On the Lookout for Expansion

KB to turn into holding company, takes over Hanuri Securities, with eye on non-life insurance firm

President Kang Chung-won of Kookmin Bank said recently that he will manage the bank to be the largest integrated bank in the country in retail and investment banking within the next three years.
As the first step for achieving the target, the bank will wrap up its take over of Hanuri Securities and go after another securities firm for acquisition. From next year, Kookmin will advance into the credit loan market and the non-life insurance market, he added.
During his first media conference Nov. 13 since his reappointment as the CEO of the bank Oct. 31, he said the acquisition of Hanuri Securities will be finished within November as soon as negotiations on details of take over is completed by the end of the month.
He added that the bank will consider the acquisition of small or medium-sized securities firm next year. He said the bank will go after a small securities firm to make it grow bigger under its management. But he said it may take some time for the take over, but there is a great possibility for acquisition.
The CEO said the bank will also launch a credit loan company in a bid to modernize the small credit loan market in the country in terms of system and rules, He said he is confident that curb loan operators would observe the new rules.
President Kang also said the bank will enter the non-insurance market in the country next year, adding that securities, credit loan and non-life insurance will be the order of priority that the bank will prepare to enter within the next three years. Kookmin wants to expand its business areas large enough to become the largest integrated bank in the country.
As to overseas operation, the CEO said the bank plans to buy stakes in local financial institutions in such countries as Kazakhstan and Indonesia and in countries like China and Vietnam where foreign investment in financial institutions are restricted, the bank will buy small stakes first and then expand them gradually under a long-term plan.
Kookmin has been talking with the largest stake holder Temasek, in the BII Bank in Indonesia to acquire more shares. It is not yet known how the Indonesian investor would react.
The nation's largest commercial bank, in the meantime, has decided to sell securities starting from April or May and complete its preparation to be a holding company in September next year.
The bank will also go ahead with its plan to reorganize the set up of the bank early next year, along with a large personnel shake up including registered directors, whose terms are up, making the new year to record one of the biggest changes in its history, bank sources said recently.
Bank officials said the bank has too many personnel concentrated in its head office, and needs to be trimmed with many of them expected to be reassigned to the operation sectors.
The reorganization is expected to replace many outside directors currently totaling eight. During the bank's shareholders'meeting in March, four directors are up for either reappointment or replacement.
The bank will complete the take over of Hanuri Securities and have it renamed KB Securities in the second half of next year to along with its plan to strengthen the retail of securities. The bank has been considering to set up "financial plazas"jointly with its securities affiliate in strategic locations across the country for maximum sale of securities and other financial products.
The bank has also decided to launch a holding company tentatively named "KB Financial Holding Co."by the end of September following the selection of key officials and staff to run the holding company. The launching date was set due to the complexity of process of turning the bank into a holding company such as getting the approval from the U.S. Securities Exchange Commission since the bank is listed on the New York Stock Exchange.
Prof. Chung Ki-young, chairman of the preparation committee, said such important matters as who will head the holding company, Kookmin Bank CEO or other person should be decided together with the plan for the set up of the governance system of the projected holding company. nw

President Kang Chung-won of Kookmin Bank.