On the Hunt for M&A Targets

Chairman Euh says KB Financial in search of life insurance firm to beef up non-banking sector

Chairman Euh Yoon-dae of KB Financial Group said the group is interested in taking over a life insurance firm during a media meeting held at the Westin-Chosun Hotel in Seoul on July 5 on the occasion of the anniversary of his first year as head of the financial group.
He said the spinning off of KB Card cut non-banking sector revenue by some 20 percent, and to recoup the loss the group plans to take over a life insurance firm, while spurring the growth of KB Life Insurance to cover at least 10 percent of the revenue loss.
The top manager said the group tried to acquire up ING Life, learning that it was looking for a new owner, but they were told that the life insurer was not for sale. But, he said, the group will continue to try to get the company if it is put on the market. Euh said KB Financial is interested in taking over Woori Investment and Securities, but financial authorities prefer to sell Woori Financial Group as a package to an investor, rather than breaking it up and selling the parts.
Euh also said the group intends to take over a savings bank in the days ahead to expand the banking sector of the group. He said the financial authorities want Kookmin Bank's stake in KB Financial Holdings by September this year, but he said he has to see how the stock market is doing at that time in order to sell the stake to maximize their return. He has been in contact with foreign investment banks including Goldman Sachs and Deutsche Bank and heard that their foreign investment funds are expected to converge on the emerging Asian financial market in the fall. He said he thinks that it will be the right time to sell the shares then although he has yet to talk things over with other group executives.
Euh said the group and Kookmin Bank will each have an executive in charge of risk management in a bid to keep the risky financial assets at minimum levels as well as minimize losses from the assets.
Since his arrival at the group on July 13, 2010, Euh focused on the reform of the group's structure. He managed to get 3,244 officers and staff to take honorary retirement packages from Kookmin Bank while strengthening the non-banking sector of the group. In order to cut the share of the non-banking sector's revenue, the group spun off KB Card in March and merged KB Investment Securities and KB Futures. He said he worked hard to make the group's operations transparent and cut expenses when outlining some of the greater achievements during his initial year on the job.
Kookmin Bank has successfully attracted young customers by kicking off a long-term savings installment deposit account tied with social network services for those in their 20s and 30s. The account allows deposits and withdrawals from 10,000 won up to 300,000 won for free at any time. In the five months since the launch of the financial product, the number of accounts has grown to 205,427. Officials of the bank said it is the high interest rate that attracts young people, with the number of accounts in excess of 100,000 in the first month of its launch.
Another popular deposit account has been the KB Smart Installment Savings Account, which matched the savings account with a smart phone and pays 4.5 percent interest annually and, if bonus interest is added, up to 4.7 percent per year. It can be opened with more than 1 million won.
KB Financial Group is Korea's leading financial institution with the largest customer base and the most extensive branch network in the country. With total assets exceeding US$313 billion, the group wields solid capital prowess and enjoys strong brand loyalty. As of June 2011, the group has nine domestic subsidiaries in banking, credit cards, securities, life insurance, real estate trust, venture capital, credit information and data systems and four overseas subsidiaries in Hong Kong, England, and Cambodia.
KB Financial Group was established in September 2008 with extensive stock transfers from major subsidiary companies. The group's establishment was made to better deal with fundamental changes in the financial markets at home and abroad such as the rapid globalization of financial services, the declining profitability of traditional banking operations, new industry regulations and an increasing demand for comprehensive financial services.
The group's long-term strategy is to solidify its group infrastructure into a growth base, strengthen comprehensive financial service competencies and cultivate future growth engines.
By expanding its non-banking operations and thus diversifying its financial products and services, KB Financial Group continues to improve customer satisfaction, maximize synergy creation and increase its corporate value. nw

Chairman Euh Yoon-dae of KB Financial Group.

Photo on Courtesy of KB