KB Financial Group is planning to establish additional headquarters in Indonesia, Vietnam and Myanmar in order to expand its business in Southeast Asia.
The group has concentrated on Southeast Asian markets for two years. For example, KB Kookmin Bank acquired 22 percent of Bank Bukopin in July last year to become the second-largest shareholder in the 15th-largest bank in Indonesia. In addition, it is trying to obtain a banking business license in Myanmar in January next year and analyzing the Vietnamese market for effective market entry.
Likewise, KB Kookmin Card acquired Tomato Specialized Bank in Cambodia last year and a loan provider in Indonesia last month. Earlier, in 2017, KB Kookmin Card and KB Capital set up KB KOLAO Leasing in Laos to create synergy with KB Kookmin Bank.
The overseas business expansion is being led by KB Financial Group chairman Yoon Jong-kyu after KB Kookmin Bank’s investment in Kazakhstan failed in 2008. At that time, the bank acquired 41.9 percent of Bank CenterCredit (BCC) shares for US$851 million but the stock price of BCC plummeted and non-performing loans increased due to the global financial crisis and local real estate market recession in 2008. KB Kookmin Bank’s losses in Kazakhstan soared to 900 billion won until 2014, when the total net profit of the entire KB Financial Group was 1.28 trillion won. The chairman took office in 2014 and sold the shares to Kazakhstan’s Tsesnabank in 2017.
At present, KB Financial Group is planning to expand its business to cover advanced as well as developing economies in the long term by taking a leaf from the book of Japanese banks, which have done so for 150 years. According to the group, investment banking business is indispensable for its overseas expansion in that Japanese banks’ global profits are derived from advanced markets, such as the United States and Europe, in most cases. “Traditional investment banking business in those markets will not be easy but there are new niche markets such as aircraft finance,” the group explained, adding, “We have a high global credit rating, which means we are competitive enough in terms of procurement costs.”