Kookmin will become the second largest shareholder in KazakhstanÆs sixth largest bank, but is paying a hefty three times book value (compared with its own 1.25 times valuation) to enter the natural resources rich Central Asian region, where it hopes ôto secure future growth momentumö, according to a filing by Kookmin.
Regulatory approval from both Korea and Kazakhstan is needed before the deal can go ahead, while the purchase will be made on the local stockmarket during an undisclosed time period û which makes it unclear what price Kookmin will eventually pay. A local firm is advising Kookmin, whose share price dropped more than 5%, compared with a 1.6% fall by the benchmark Kospi index at the close of business.
Like other Korean banks, Kookmin is expanding overseas in order to diversify its revenue sources as domestic lending slows and as interest income margins shrink in a local market that has become more competitive ahead of the implementation of the Financial Investment Services and Capital Market Act next year. Already, rival securities firms have been allowed to woo customers away from traditional savings accounts with high-interest paying easy-access deposit products linked to the stockmarket.
According to the regulator, the Financial Supervisory Service, Korean banks earned less than 5% of their revenue from overseas operations last year. But that proportion is set to rise as banks follow their corporate clients overseas. Shinhan Financial Group and Hana Financial Group have opened units elsewhere in Asia; the former now has four branches in China, two in India and one in Vietnam as well as a joint venture. Kookmin was part of a consortium led by SingaporeÆs Temasek which bought a controlling stake in PT Bank Internasional Indonesia in 2003. Temasek is now being forced to sell its holding in order to comply with recent central bank regulations limiting foreign investors to owning no more than one Indonesian bank. Kookmin was not on the shortlist to buy its stake.
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