Kookmin Bank on the Move
Kookmin to take over bank in Kazakhstan and expand stakes in BII in Indonesia
Kookmin Bank has been stepping up its M&A activity both at home and abroad, despite the selloff of bank shares in the stock market due to the fear of reduced profits amid a perceived economic slowdown.
President Kang Chung-won of Kookmin, the largest retail bank in the country, said recently that it is about to take over a bank in Kazakhstan and secure more shares in the Bank International Indonesia from the bank's second largest shareholder.
He also said Kookmin is still after the Korea Exchange Bank, aware that the contract between Lone Star, the majority shareholder of KEB, and HSBC to take over the bank will expire at the end of next month, possibly ending HSBC's deal with Lone Star to buy stakes in KEB.
Kang is confident that Kookmin will regain the position of being the largest bank in terms of assets in Korea ¡ª which the bank recently lost to Shinhan Financial Group ¡ª when it takes over the banks at home and abroad as planned and as the bank becomes a financial holding company around September. Kang is very sure that Kookmin will then be a leading bank in Asia.
Kang said Kookmin has been in talks with 'S'bank in Kazakhstan on securing the management rights of the bank and is likely to take over the bank in the first half of the year as the local financial authorities are friendly to Kookmin's plan. Kookmin wants to take over a 30 percent stake in the bank and acquire an additional 20 percent later.
Kang said Kookmin plans to entrust local board members with the operation of the bank, which will serve both Korean firms in Kazakhstan and local customers when it finally secures the management rights.
Kookmin plans to make Kazakhstan the operational base for its ultimate advancement into other countries in Central Asia, Eastern Europe and Russia. Kookmin's operation will help Korean firms engaged in the exploration of natural resources in the region, he said.
The Kookmin CEO is definitely after securing additional stakes in BII in Indonesia from Temasek holding Co. of Singapore, which is the second largest stakeholder of BII.
In 2003, Kookmin formed a consortium with Temasek and bought 56.24 percent of BII. Temasek holds a 50 percent stake in the Sorak consortium, while Kookmin shares 25 percent, making Temasek the largest shareholder in BII and Kookmin the second largest shareholder.
The Singaporean investment fund is also the largest shareholder of another Indonesian bank and the financial regulations have now been revised so that in the Southeastern Asian country a foreign investor is prohibited from owning controlling stakes in two commercial banks in the country at the same time. The Singaporean investor now has to sell off its shares in BII.
Kang also said the synergy created when Kookmin takes over KEB is greater than with any other bank in the country in terms of the operational structures of the two banks.
He said KEB will keep its name and the actual merger date can be delayed for a considerable time in respect for the feelings of KEB employees.
When the job of turning Kookmin into a holding company is finished around September, Kookmin will try to take over a credit loan company and also branch into the non-life insurance industry by taking over a small non-life insurance firm early next year, under a strategy to make Kookmin the largest financial group in the country.
In the meantime, financial authorities said Kookmin has decided to take over a savings bank in the Seoul area since setting up a new credit loan company is difficult and a capital company can only lend half of its funds under current financial regulations.
Kookmin is also said to be considering spinning off its KB Card in March, and the move, when completed, will intensify the competition among credit card companies in the country. Kookmin will make a decision on the spin-off move when the board of directors and the promotion committee for setting up a holding company meet on March 14. They will decide whether the KB Card will be included in the holding company application as part of Kookmin Bank or not. nw
President Kang Chung-won of Kookmin Bank. |