Ministry’s exclusion of the lender from list of public agencies sparks debate


The government’s recent decision to exclude KDB Financial Group from the list of public corporations has paved the way for the lender to speed up its privatization project, financial sources said.

In late January, the Finance Ministry took the state-run financial group off the yearly list of public agencies. But the government’s policy, which has essentially allowed KDB Financial to push for a stake sale, is drawing mixed reactions from the market.

Proponents say the exclusion is a prerequisite for the group’s project to sell 10 percent of the shares held by the government by the end of 2012.

Earlier this year, KDB Financial chairman Kang Man-soo unveiled the stake disposal project, which will be carried out through the group’s planned listing ― or pushing for initial public offering ― on the stock market.

Public officials as well as Kang have already mapped out step-by-step procedures to sell the entire government-stake in KDB Financial over the next two years.

The plan includes a 10 percent stake sale by 2012, 30 percent by 2013 and the remaining 40 percent by 2014.

The Korea Finance Corp. holds a 90.3 percent stake and the Finance Ministry 9.7 percent in the financial group.

But worries are growing among opponents over the possibility that KDB Financial will lose its long-standing position allowing it to closely coordinate with policymakers according to market situations.

Over the past several decades, its flagship Korea Development Bank has played a significant role in funding a great number of enterprises and supporting the corporate sector’s advancing to overseas markets.

Whenever private financial companies have suffered difficulties, KDB was a pioneer in bailing out them in collaboration with financial regulators.

An official of the Financial Supervisory Service highlighted the changed situation that global regulators have put priority on the government and government agencies’ role in the market since the 2008 global financial crisis.

“Unlike taxpayers’ money-injected Woori Financial Group, I can find few convincible reasons for the KDB privatization plan,” he said.

Some analysts also argue that more sufficient research on the stake sale project is needed at the present stage.

As a move to bolster retailing banking, KDB Financial has reportedly made a preliminary contract with HSBC to take over the U.K.-based bank’s retail operations in Seoul.

Over the past few months, the financial group has been striving to acquire 11 retail branches of HSBC Korea.

Kang has vowed to buy a local bank as part of efforts to privatize the group and beef up its competitiveness.

In his New Year message to the KDB Financial staff, Kang said the group will “expand global networks” to become a leading bank in Asia and “revitalize the plan to sell shares” held by the government.

This year’s business policy of KDB Financial is drawing wide interest ― in terms of mergers and acquisitions, in particular ― as it failed to take over Woori Financial Group in 2011.

Meanwhile, aside from KDB Financial Group and Korea Development Bank, the finance ministry has excluded Industrial Bank of Korea from the list of public institutions.

By Kim Yon-se (kys@heraldcorp.com)