KB Financial To Raise $2b For Loans, Takeovers

The company seeks to increase its dominance by acquiring its rivals.

KB Financial Group (KBF), holding firm of South Korea’ Kookmin Bank, is waiting for the right time to scale up its lending operations and acquisitions. Hwang Young Key, who joined KBF last September as Chairman, wanted to acquire rivals to make it one of Asia’s 10 largest banks within five years, reported Bloomberg.

However, KBF’s expansion plans are put on hold because of the global financial crisis, which has affected South Korean exports and propelled funding costs and bad loans at the country’s banks. As a result, it had to stall its plan to split its credit-card business, because of concerns over the bank’s ability to manage risks and raise funds as a stand-alone unit.

Now, encouraged by the good performance of Korea Exchange Bank, he seeks board approval to sell $2 billion of new shares to existing stockholders, to offer more loans and finance acquisitions once the economy recovers.

Mr. Key said: “I would probably use our strong capital base to make additional loans to our clients. If we have enough capital and there are acquisition opportunities in the market, we will be interested.”

Mr. Key is considering acquisition of Korea Exchange Bank, controlled by Lone Star Funds. “It’s an asset we have been interested in and we continue to be interested in,” he commented.