Kookmin Bank Shows Interest
in Korea Exchange Bid

Analysts say Kookmin? takeover of KEB would have more synergy

Kookmin Bank President Kang Chung-won said his bank may join in a race to acquire Korea Exchange Bank.
"We are not interested in a bid for Korea Exchange Bank due to our focus on beefing up our internal capabilities. However, external environment for competition has changed much, and we will have a watchful eye on it,"Kookmin Bank President Kang said. He made the remark during a meeting with reporters in celebration of the first anniversary of his inauguration as Kookmin Bank CEO on November 17.
Kang's disclosure of an intention to join the bidding race was a contrast to his remark made on October 31 at an investor relation session on his bank that his bank was not interested in the bid.
So far, Hana Bank has reportedly been ready for its bid for acquiring Korea Exchange Bank. Shinhan Financial Group is moving to acquire LG Card. Kookmin Bank, Korea's largest lender, needs to cope with any changes in the market, Kookmin Bank officials said.
"Even though a detailed bidding plan has yet to be determined, management has almost agreed on a consensus,"Kookmin CEO Kang said. He added that his bank has enough time for preparing a bid as Korea Exchange Bank completes the bidding by the end of December.
Kookmin appears to have no problems in raising the fund necessary for the acquisition. Kang indicated that that issue will not hinder his bank's bid efforts, adding that Kookmin's assets exceed 180 trillion won.
The stock value of Korea Exchange Bank is estimated at more than 8 trillion won, and more than 4 trillion won would, excluding management premiums, be needed to take over a 51 percent stake, owned by Lone Star Funds, in the bank, which is on the block, sources said.
Kookmin's management strategies for next year focus on expanded foreign exchange and corporate financing. Analysts note that Kookmin, which has concentrated on retail banking, would need the manpower and infrastructure if the bank seeks to build a growth engine in the corporate financing sector. If Kookmin acquires Korea Exchange Bank, it could bring about the benefits of building up a profit base in a short period of time rather than strengthening internal capabilities for a long time, they said.
CEO Kang said his bank has been defensive so far this year, but it will be on the offensive next year. He forecast that his bank's assets are projected to grow about 5 percent next year, and the growth will be based primarily on SOHO and corporate lending, not on individual lending. He also predicted that the household financing sector will see profits rise at a fast pace if the customer relationship management (CRM) system is activated. CEO Kang said the retail banking depends on how to analyze customers and the CRM system, developed with his bank's investment of considerable amounts of money and six month-long efforts, will boost its business capabilities by analyzing each of the 25 million customers.
Concerning Kookmin? interest in Korea Exchange Bank bid, Mirae Asset analyst Han Jung-tae said Kookmin may have an interest in taking over Korea Exchange Bank, which has strengths and merits in the foreign exchange sector, in a bid to gain a new momentum.
GoodMorning Shinhan Securities analyst Lee Jae-won said Kookmin may have taken into account a rise in its owner capital stemming from disposing of its treasury stock worth 1.2 trillion won in the first half of the year.
Korea Exchange Bank stock rose 5.2 percent to close at 13,150 won on November 17, while Kookmin Stock edged 0.3 percent to 66,800 won on the same day.
Kookmin? acquisition of Korea Exchange Bank would have greater synergy than a takeover by Hana Bank, analysts said.
Woori Bank CEO Hwang Young-key said Koomin-KEB tie-up would be better because the two banks complement each other. He noted that KEB has strong points in corporate lending while Kookmin has strengths in retail banking, but the synergetic effects coming from Hana Bank's acquisition over KEB are not sure because Hana Bank and KEB have similar portfolios.

Kookmin Bank President Kang Chung-won

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