Belgian financial services firm KBC Group has taken the bold, if painful, step of writing down its most-toxic assets to zero. It also accepted $2.6 billion from a Flemish regional government to shore up capital.

And its stock has soared, reports Bloomberg, rising 53 percent.

Nobody believes that similarly toxic assets held by U.S. and European banks are worth nothing (the houses these mortgages were taken on are real, after all, and not worthless), but the idea of going ahead and admitting the worthlessness of mortgage-backed bonds is intriguing.

For most banks, however, it would be much more than biting the bullet. It would be biting the cannon ball!

Look, we all know we are in “unchartered waters,” a situation that requires authorities to execute without delay both effective and transparent interventions.

Now, we finally have such an intervention in Belgium. The regional authorities have injected the necessary capital in KBC Group that allows them to eliminate the structured-credit portfolio toxic risk by writing it down completely to zero the mezzanine collateralized debt obligation (CDO) notes while only conserving the super senior tranches.

Flemish authorities also have provided a standby core capital facility for KBC. By acting this way, they have helped to restore confidence immediately in KBC. That’s what made investors euphoric.

We will now see how S&P, Moody's, and Fitch rate the group under this new situation. On Dec. 30, Moody's made no rating change following KBC's additional write-downs on CDOs at that time. Now KBC has virtually zero toxic CDO exposure on its books.

I don’t know if it’s still too early to start buying KBC because of the very negative economic environment in Belgium and Europe as a whole. Also, KBC still has to publish its final fourth-quarter figures, due Feb. 12.

Nevertheless, it’s definitively on my “buy” watch list.

In the event that the United States follows the Flemish example, I think that it could be possible NYU economist Nouriel Roubini will have to readjust to the upside his recent estimate of $3.6 trillion in financial losses for the banks!