Largest Financial Group

 

KB Financial Group is expected to become the country’s largest financial group once again by taking over LIG Insurance Co.

The Financial Services Commission (FSC) has approved KB Financial Group's acquisition of LIG Insurance Co. on Dec. 24, ordering, “KB Financial Group needs to carry out the governance structure reform plan by March next year.”

As of the third quarter, KB Financial Group’s total assets including trust management amounted to 400 trillion won (US$362.88 billion), which was about the same with Shinhan Financial Group of 401 trillion won (US$ 373.78 billion). However, KB Financial will top the list in assets with 423 trillion won (US$383.74 billion) when it takes over LIG Insurance, whose assets totaled 23 trillion won (US$20.87 billion) as of the end of Oct. Also, its gap between the country’s third largest NH Financial Group of 313 trillion won (US$283.95 billion) and the fourth Hana Financial Group of 312 trillion won (US$283.04 billion) will widen even more.

The takeover will diversify KB's business portfolio which currently focuses on banking. The group is to beef up its non-banking business, expanding the asset ratio of the non-banking sector from the current 26 percent to 30 percent. Also, diverse synergy effects, including the use of KB Financial Group’s platform, are expected through taking over affiliates of LIG Insurance.

Moreover, it will diversify channels as well, such as lining up automotive financial products through developing compound automotive financial goods between LIG Insurance and KB Capital and cross selling between KB Life Insurance and LIG Insurance.

With KB Financial acquiring the US branch of LIG Insurance, the group is proceeding the procedure to acquire a license to operate as the US financial holding company from the US Federal Reserve Board.

However, the branch in the US was ordered to suspend business due to a lack of business funds by its financial supervisory authorities in March. As its losses exceeded 100 billion won (US$90.72 million), the branch is currently under investigation by the authorities.

KB Financial Group has repeatedly failed to take over a company, starting from biddings for Korea Exchange Bank in 2006 to Woori Bank, ING Life Insurance and Woori Investment and Securities Co. Many persons had expected that the FSC would not approve its acquisition by the end of this year as six months passed also at this time since the group concluded purchase contract with LIG Insurance.

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