in a limited
number of files settlements were reached. Only a few lawsuits are ongoing. In seven cases the courts

107
 rendered judgments in favour of KBC. In one case, the court decided that the bank and the client were
jointly responsible. KBC appealed against this decision in June 2013. One case is still pending in first
instance. Currently eight cases are pending in degree of appeal. The first ruling in appeal is expected in
Autumn 2014.

In one case a criminal complaint was lodged against KBC Bank in France. Three representatives of
KBC were interrogated by the Police Judiciaire in Paris. The public prosecutor served a writ of
summons before the criminal court in Paris against KBC Bank for the hearing of 3 October 2013. KBC
emphasizes that it is formally disputing these allegations and has arranged the defense of its rights in
these proceedings. KBC was given the opportunity in the past months to study the Public Prosecutors
file for the first time since the complaint was lodged and in doing so discovered that the rights of
defense of KBC were disrespected. At the hearing of 3 October 2013 KBC argued the proceedings
should be null and void. Moreover KBC has strong arguments to refute the claims. A ruling was issued
on 28 November 2013 in favour of KBC, which was not appealed.

In Hungary a marketing brochure was used which could be misinterpreted as a guarantee on a

secondary market and contained a possibly misleading comparison with state bonds. In more than 94%
of the files, a settlement has been reached. A limited number of clients started a lawsuit. Most of the
lawsuits were terminated by a settlement out of court; recently three cases were settled as a result of
court verdicts; few clients are still pursuing their claim before the court.

On 10 December 2009, the Hungarian Competition Authority ("HCA") passed a resolution whereby
K&H was ordered to pay a fine of HUF 40,000,000 (approximately EUR 150,000) based on the
violation of the Hungarian Act on the prohibition of unfair and restrictive market practices in relation
to K&Hs trade in CDO bonds. The appeal filed by K&H against the HCA resolution was rejected by
the Budapest Metropolitan Court. K&H Bank submitted a revision claim before the Supreme Court.

In CSOB SK a similar approach as in Belgium was followed and in all cases of CDO investments with
Private Banking and Retail clients, settlements were reached. There will be no settlement and
negotiation with four institutional clients. No lawsuit in respect of CDO investments is pending.

(iv) Lazare Kaplan International Inc. is a U.S. based diamond company ("LKI"). Lazare Kaplan Belgium
NV is LKIs Belgian affiliate ("LKB"). LKI and LKB together are hereinafter referred to as "LK".

Since 2008, LKB is involved in a serious dispute with its former business partners, DD Manufacturing
NV and KT Collection BVBA ("Daleyot"), Antwerp based diamond companies belonging to Mr. Erez
Daleyot. This dispute relates to a joint venture LK and Daleyot set up in Dubai (called "Gulfdiam").

LKB and Daleyot became entangled in a complex litigation in Belgium, each claiming that the other
party is their debtor. Daleyot initiated proceedings before the Commercial Court of Antwerp claiming
the non-payment of commercial invoices for an amount of (initially) approximately USD 9 million.
LKB launched a counter claim claiming the non-payment of commercial invoices for (initially) an
amount of approximately USD 38 million.

The dispute has escalated to the degree that LK is directly involving Antwerpse Diamantbank NV
("ADB") and KBC Bank NV ("KBC") by launching legal claims against ADB in Belgium (Antwerp)
and against both ADB and KBC in the USA (New York) alleging that LK was swindled out of some
USD 140 million by DD Manufacturing and other Daleyot entities in cooperation with ADB. This
development was triggered by the fact that, at the end of 2009, ADB terminated LKs credit facilities
and started proceedings before the Commercial Court in Antwerp.

108
Essentially, all legal proceedings initiated by LK against ADB and / or KBC in Belgium and the USA
only relate to the dispute between ADB and LKI with regard to the termination of the credit facility
and the recovery of all the monies LKI owes under the terminated credit facility.

- Commercial Court of Antwerp (seventh Chamber): ADB issued a summons against LKI in order to
recover the monies owed to it under the terminated credit facility (approximately USD 45 million in
capital). LKB voluntarily intervened in this proceeding and claimed an amount of USD 350 million
from ADB. LKI launched a counterclaim an amount of USD 500 million (including the USD 350
million of LKB) against ADB for damages.

After numerous procedural incidents, a court hearing was set for 13 February 2014. As a consequence
of the fact LK lodged an appeal against a decision of the Commercial Court regarding the briefs
schedule and the court hearing, the Commercial Court postponed the case to 24 April 2014. The
hearing before the Court of Appeals of Antwerp will take place on 3 March 2014.

- Court of Cassation: LK filed no less than four separate appeals with the Court of Cassation. All
appeals were related to the proceedings before the Commercial Court of Antwerp. All appeals have
recently been dismissed.

As a result of the dismissal of LKIs and LKBs requests to reopen the debate, LKI challenged the
President of the seventh Chamber of the Commercial Court (verzoek tot wraking) claiming that this
judge is not impartial. By decision of 23 September 2009 the Court of Appeals of Antwerp dismissed
this request to challenge.

On 24 September 2013 LKI and LKB started proceedings before the Court of Cassation against the
decision of the President of the seventh Chamber of the Commercial Court to dismiss LKIs requests to
reopen the debate. By decision of 9 January 2014 the Court of Cassation dismissed this appeal. On 16
October 2013 LKI lodged an appeal with the Court of Cassation against the decision of the Court of
Appeals of Antwerp to dismiss the request to challenge the President of the seventh Chamber of the
Commercial Court. By decision of February 13, 2014 the Court of Cassation dismissed the appeal.

On 23 December 2013 LKI and LKB filed a motion with the Court of Cassation to withdraw the case
from the seventh Chamber of the Commercial Court (Onttrekking van de zaak aan de rechter). This
motion is based on the asserted risk that the Court lacks independence and impartiality (gewettigde
verdenking). By decision of 13 Feburary 2014, the Court of Cassation dismissed the motion.

LKI and LKB lodged a claim with the Court of Cassation against the judges of the Commercial Court
for miscarriage of justice (verhaal op de rechter). Lazare Kaplan alleges that the judges refused to
exercises their powers (rechtsweigering) with regard to LKs request to set a briefing schedule and a
court hearing. However, KBC nor ADB were parties to these proceedings, they have been told that the
Court of Cassation dismissed this appeal.

- Criminal Court of Antwerp: On 21 March 2013 LKI summoned ADB directly before the Criminal
Court in Antwerp mainly under accusation of fraud, abuse of trust and money laundering. These
summons can lead to a suspension of the case pending before the Commercial Court of Antwerp,
which is however under discussion. KBC is not a party to this litigation. On October 30, 2013 the
Criminal Court decided that it has no jurisdiction (onbevoegdheid) over the claim LKI directly
summoned before the Criminal Court. LKI has lodged an appeal with the Court of Appeals of Antwerp
against the decision of the Criminal Court. No date has yet been set for the hearing before the Court of
Appeals.

- Criminal Complaint: On 22 March 2013 LKI filed a criminal complaint against ADB with the
examining/investigation magistrate (Onderzoeksrechter) in the Criminal Court of Antwerp, this time

109
 on the basis of alleged bribery of ADB officers / directors by Daleyot. KBC is not a party to this
litigation. The Public Prosecutor decided however to bring the case directly before before the Counsel
Chamber (Raadkamer). LKI launched a request for further investigation.

This request is still pending before the Chamber of Accusation of Antwerp (Kamer van
Inbeschuldigingstelling).

- District Court Southern District of New York: On 23 December 2011, LKI filed a claim of USD 500
million against both ADB and KBC, based on the so-called RICO-act; this claim is in fact a non-
cumulative duplicate of the one brought before the Commercial Court in Belgium.

On 5 September 2012, the New York District Court granted ADBs and KBCs motions to dismiss
based on the doctrine of forum non conveniens meaning that New York is not the appropriate forum
for this litigation. LKI filed a notice of appeal to the United States Court of Appeal for the Second
Circuit.

By decision dated 20 June 2013 the Court of Appeal referred the case back to the District Court. The
Court of Appeal decided that the District Court had to choose between the two conflicting forum
selection clauses instead of proceeding directly to a forum non conveniens analysis. The Court of
Appeal made clear that it did not express an opinion on the applicability of either of the two forum
selection clauses nor on the merits of ADBs and KBCs arguments for dismissal. On 8 July 2013 the
District Court ruled that some reciprocal discovery is appropriate in order to make a decision on the
forum selection clauses. Parties have had disagreements about the scope of document discovery.
During a discovery conference held on 8 November 2013 the District Court ruled that LKI is permitted
some additional document discovery. Parties are now exchanging the documents which are under the
scope of this ruling.

(v) When Lehman Brothers went bankrupt in September 2008, KBC Bank had derivative transactions
outstanding with Lehman Brothers Finance AG (LBF) under an ISDA Master Agreement. The
bankruptcy triggered an event of default and early termination of all outstanding transactions. LBF is
disputing a number of matters in this regard, including the valuation method used by KBC Bank and
in a letter of claim dated 21 December 2012 asserted that the net amount payable to LBF under the
ISDA agreement is USD 58.1 million plus USD 52.8 million in interest accruing since September
2008. On 25 September 2013, KBC was summoned by LBF in London, where it filed a claim of USD
58.1 million (plus interest of USD 57 million). KBC Bank believes it has various arguments to defend
the valuation method used and is also strongly disputing the interest rate applied by LBF. The formal
procedural steps have not yet been determined. In accordance with applicable procedure laws,
evidence documents will have to be exchanged and the judge will hold a case management conference.
The actual court proceedings will start at the earliest one year after the case management conference.
An adequate provision has been set aside.

KBC Diversified Fund, a segregated portfolio of KBC AIM Master Fund Spc., filed a claim against
Lehman Brothers International Europe (LBIE) in relation to derivatives amounting to USD 44.3
million, which amount was the result of a set-off of claims between various KBC entities and LBIE.
This claim is being contested by LBIE and provisions have been set aside covering this amount. KBC
is negotiating with the administrator of LBIE regarding the valuation of a number of terminated
transactions.

KBC Bank filed a claim of USD 29.2 million payable by Lehman Brothers Special Financing Inc.
(LBSF) to KBC based on the termination of derivative transactions. After LBSFs administrator
contested the valuation of some of the derivative transactions, an out-of-court settlement was reached

110
in which both parties consented to KBC claiming USD 22.7 million. An adequate provision for this
claim has been set aside.

111
 TAXATION

EU Savings Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income (the Savings Directive),
Member States are required to provide to the tax authorities of another Member State details of payments of
interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other
Member State or to certain limited types of entities established in that other Member State. However, for a
transitional period, Luxembourg and Austria are instead required (unless during that period they elect
otherwise) to operate a withholding system in relation to such payments (the ending of such transitional
period being dependent upon the conclusion of certain other agreements relating to information exchange
with certain other countries). A number of non-EU countries and territories including Switzerland have
adopted similar measures (a withholding system in the case of Switzerland). In April 2013, the Luxembourg
government announced its intention to abolish the withholding system with effect from 1 January 2015, in
favour of the automatic exchange of information.

The European Commission has proposed certain amendments to the Savings Directive which may, if
implemented, amend or broaden the scope of the requirements described above.

Belgium

The following summary describes the principal Belgian tax considerations of acquiring, holding and selling
the Securities. This information is of a general nature and does not purport to be a comprehensive description
of all Belgian tax considerations that may be relevant to a decision to acquire, to hold or to dispose of the
Securities. In some cases, different rules can be applicable. This summary does not describe the tax
consequences for a holder of Securities of a Principal Write-down or a Principle Write-up. Furthermore, this
description is based on current legislation, published case law and other published guidelines and regulations
as in force at the date of this document and remains subject to any future amendments, which may or may not
have retroactive effect.

Each prospective holder of Securities should consult a professional adviser with respect to the tax
consequences of an investment in the Securities, taking into account their own particular circumstances and
the influence of each regional, local or national law.

Belgian withholding tax

For Belgian income tax purposes, interest includes (i) periodic interest income, (ii) any amounts paid by the
Issuer in excess of the issue price (upon full or partial redemption whether or not at maturity, or upon
purchase by the Issuer), and (iii) in case of a sale of the Securities between interest payment dates to any third
party, excluding the Issuer, the pro rata of accrued interest corresponding to the holding period.

Payments of interest on the Securities made by or on behalf of the Issuer are as a rule subject to Belgian
withholding tax, currently at a rate of 25 per cent. on the gross amount.

However, the holding of the Securities in the X/N clearing system of the NBB (the Securities Settlement
System) permits investors to collect interest on their Securities free of Belgian withholding tax if and as long
as at the moment of payment or attribution of interest the Securities are held by certain investors (the
Eligible Investors, see below) in an exempt securities account (X-account) that has been opened with a
financial institution that is a direct or indirect participant (a Participant) in the Securities Settlement
System. Euroclear and Clearstream Luxembourg are directly or indirectly Participants for this purpose.

112
Holding the Securities through the Securities Settlement System enables Eligible Investors to receive the
gross interest income on their Securities and to transfer the Securities on a gross basis.

Participants to the Securities Settlement System must keep the Securities which they hold on behalf of
Eligible Investors on an X-account, and those which they hold on behalf of non-Eligible Investors in a non-
exempt securities account (N-account). Payments of interest made through X-accounts are free of
withholding tax; payments of interest made through N-accounts are subject to withholding tax, currently at a
rate of 25 per cent, which is withheld from the interest payment and paid by the NBB to the tax authorities.

Eligible Investors are those entities referred to in article 4 of the Belgian Royal Decree of 26 May 1994 on the
deduction of withholding tax (koninklijk besluit van 26 mei 1994 over de inhouding en de vergoeding van de
roerende voorheffing/arrt royal du 26 mai 1994 relatif la perception et la bonification du prcompte
mobilier), which includes inter alia:

(i) Belgian resident companies referred to in article 2, 1, 5, b) of the Belgian Income Tax Code of 1992
(wetboek van inkomstenbelastingen 1992/code des impts sur les revenus 1992) (BITC);

(ii) Without prejudice to article 262, 1 and 5 of the BITC, the institutions, associations or companies
referred to in article 2, 3 of the law of 9 July 1975 with respect to the control of insurance companies
other than those referred to in (i) and (iii);

(iii) Semi-governmental institutions (parastatalen/institutions parastatales) for social security or

institutions equated therewith referred to in article 105, 2 of the Royal Decree of 27 August 1993
implementing the BITC (RD/BITC);

(iv) Non-resident investors referred to in article 105, 5 of the RD/BITC whose holding of the Securities is
not connected to a professional activity in Belgium;

(v) Investment funds referred to in article 115 of the RD/BITC;

(vi) Investors referred to in article 227, 2 of the BITC, subject to non-resident income tax (belasting van
niet inwoners/impt des non-rsidents) in accordance with article 233 of the BITC and which have
used the income generating capital for the exercise of their professional activities in Belgium;

(vii) The Belgian State, in respect of investments which are exempt from withholding tax in accordance
with article 265 of the BITC;

(viii) Investment funds governed by foreign law (such as beleggingsfondsen/fonds de placement) that are an
undivided estate managed by a management company for the account of the participants, provided the
funds units are not publicly issued in Belgium or traded in Belgium; and

(ix) Belgian resident companies not referred to under (i), whose activity exclusively or principally exists of
granting credits and loans.

Eligible Investors do not include, inter alia, Belgian resident individuals and Belgian non-profit organisations,
other than those mentioned under (ii) and (iii) above.

Transfers of Securities between an X-account and an N-account give rise to certain adjustment payments on
account of withholding tax:

A transfer from an N-account (to an X-account or N-account) gives rise to the payment by the
transferor non-Eligible Investor to the NBB of withholding tax on the accrued fraction of interest
calculated from the last interest payment date up to the transfer date.

113
 A transfer to an N-account (from an X-account or an N-account) gives rise to the refund by the NBB to
the transferee non-Eligible Investor of withholding tax on the accrued fraction of interest calculated
from the last interest payment date up to the transfer date.

Transfers of Securities between two X-accounts do not give rise to any adjustment on account of
withholding tax.

When opening an X-account for the holding of Securities, an Eligible Investor will be required to certify its
eligible status on a standard form claimed by the Belgian Minister of Finance and send it to the participant to
the Securities Settlement System where this account is kept. This statement needs not be periodically reissued
(although Eligible Investors must update their certification should their eligible status change). Participants to
the Securities Settlement System are however required to make declarations to the NBB as to the eligible
status of each investor for whom they hold Securities in an X-account during the preceding calendar year.

These identification requirements do not apply to Securities held with Euroclear or Clearstream Luxembourg
acting as Participants to the Securities Settlement System, provided that they only hold X-accounts and that
they are able to identify the Holders for whom they hold Securities in such account.

Belgian income tax and capital gains

Belgian resident individuals

For natural persons who are Belgian residents for tax purposes, i.e. who are subject to the Belgian personal
income tax (Personenbelasting/Impt des personnes physiques) and who hold the Securities as a private
investment, payment of the 25 per cent. withholding tax fully discharges them from their personal income tax
liability with respect to these interest payments (bevrijdende roerende voorheffing/prcompte mobilier
libratoire). This means that they do not have to declare the interest obtained on the Securities in their
personal income tax return, provided withholding tax was levied on these interest payments.

Belgian resident individuals may nevertheless elect to declare the interest payment (as defined above in the
Section Belgian withholding tax) in their personal income tax return. Where the beneficiary opts to declare
them, interest payments will normally be taxed at the interest withholding tax rate of 25 per cent. (or at the
progressive personal tax rate taking into account the taxpayers other declared income, whichever is lower). If
the interest payment is declared, the withholding tax retained may be credited.

Capital gains realised on the sale of the Securities are in principle tax exempt, unless the capital gains are
realised outside the scope of the normal management of ones private estate or unless the capital gains qualify
as interest (as defined above in the Section Belgian withholding tax). Capital losses are in principle not tax
deductible.

Other tax rules apply to Belgian resident individuals who do not hold the Securities as a private investment.

Belgian resident companies

Interest on the Securities derived by Belgian corporate investors who are Belgian residents for tax purposes,
i.e. who are subject to Belgian Corporate Income Tax (Vennootschapsbelasting/Impt des socits) and capital
gains realised on the Securities will be subject to Belgian corporate income tax at a rate of in principle 33.99
per cent. Capital losses are in principle tax deductible.

Belgian legal entities

For legal entities subject to Belgian legal entities tax (Rechtspersonenbelasting/Impts des personnes
morales) which have been subject to the 25 per cent. Belgian withholding tax on interest payments, such
withholding tax constitutes the final taxation.

114
Belgian legal entities which have received interest income on Securities without deduction for or on account
of Belgian withholding tax are required to declare and pay the 25 per cent. withholding tax to the Belgian tax
authorities themselves.

Capital gains realised on the sale of the Securities are in principle tax exempt, unless the capital gain qualifies
as interest (as defined above in the Section Belgian withholding tax). Capital losses are in principle not tax
deductible.

Organisation for Financing Pensions

Interest and capital gains derived by Organisations for Financing Pensions in the meaning of the Law of
27 October 2006 on the activities and supervision of institutions for occupational retirement provision, are in
principle exempt from Belgian corporate income tax. Capital losses are in principle not tax deductible.
Subject to certain conditions, the Belgian withholding tax that has been levied can be credited against any
corporate income tax due and any excess amount is in principle refundable.

Belgian non-residents
Securities holders who are non-residents of Belgium for Belgian tax purposes and are not holding the
Securities through a Belgian establishment and do not invest the Securities in the course of their Belgian
professional activity will not incur or become liable for any Belgian tax on income or capital gains by reason
only of the acquisition, ownership or disposal of the Securities, provided that they qualify as Eligible
Investors and hold their Securities in an X-account.

If the Securities are not entered into an X-account by the Eligible Investor, withholding tax on the interest is
in principle applicable at the current rate of 25 per cent., possibly reduced pursuant to a tax treaty, on the gross
amount of the interest.

European Directive on taxation of savings income in the form of interest payments

The EU has adopted a directive (European Council Directive 2003/48/EC) regarding the taxation of savings
income (hereinafter Savings Directive). Under the Savings Directive, Member States are required to
provide to the tax authorities of another Member State details of payments of interest (or other similar
income) paid by a person within its jurisdiction to an individual resident in that other Member State or to
certain limited types of entities established in that other Member State (hereinafter Disclosure of
Information Method). However, for a transitional period, Luxembourg and Austria instead are required
(unless during that period they elect otherwise) to operate a withholding system (hereinafter Source Tax) in
relation to such payments (the ending of such transitional period being dependent upon the conclusion of
certain other agreements relating to information exchange with certain other countries). A number of non-EU
countries and territories including Switzerland have adopted similar measures (a withholding system in the
case of Switzerland). In April 2013, the Luxembourg government announced its intention to abolish the
withholding system with effect from 1 January 2015, in favour of the automatic exchange of information.

The European Commission has proposed certain amendments to the Savings Directive which may, if
implemented, amend or broaden the scope of the requirements described above.

Individuals not resident in Belgium

Interest paid or collected through Belgium on the Securities and falling under the scope of application of the
Savings Directive will be subject to the Disclosure of Information Method.

Individuals resident in Belgium

An individual resident in Belgium will be subject to the provisions of the Savings Directive, if he receives
interest payments from a paying agent (within the meaning of the Savings Directive) established in another
EU Member State, Switzerland, Liechtenstein, Andorra, Monaco, San Marino, Curaao, Bonaire, Saba, Sint

115
Maarten, Sint Eustatius (formerly the Netherlands Antilles), Aruba, Guernsey, Jersey, the Isle of Man,
Montserrat, the British Virgin Islands, Anguilla, the Cayman Islands or the Turks and Caicos Islands.

If the interest received by an individual resident in Belgium has been subject to a Source Tax, such Source
Tax does not liberate the Belgian individual from declaring the interest income in the personal income tax
declaration. The Source Tax will be credited against the personal income tax. If the Source Tax withheld
exceeds the personal income tax due, the excessive amount will be reimbursed, provided it reaches a
minimum of EUR 2.5.

Tax on stock exchange transactions

A tax on stock exchange transactions (beurstaks/taxe sur les oprations de bourse) will be due on the
purchase and sale (and any other transaction for consideration) with respect to existing Securities if such
transaction is either entered into or carried out in Belgium through a professional intermediary. The rate
applicable for secondary sales and purchases in Belgium through a professional intermediary is 0.09 per cent.
with a maximum amount of EUR 650 per transaction and per party. The tax is due separately from each party
to any such transaction, i.e. the seller (transferor) and the purchaser (transferee), both collected by the
professional intermediary.

However, no tax on stock exchange transactions will be payable by exempt persons acting for their own
account including investors who are not Belgian residents provided they deliver an affidavit to the financial
intermediary in Belgium confirming their non-resident status and certain Belgian institutional investors as
defined in Article 126.1 2 of the Code of miscellaneous taxes and duties (Code des droits et taxes
divers/Wetboek diverse rechten en taksen).

As stated below, the EU Commission adopted on 14 February 2013 the Draft Directive on a FTT. The Draft
Directive currently stipulates that once the FTT enters into force, the Participating Member States shall not
maintain or introduce taxes on financial transactions other than the FTT (or VAT as provided in the Council
Directive 2006/112/EC of 28 November 2006 on the common system of value added tax). For Belgium, the
tax on stock exchange transactions should thus be abolished once the FTT enters into force. The Draft
Directive is still subject to negotiation between the Participating Member States and therefore may be
changed at any time.

Financial Transaction Tax

On 14 February 2013, the EU Commission adopted a proposal for a Council Directive (the Draft Directive)
on a common financial transaction tax (FTT). Pursuant to the Draft Directive, the FTT shall be
implemented and enter into effect in eleven EU Member States (Austria, Belgium, Estonia, France, Germany,
Greece, Italy, Portugal, Slovakia, Slovenia and Spain; the Participating Member States).

According to the Draft Directive, the FTT shall be payable on financial transactions provided that at least one
party to the financial transaction is established (or deemed established) in a Participating Member State and
that there is a financial institution established (or deemed established) in a Participating Member State which
is a party to the financial transaction, or is acting in the name of a party to the transaction. The FTT shall,
however, not apply to among others primary market transactions referred to in Article 5 (c) of Regulation
(EC) No 1287/2006, including the activity of underwriting and subsequent allocation of financial instruments
in the framework of their issue.

The rates of the FTT shall be fixed by each Participating Member State but for transactions involving
financial instruments other than derivatives they shall amount to at least 0.1 per cent. of the taxable amount.
The taxable amount for such transactions shall in general be determined by reference to the consideration paid
or owed in return for the transfer or the market price (whichever is higher). The FTT shall be payable by each
financial institution established (or deemed established) in a Participating Member State which is a party to

116
the financial transaction, which is acting in the name of a party to the transaction or where the transaction has
been carried out on its account. Where the FTT due has not been paid within the applicable time limits, each
party to the relevant financial transaction, including persons other than financial institutions, shall become
jointly and severally liable for the payment of the FTT due.

Prospective Holders should therefore note, in particular, that if the Draft Directive is implemented by the
Participating Member States in its current form, any sale, purchase or exchange of the Securities will be
subject to the FTT at a minimum rate of 0.1 per cent., provided the abovementioned prerequisites are met.
The Holder may be liable to itself pay this charge or reimburse a financial institution for the charge, and/or
the charge may affect the value of the Securities.

The Draft Directive is still subject to negotiation between the Participating Member States and therefore may
be changed at any time. Moreover, if and once the Draft Directive has been adopted and becomes a directive
(the Directive), it will need to be implemented into the respective domestic laws of the Participating
Member States and the domestic provisions implementing the Directive might deviate from the Directive
itself. Furthermore, it should be noted that on 18 April 2013 the United Kingdom challenged the legality of
the FTT before the European Court of Justice. This legal challenge has, however, no suspending effect.
Prospective Holders of the Securities should consult their own tax advisers in relation to the consequences of
the FTT associated with the subscription, purchase, holding or disposal of the Securities.

FATCA Withholding
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, HOLDERS ARE
HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS
PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED
UPON, BY HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON
HOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED
HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN
THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS
ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR
PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.

Pursuant to the foreign account tax compliance provisions of the Hiring Incentives to Restore Employment
Act of 2010 (FATCA), non-U.S. financial institutions that enter into agreements with the IRS (IRS
Agreements) or become subject to provisions of local law intended to implement an intergovernmental
agreement (IGA legislation) entered into pursuant to FATCA, may be required to identify financial
accounts held by U.S. persons or entities with substantial U.S. ownership, as well as accounts of other
financial institutions that are not themselves participating in (or otherwise exempt from) the FATCA reporting
regime. In order (a) to obtain an exemption from FATCA withholding on payments it receives and/or (b) to
comply with any applicable laws in its jurisdiction, a financial institution that enters into an IRS Agreement or
is subject to IGA legislation may be required to (i) report certain information on its U.S. account holders to
the government of the United States or another relevant jurisdiction and (ii) withhold 30 per cent. from all, or
a portion of, certain payments made to persons that fail to provide the financial institution information,
consents and forms or other documentation that may be necessary for such financial institution to determine
whether such person is compliant with FATCA or otherwise exempt from FATCA withholding.

Under FATCA, withholding may be required with respect to payments to persons that are not compliant with
FATCA or that do not provide the necessary information, consents or documentation made on or after
(i) 1 July 2014 in respect of certain US source payments, (ii) 1 January 2017, in respect of payments of gross
proceeds (including principal repayments) on certain assets that produce US source interest or dividends and
(iii) 1 January 2017 (at the earliest) in respect of foreign passthru payments and then only on obligations

117
that are not treated as equity for U.S. federal income tax purposes and that are issued or materially modified
on or after (a) 1 July 2014, and (b) if later, in the case of an obligation that pays only foreign passthru
payments, the date that is six months after the date on which the final regulations applicable to foreign
passthru payments are filed in the Federal Register.

Whilst the Securities are held within the X/N Clearing System (See Belgium Belgian withholding tax), it
is expected that FATCA will not affect the amount of any payments made under, or in respect of, the
Securities by the Issuer or any paying agent, given that each of the entities in the payment chain between the
Issuer and the Participants in the clearing system is a major financial institution whose business is dependent
on compliance with FATCA and that any alternative approach introduced under an intergovernmental
agreement will be unlikely to affect the Securities.

However, FATCA may affect payments made to custodians or intermediaries in the payment chain leading to
the ultimate investor if any such custodian or intermediary generally is unable to receive payments free of
FATCA withholding. It also may affect payments to any ultimate investor that is a financial institution that is
not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to
provide its broker (or other custodian or intermediary from which it receives a payment) with any
information, forms, other documentation or consents that may be necessary for the payments to be made free
of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is
compliant with FATCA or other laws or agreements related to FATCA, including any IGA legislation, if
applicable) and provide each custodian or intermediary with any information, forms, other documentation or
consents that may be necessary for such custodian or intermediary to make a payment free of FATCA
withholding. Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA
and how FATCA may affect them.

118
 USE OF PROCEEDS

The net proceeds from the issue of the Securities are expected to amount to approximately
EUR 1,386,750,000 (after deduction of fees and expenses). They will strengthen the Issuers Tier 1 capital
base under a fully loaded CRD IV approach (and also as contingent capital for the purposes of testing under
stressed conditions) and are part of the Issuers long-term funding, which the Issuer uses to fund and manage
its activities.

The Issuer will on-lend the proceeds of the Securities to KBC Bank NV under a loan agreement which will
also qualify at the level of KBC Bank NV as Additional Tier 1 capital for regulatory capital purposes. Subject
to market conditions, KBC Bank NV intends to use the proceeds of the loan to redeem outstanding Tier 1
instruments which are gradually being phased out under CRD IV.

119
 SUBSCRIPTION AND SALE

Goldman Sachs International, J.P. Morgan Securities plc, KBC Bank NV, Morgan Stanley & Co. International
plc and UBS Limited (together the Joint Lead Managers) have, pursuant to a Subscription Agreement
dated 17 March 2014 (the Subscription Agreement), jointly and severally agreed with the Issuer, subject
to the satisfaction of certain conditions, to subscribe and pay for the Securities at 100 per cent. of their
principal amount, plus accrued interest (if any) less certain fees and commissions. To the extent permitted by
local law, the Joint Lead Managers and Issuer have agreed that commissions may be offered to certain
brokers, financial advisors and other intermediaries in connection with the purchase of Securities by such
intermediary and/or its customers.

The Issuer has also agreed to reimburse the Joint Lead Managers for certain of their expenses, and has agreed
to indemnify the Joint Lead Managers against certain liabilities, incurred in connection with the issue of the
Securities.

The Joint Lead Managers are entitled to terminate the Subscription Agreement in certain circumstances prior
to payment to the Issuer.

United States

The Securities have not been and will not be registered under the U.S. Securities Act of 1933 (the Securities
Act) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S.
persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms
used in this paragraph have the meanings given to them by Regulation S under the Securities Act
(Regulation S).

Each Joint Lead Manager has agreed that, except as permitted by the Subscription Agreement, it will not
offer, sell or deliver the Securities (a) as part of their distribution at any time or (b) otherwise until 40 days
after the later of the commencement of the offering and the Closing Date (as defined in the Subscription
Agreement), within the United States or to, or for the account or benefit of, U.S. persons, and that it will have
sent to each dealer to which it sells any Securities during the distribution compliance period a confirmation or
other notice setting forth the restrictions on offers and sales of the Securities within the United States or to, or
for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by
Regulation S.

In addition, until 40 days after the commencement of the offering of the Securities, an offer or sale of any
such Securities within the United States by any dealer that is not participating in the offering may violate the
registration requirements of the Securities Act.

United Kingdom

Each Joint Lead Manager has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000) received by it in connection with the issue
or sale of any Securities in circumstances in which section 21(1) of the Financial Services and Markets
Act 2000 does not apply to the Issuer; and

120
(b) it has complied and will comply with all applicable provisions of the Financial Services and Markets
Act 2000 with respect to anything done by it in relation to any Securities in, from or otherwise
involving the United Kingdom.

Hong Kong

Each Joint Lead Manager has represented and agreed that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any
Securities other than (a) to professional investors as defined in the Securities and Futures Ordinance
(Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances
which do not result in the document being a prospectus as defined in the Companies Ordinance (Cap.
32) of Hong Kong or which do not constitute an offer to the public within the meaning of that
Ordinance; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its
possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,
invitation or document relating to the Securities, which is directed at, or the contents of which are
likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the
securities laws of Hong Kong) other than with respect to Securities which are or are intended to be
disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the
Securities and Futures Ordinance and any rules made under that Ordinance.

Singapore

Each Joint Lead Manager has acknowledged that this Prospectus has not been registered as a prospectus with
the Monetary Authority of Singapore, and the Securities will be offered pursuant to exemptions under the
Securities and Futures Act, Chapter 289 of Singapore (the SFA). Accordingly, each Joint Lead Manager has
represented and agreed that it has not offered or sold any Securities or caused such Securities to be made the
subject of an invitation for subscription or purchase and will not offer or sell such Securities or cause such
Securities to be made the subject of an invitation for subscription or purchase, and has not circulated or
distributed, nor will it circulate or distribute, this Prospectus or any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of such Securities, whether directly or
indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii)
to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance
with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with
the conditions of, any other applicable provision of the SFA.

Where Securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share capital of which is owned by one or more
individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that
trust has acquired the Securities pursuant to an offer made under Section 275 of the SFA except:

121
1.1 to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person
arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

1.2 where no consideration is or will be given for the transfer;

1.3 where the transfer is by operation of law; or

1.4 as specified in Section 276(7) of the SFA or Regulation 32 of the Securities and Futures (Offers of
Investments) (Shares and Debentures) Regulations.

Korea

The Securities have not been and will not be registered under the Financial Investment Services and Capital
Markets Act and its subordinate decrees and regulations (collectively, the FSCMA). Accordingly, each
Joint Lead Manager has represented and agreed, that it has not offered, sold or delivered and will not offer,
sell or deliver, directly or indirectly, any Securities in Korea or to, or for the account or benefit of, any Korean
resident (as such term is defined in the Foreign Exchange Transaction Law and its subordinate decrees and
regulations (collectively, the FETL)), except as otherwise permitted under applicable Korean laws and
regulations, including the FSCMA and FETL.

Peoples Republic of China

Each Joint Lead Manager has represented and agreed that neither it nor any of its affiliates has offered or sold
or will offer or sell any of the Securities in the Peoples Republic of China (excluding Hong Kong, Macau and
Taiwan) as part of the initial distribution of the Securities except as permitted by the securities laws of the
Peoples Republic of China.

General

No action has been or will be taken in any country or jurisdiction by the Issuer or the Joint Lead Managers
that would permit a public offering of the Securities, or possession or distribution of any offering material in
relation thereto, in any country or jurisdiction where action for that purpose is required. Persons into whose
hands this Prospectus comes are required by the Issuer and the Joint Lead Managers to comply with all
applicable laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or
deliver the Securities or have in their possession or distribute such offering material, in all cases at their own
expense.

Each Joint Lead Manager has agreed that it shall comply to the best of its knowledge with all applicable laws
and regulations in each jurisdiction in which it acquires, offers, sells or delivers the Securities or has in its
possession or distributes this Prospectus or any other offering or publicity material, in all cases at its own
expense.

122
 GENERAL INFORMATION

Authorisation

The creation and issue of Securities have been duly authorised by resolutions of the Issuer's Executive
Committee (directiecomit/comit de direction) dated 4 February 2014 and by resolutions of the Issuers
Board of Directors dated 12 February 2014.

Listing and admission to trading of Securities on the regulated market of Euronext Brussels

Application has been made to the Financial Services and Markets Authority (Autoriteit voor Financile
Diensten en Markten/Autorit des services et marchs financiers) (the FSMA) in its capacity as competent
authority under article 23 of the Belgian Law dated 16 June 2006 concerning the public offer of investment
securities and the admission of investment securities to trading on a regulated market (the Prospectus Law)
to approve this document as a Prospectus for the purposes of Article 23 of the Belgian Prospectus Law and
Article 5.3 of the Prospectus Directive (as defined herein). This approval cannot be considered as a judgment
as to the opportunity or the quality of the transaction, nor on the situation of the Issuer.

Application has also been made to Euronext Brussels for the Securities to be listed on Euronext Brussels.
References in this Prospectus to the Securities being listed (and all related references) shall mean that the
Securities have been listed on Euronext Brussels and admitted to trading on the regulated market of Euronext
Brussels. The regulated market of Euronext Brussels is a regulated market for the purposes of the Prospectus
Directive.

Documents Available

Copies of the following documents (together with English translations thereof where relevant) will be
available on the website of the Issuer at www.kbc.com, and during normal business hours at the registered
office of the Issuer:

(x) a copy of this Prospectus;

(xi) the audited annual consolidated financial statements of the Issuer in respect of the financial years
ended 31 December 2011 and 31 December 2012, together, in each case, with the related statutory
auditors' report; and

(xii) the constitutional documents of the Issuer.

A copy of the Agency Agreement will be available for inspection during normal business hours at the
registered office of the Issuer and on request.

Clearing Systems

The Securities have been accepted for clearance through the Securities Settlement System, which has links to
Euroclear and Clearstream Luxembourg. The appropriate ISIN is BE0002463389 and the common code is
104527639.

The address of the NBB is De Berlaimontlaan 14, 1000 Brussels, Belgium, the address of Euroclear is 3
Boulevard du Roi Albert III, B.1210 Brussels, Belgium and the address of Clearstream Luxembourg is 42
Avenue J. F. Kennedy, L-1855 Luxembourg.

123
Significant or Material Change

Save as disclosed in sections Description of the Issuer Recent events and Description of the Issuer
Litigation, there has been:

(c) no significant change in the financial or trading position of the Issuer; and

(d) no material adverse change in the financial position, business or prospects of the Issuer,

since 31 December 2013.

Litigation

Other than as set out in Section Description of the Issuer, subsection 20 Litigation, each of the Issuer and
its subsidiaries is not involved in any governmental, legal or arbitration proceedings (including any
proceedings which are pending or threatened of which the Issuer is aware) which may have or have had in the
12 months preceding the date of this Prospectus a significant effect on the financial position or profitability of
KBC Group.

Statutory Auditors

The statutory auditors of the Issuer are Ernst & Young Bedrijfsrevisoren BCVBA (erkende revisor/rviseur
agr), represented by P. Vanderbeek and/or P. Telders, with offices at De Kleetlaan 2, B-1831 Diegem
(Brussels). The auditors of the Issuer are members of the Instituut der Bedrijfsrevisoren/Institut des Reviseurs
d'Entreprises. The consolidated financial statements of the Issuer (as well as the annual accounts of the
Issuer) for the years ended 31 December 2011 and 31 December 2012 have been audited in accordance with
Belgian GAAS and the audits resulted, in each case, in an unqualified opinion. The auditors of the Issuer have
no material interest in the Issuer.

The reports of the auditors of the Issuer are included or incorporated in the form and context in which they are
included or incorporated, with the consent of the auditors who have authorised the contents of that part of this
Prospectus.

Joint Lead Managers transacting with the Issuer

Some of the Joint Lead Managers and their affiliates have engaged in, and may in the future engage in,
investment banking and other commercial dealings in the ordinary course of business with the Issuer or its
affiliates. They have received, or may in the future receive, customary fees and commissions for these
transactions. In addition, in the ordinary course of their business activities, the Joint Lead Managers and their
affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including bank loans) for their own account and for
the accounts of their customers. Such investments and securities activities may involve securities and/or
instruments of the Issuer or its affiliates. The Joint Lead Managers and their affiliates may also make
investment recommendations and/or publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short
positions in such securities and instruments. Potential investors should be aware that the Issuer is the parent
company of KBC Bank NV and that the interests of KBC Bank NV may conflict with the interests of the
holders of the Securities. Moreover, the holders of securities should be aware that KBC Bank NV, acting in
whatever capacity, will not have any obligations vis--vis the holders of the Securities and, in particular, it
will not obliged to protect the interests of the holders of the Securities.

124
 THE ISSUER

KBC Group NV
Havenlaan 2
B-1080 Brussels
JOINT BOOKRUNNERS AND JOINT LEAD MANAGERS

Goldman Sachs International J.P. Morgan Securities plc

Peterborough Court 25 Bank Street
133 Fleet Street Canary Wharf
London EC4A 2BB London E14 5JP

KBC Bank NV Morgan Stanley & Co International plc

Havenlaan 2 25 Cabot Square
B-1080 Brussels Canary Wharf
London E14 4QA

UBS Limited
100 Liverpool Street
London EC2M 2RH
PAYING AND DOMICILIARY AGENT

KBC Bank NV
Havenlaan 2
B-1080 Brussels
LEGAL ADVISER

To the Issuer as to Belgian law To the Issuer as to English law

Linklaters LLP Linklaters LLP
Rue Brederodestraat 13 One Silk Street
B-1000 Brussels London EC2Y 8HQ

To the Joint Lead Managers as to Belgian law To the Joint Lead Managers as to English law
Allen & Overy LLP Allen & Overy LLP
Avenue de Tervueren 268/A One Bishops Square
B-1150 Brussels London E1 6AD
AUDITORS

To the Issuer
Ernst & Young Bedrijfsrevisoren BCVBA
De Kleetlaan 2
B-1831 Diegem (Brussels)