KB Financial to Lead the Way
Strategic tie-ups sought with banks in Africa and Latin America to pave the way for Korean firms abroad
Key participants at a reception to launch KB Good Job by KB Financial Group to find jobs for young jobless people.
KB Financial Group Chairman Euh Yoon-dae said the group will consider M&As with other financial institutions during the fourth quarter this year when its cash flow improves.
During a New Year's media interview, the chairman said the group will focus on its non-banking sector to increase its earnings this year. The group will complete a deal to sell a stake in KB Securities to Chinese Industry and Commerce Bank. It will also launch KB Credit Card and work to strengthen KB Life Insurance's general life insurance business.
Euh said KB Financial Holding will complete the stake exchange deal with Standard Bank of South Africa in a strategic alliance with the South African bank, which is one of the diverse ways for KB Financial Holding to expand its overseas operations.
"What I did since coming to KB Financial Holding is to slightly change the course of the financial group toward the right direction," the chairman said. He took over the helm of the financial group last July.
What he meant was that the group would still have to take care of its internal operational matters and not be ready to expand its overseas operations this year.
"This year, too, we have to focus on rationalizing our operations to improve the group's physical quality, rather than expand," the chairman said. Commenting on Hana Financial Group's takeover of Korea Exchange Bank, he said it will be a tough challenge for Kookmin Bank, which has been a top bank in Korea for so long.
It now has become a four-way competition in the banking industry between Hana, Kookmin, Woori and Shinhan. Since the financial market has not grown, banks will be forced to rationalize their operations.
Euh said he let Kookmin Bank cut the number of vice presidents to 10 from 13 last year, along with a 20 percent reduction in the number of directors at KB Financial Holding.
The chairman also said KB Securities will, for the first time in Korea, let a Chinese bank hold a stake as agreed in the recently signed non-binding MOU. The securities firm will also expand its investment banking role, while KB Life Insurance will reduce the sale of bancassurance and instead expand the sale of its life insurance products by expanding the number of its financial counselors.
He said the group's financial structure will improve this year with profits returning to a normal level. During the first half, the group plans to sell 2.5 trillion won worth of its own stocks in the form of swaps or others, which will expand its capital from the fourth quarter, helping the group consider M&As. Euh also said KB Financial would not be interested in taking over Woori Bank.
KB Financial will go on to conclude a strategic alliance with Standard Bank of South Africa in the second half and exchange a 1 percent stake with each other. The South African bank is the largest in Africa with operations in 17 countries in Asia and Europe and is listed on the South African stock exchange.
The time may be right for Korean firms to advance into South America and Africa, but there is not enough information on the countries in those regions, which is why KB Financial will spearhead their advancement by providing information on investment opportunities in those regions by forging strategic alliances with local financial institutions.
He said Kookmin Bank will try to secure more college students as customers by setting up 48 banking outlets called "Rock Star" branches near Ewha Woman's University and Sookmyung Women's University campuses, segregated special small banking outlets, pointing to what banking will likely become in the future.
The chairman predicted that brand new banking outlets to be serviced by social networks such as Facebook and Twitter in a smart-phone environment will be in business in the near future.nw