"Blood, Tears and Sweat"

Chmn. Hwang of Kookmin Financial Holding Co. says of his resolve to make company a global player

Kookmin Financial Holding Co. has officially set sail in a ceremony Sept. 29 at Kookmin Bank's old head office building in Myeong-dong, in the heart of downtown Seoul.
Chairman Hwang Young-ki said in his speech that he and the staff of the new financial holding company will do their best to boost the financial holding company's asset to 600 trillion won by 2013, placing it 10th in Asia and among the 50 largest financial companies in the world.
The chairman went on to say that the current turmoil in the world financial market is an opportunity for Korean financial firms to make advances into the global financial market.
Hwang said the first M&A target is the Korea Exchange Bank, although he has received nothing from Lone Star, the owner of the bank. He said President Kang Chung-won of Kookmin Bank knows executives of the U.S. investment fund very well through contacts with John Grayken, chairman of the U.S. financial firm.Kookmin Bank will have the responsibility of laying the ground for the targeted takeover moves and the holding company will undertake the work associated with the conclusion of the negotiations with Lone Star Funds, Hwang said.
Kang led the talks with the U.S. investment fund in 2006 and signed an agreement to take over KEB, although Lone Star invalidated the contract. Kang continued to hold contacts with the U.S. fund, following the breakup of the agreement.
Hwang pointed out that Hana Financial Group would be the main rival for his group in the domestic financial market. But he's confident that Kookmin Financial would be able to fight to the end to take over KEB as it can easily raise some 5 trillion won by selling its assets to take over KEB.
He said the holding company can secure some 4 trillion won by selling the shares of Kookmin Bank that it acquired in the process of setting up the holding company. It can also sell its shares of ING Life Insurance for some 600 billion won and it could raise 400 billion won by selling its 14 percent stake in BII in Indonesia. In addition, it can secure 5 trillion won through overseas borrowing, officials of the holding company said.
He said the monetary authorities are concerned over the outflow of U.S. dollars when Kookmin takes over KEB. He said, however, the company can solve the problem by securing funds from overseas. The company could easily sell its 20 percent stakes in Kookmin Bank to foreign investors and raise 4 trillion won, Hwang said.
Hwang also said Kookmin Bank doesn't have to immediately merge with KEB, as the two banks can operate separately, much like Shinhan Bank did when it took over Chohung Bank before merging the two into a large bank. He also pointed out the option of using the matrix system to operate the two banks as Hana Bank did with banks it took over.
The chairman asserted the need for a one-on-one merger with a suitable financial holding company in Korea when he first took office. But later, when HSBC pulled out of its agreement to buy KEB, he said his company would look at the takeover of KEB first and then seek mergers with rival financial holding companies.
He said he would try to build up the assets of the holding company to the 600 trillion won level, which financial experts deemed possible. Kookmin Bank has to take over KEB and then merge with Hana Financial Group to boost its assets to that level. It will take a year or two to do so, according to financial experts.
Hwang said the company would go for a takeover of financial firms in the non-banking sector such as securities firms, insurance firms and asset management firms if KEB and other rival financial holding companies are unavailable for a merger.
He paraphrased what Churchill said during the height of the second World War: "I can give only blood, tears and sweat, to achieve the construction of a national representative financial air craft carrier overcoming all kinds of difficulties that might arise along the way." nw

Dignitaries applaud after putting up the name board of the Kookmin Financial Holding Co. in Myung-dong, downtown Seoul. Chmn. Hwang Young-ki of the financial holding co. is second from left and President Kang Chung-won of Kookmin Bank is fourth from right.