The latest European bank to get a government bailout, Belgian banking and insurance group KBC, will receive a capital injection of 3.5 billion euro ($4.4 billion) from the Belgian government, and will not pay any dividend for 2008. The injection will boost KBC’s core tier-1 ratio for banking to above 8 percent from close to 7 percent.

The announced move, aiming at reassuring investors after the bank’s shares hit a 12-year low on Friday, will require the bank to issue the bailout amount in nonvoting, core capital securities to the Belgian state.

Bank Analyst Ivan Lathouders said the deal was quite like the one provided by the Dutch government for ING Groep NV last week, and should boost investor confidence especially due to the limited dilutive impact. Lathouders said that KBC expectedly would generate sufficient excess cash going forward to pay off the 3.5 billion euro relatively soon.

KBC had said on Friday it was considering the move of seeking state guarantees for its borrowing, and was looking at its capital requirements as the only big bank in Belgium not to have availed any guarantees from governments.

Explaining the structure of the transaction, the bank said that it will not cause share-price dilution for shareholders, but will increase security for customers, counterparties and debtholders.

Chief Executive Andre Bergen said in a statement: “Our solvency position is solid and well above the sector average and regulatory requirements. This has not changed in recent months or in the past few days.” Commenting on the injection, Bergen said that capital market sentiment had changed dramatically, which, in recent weeks, had led to a unanimous call for higher capital requirements for financial institutions.