(Yonhap Interview) KB Financial eyes bank takeover after turnaround: chief

By Kim Soo-yeon
SEOUL, Aug. 15 (Yonhap) -- KB Financial Group Inc., South Korea's No. 2 financial
services company by assets, may consider taking over a domestic bank or a foreign
lender after the group becomes healthier, its new chief said Sunday.
"KB Financial Group is not just thinking about targeting a local bank. Once the
group becomes healthier, it may seek to acquire or merge with a foreign bank,"
Euh Yoon-dae, chairman of KB Financial Group, said in an interview with Yonhap
News Agency.
The 65-year-old, however, declined to elaborate on a specific foreign bank.
Euh, former head of the presidential council on enhancing the country's national
image, took the helm of KB Financial Group last month with pledges to boost
profitability and efficiency. He has set in motion a reform drive, eliminating
several business divisions.
He earlier described the group as "a patient suffering from obesity," pointing to
the group's urgency in reforming itself. In the second quarter, the group posted
the first net loss since the holding company was created in September 2008.
The group's low profitability and inefficiency prompted it to decide not to bid
for a major stake in Woori Finance Holdings Co., which the government is seeking
to privatize.
The chairman said it would take two or three years for the group to become
healthier, but once the group regains its vitality, it will be ready to push for
aggressive takeovers of both a bank and a non-banking institution.
The South Korean banking sector is poised to undergo sea change as the potential
sale of Woori Finance is expected to unleash a wave of mergers and acquisitions.
The government plans to put the state-run Korea Development Bank in private
hands, and U.S. buyout fund Lone Star Funds has resumed its process of selling
Korea Exchange Bank.
"Over the long haul, when KB Financial becomes a sound financial group, different
strategies could come out," Euh said, adding that the group first plans to make
efforts to boost its falling share prices in a bid to maximize shareholders'
value.
Euh said he plans to buy treasury stocks within three or four months as part of
such efforts.
As part of the group's reform drive, KB Financial, which controls top lender
Kookmin Bank, is also seeking to diversify its bank-focused business structures.
KB Financial Group has nine affiliates under its wing, including the banking unit
and the securities operation, but the group's non-banking affiliates contribute
less than 10 percent to its total earnings.
"To meet ever-changing customers' needs, we should provide diverse financial
services. I think beefing up the brokerage, life insurance and investment trust
businesses will help make the group more competitive," Euh said.
"The group will seek to buy a brokerage house if a potential company is up for
sale with the proper price, but organic growth will be first sought."
The chairman added that KB Financial Group will prepare for a merger between its
futures unit, KB Futures Co., and the brokerage affiliate, KB Investment &
Securities Co., as the country's law on capital market deregulation allows
securities firms to deal with the futures business.
The group will tap into the consumer credit lending business through either
creation or a takeover in line with the government's drive to support low-income
families.
Meanwhile, Euh played down a possibility that the group's envisioned credit card
unit would establish a joint venture with telecom giant KT Corp.
The group has decided to spin off its credit card business from Kookmin Bank with
an aim to establish a credit card unit, tentatively named KB Card, in the first
quarter in 2011.
"For now, KT does not seem to have an interest in making a joint venture in doing
card business, but we have discussed bolstering cooperation in various fields."
Convergence services between telecom and finance are becoming a new trend as
South Korean mobile carriers are venturing into finance and credit card
businesses in an effort to find fresh sources of growth. Top player SK Telecom
Co. purchased a 49-percent stake in Hana Financial Group Inc.'s card unit, and KT
is scurrying to make inroads into the telecom-credit card convergence business.
sooyeon@yna.co.kr
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