Kookmin's Tie-up with
Sumitomo-Mitsui

Two banks to collaborate in financial services to Japanese firms operating in Korea

Kookmin Bank, the nation's largest commercial bank, said it has formed a business alliance with Japan's Sumitomo Mitsui Banking Corp. to provide better services to their corporate clients, the bank said March 12.
The tie-up calls or joint financing for Japanese companies operating in Korea and the development of investment banking services and cash management services for corporate clients from the two countries. Exporters of both nations will also have access to products and services offered by the two banks, Kookmin Bank said.
Sumitomo-Mitsui is the second largest bank in Japan by equity capital. Currently some 1,600 Japanese companies are operating in Korea, according to Kookmin Bank.
"The agreement will serve as an opportunity for Kookmin Bank to come closer to the goal of its development as a global bank leading the Asian financial market,"Kookmin Bank CEO Kang Chung-won said at a signing ceremony in Seoul.
Kookmin has been looking to do business overseas as competition heats up in the domestic financial market.
It has formed a business tie-up with the Industrial and Commercial Bank of China, China's largest lender, in January this year and a similar deal with ABN AMRO, the biggest bank in the Netherlands, in 2005.
In the meantime, Kookmin said it is not in talks with Temasek holdings to increase its stake in PT Bank International Indonesia(BII), denying a report that it is pushing to take over managerial rights of the Indonesian bank. "Kookmin Bank is not seeking ways to buy shares in BII,"the bank said.
A local newspaper said Kookmin Bank was negotiating with Temasek over the number of shares and price for a deal presumed be worth 100 billion won. A consortium including Kookmin Bank, Temasek and others purchased a 56.33 percent stake in BII in 2003. There has been speculation that Kookmin with 14.22 percent stake, could secure managerial rights of BII if it buys some shares from Temasek, BII's largest shareholder.
The Bank International Indonesia is the southeast Asian country's sixth largest lender with assets of $5 billion.
In the meantime, Kookmin hired 223 college graduates early this year including a dozen foreign employees who came from such countries in southeast Asia as Cambodia, Indonesia, and Vietnam, demonstrating the bank's plan to be a leading regional bank in Asia by expanding its operations in emerging markets.
The bank has been trying to launch retail banking operations in the three nations this year and is now in talks to open branches or local units in those countries.
CEO Kang, in his new year's address, said this year is the initial year for Kookmin's expansion of its operations overseas. "Our long-term growth potential lies in offshore markets,"he said. "Efforts we will make this year such as recruiting regional experts and changing our operational system and practices in line with global standards, will enable us to take a leap toward becoming a global player."Kookmin Bank sold "Korea Global Financial 4 Star Derivative Commodity Investment Trust"a derivative fund linked to share prices of such global financial institutions as HSBC, Merrill Lynch, Deutsch Bank, and Mitsubishi-UFI until March 15.
The basic assets of the financial commodity were made of key global financial shares in consideration of confidence and connections and to raise the value of early repayment, the bank said.
The bank launched the sale of the product for customers who want to readjust their investment portfolio, not able to find suitable areas for investment with the turbulence in the stock market.
The product's advantage is that if its price rose 10 percent level, the investors could sell the product in every six months or even before the six-month period if the price of the product rises 10 percent.
At maturity after three years, the investors will be able to earn at least 9.7 percent return if the product has not dipped below 20 percent in price during the three- year period. Even if it has fallen 20 percent, the investors will be able to get the principle back. nw

Kookmin Bank CEO Kang Chung-won, right, shakes hands with his counterpart of the Sumitomo_Mitsui Banking Corp. at his office in Seoul March 12.

Staff of Kookmin Bank private banking dep't discuss the "Korea Global Financial 4 Star Derivative Commodity Investment Trust,"the bank's new financial product.