KB dives into overseas challenge

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KB dives into overseas challenge

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  • Hwang Young-key (57)
  • Chairman and CEO of KB Financial Group
  • Bachelor’s in international economics, Seoul National University.
  • Master’s in accounting and finance, London School of Economics
  • Ask people around you if they have an account at Kookmin Bank, or do any banking chores related to the company. About a half of them may say ‘yes,’ if you picked the right pool of people.

    The bank has nearly 25 million customers across the country, a half of Korea’s 50-million population and probably far more than a half of the nation’s adult population.

    The bank, once a small, obscure player in the local financial industry for decades since its inception in 1963, rapidly beefed up its presence through a series of mergers and acquisitions in the wake of 1997-98 Asian financial crisis to finally become Korea’s largest lender by assets.

    The bank last year even took a holdings group format under the name of KB Financial Group, armed with nine subsidiaries, including the bank itself, and a combined asset of 329 trillion won ($261.1 billion), more than 1,200 branches across the country and nearly 30,000 employees serving nearly 25 million customers.

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    Now the financial behemoth is set to go through another round of breakthroughs to achieve its next goal: becoming a global financial powerhouse catering to customers beyond Korea and all across Asia.

    Kookmin Bank was born in 1963 as a state-run lender aimed at providing financial support to the average Korean with minimum interest. But after privatization in 1995, the bank set out to strike a flurry of mergers and acquisitions with its often-bigger industry peers who were struggling in the wake of 1997-98 Asian currency crisis. The former state lender rushed to snap up Daedong Bank and Long-term Credit Bank in 1998 and Korea Housing Bank in 2001, a meaty takeover deal that finally made Kookmin the largest lender by asset in the country and one of the world’s 60 top lenders.

    The bank since then has kept the position of the nation’s top lender, achieving many firsts in the local banking industry. Even before the takeover of Korea Housing Bank, for the first time among the local financial institutions, Kookmin amassed total assets of 100 trillion won in 2001 and an annual net profit of more than 2 trillion won in 2005, also the first time among Korean financial companies.

    And the bank last year took a financial holdings group format with Kookmin Bank and eight other subsidiaries, joining a growing number of Korean banks that set up their own holdings group to better manage their sprawling businesses portfolios and increasing subsidiaries. Now under the name of “KB Financial Group” lie nine companies: its flagship unit Kookmin Bank; KB Investment & Securities, a stock brokerage house; KB Life Insurance; KB Asset Management; KB Real Estate Trust, a real estate development financier; KB Investment, a venture capital financier; KB Futures, a financial futures trader; KB Credit Information, a debt credit ratings and debt collection agency; and KB Data System, in charge of online solution systems and related services to Kookmin Bank and other companies.

    Now, based on its dominant presence and banking business know-how in Korea, the group is girding itself for a new challenge: going overseas. KB group is now aspiring to join the pantheon of the world’s leading financial groups, as Kookmin Bank is ratcheting up efforts to cement its presences in the banking markets in developing countries, especially in rapidly-growing central Asia.

    Kookmin Bank Chief Executive Kang Chung-won has long envisioned a blueprint to form an overseas business network connecting countries in the former-Soviet Union, Southeast Asia and China.

    In part of the plan, the bank earlier this year took over a 51 percent stake in Khmer Union Bank in Cambodia and renamed the local lender “Kookmin Bank Cambodia,” and is also seeking to buy shares in Bank Center Credit in Kazakhstan. Kookmin currently has a 30.5-percent stake in the Kazakhstan lender and is mulling a greater stake for the next two years.

    A quick rundown at the financial giant’s top executives list reveals a mix of the Seoul’s most prominent banking hotshots and those who have climbed their ways into the top from the very bottom of Kookmin Bank or the banks acquired by Kookmin in the past.

    At the center is Hwang Young-key, chairman and chief executive of KB Financial Group. The 57-year-old, ironically, was once a chairman of Woori Finance Holdings, KB’s archrival in the industry, from 2004 to 2007, before taking the top post at KB group in 2008.

    Hwang, a longtime executive at Samsung Group’s various subsidiaries through 1980s and 1990s, is well known for his charismatic leadership and outspoken manner. Famed for saying, “Doing things that may turn out wrong later is far better than doing absolutely nothing and playing safe,” he has stirred controversies within the industry by announcing in 2006 he would turn all of Woori Bank’s temp workers into regular workers, a move criticized by some of Woori’s industry peers that were faced with pressure to do the same.

    Now at the top post of KB Financial Group, Hwang is in his element again, announcing that KB would launch a series of takeovers in stock brokerage, insurance, or asset management to further beef up its presence.

    The move is also in line with the group’s efforts to diversify its portfolio beyond the traditional stronghold of banking unit, whose net profits account for nearly 96 percent of the group’s entire net earnings.

    “We will focus on resources aimed at beefing up the products and service capabilities of non-banking subsidiaries,” he said, reiterating a goal to make KB group one of Asia’s top 10 and the world’s top 50 financial institutions with total assets of 600 trillion won by 2013.

    Next in line is Kang Chung-won, the vice chairman of KB Financial Group and longtime chief executive of Kookmin Bank since 2004. Kang, who once worked for the Seoul branches of Citibank, Bankers Trust Group and Deutsche Bank Group, served as the chief executive at Seoul Bank from 2000 to 2002 before the bank eventually merged with Hana Bank in 2002.

    The soft-spoken 59-year-old is credited with Kookmin Bank’s strong performance and business practices that have kept the bank at the top position within the industry for years. Under his leadership, Kookmin managed to stay on the top of Korea Productivity Center’s National Customer Satisfaction Index for three straight years from 2006 to 2008, up from the 6th notch in 2004.

    He also spearheaded the lender’s efforts to establish a greater presence abroad, by opening a series of new overseas branches in countries like China, Kazakhstan, Vietnam, Ukraine and Cambodia for the past years.

    Kim Jung-hoe, the chief operating officer of KB Financial Group, was a longtime public servant who worked for the nation’s top financial authorities including the Bank of Korea and the Financial Supervisory Service from 1977 to 2003.

    As the FSS’s senior director, deputy governor and vice governor in charge of the banking sector through late 1990s and early 2000s, Kim witnessed and played a pivotal role in supervising the industry-wide shakeup at the local financial sector that went through intense restructuring in the wake of 1997-98 financial crisis.

    Kim Myung-han, chief executive of KB Investment & Securities, is in charge of the group’s rapidly growing stock brokerage unit, spearheading efforts to make the firm one of the top 3 stock brokerages by 2013.

    Kim, a seasoned investment financier who used to work for JP Morgan Chase and Deutsche Bank, took the position at KB Investment & Securities in April 2008 and helped the firm become one of the leaders in the local mergers and acquisition scene.

    Kim Seok-nam, the chief executive of KB Life Insurance, has vast experience in Korea’s insurance market, having worked for Samsung Life Insurance, Korea’s largest life insurer, and Meritz Fire & Marine Insurance for the past three decades.

    Cho Jae-min, the chief executive of KB Asset Management, is a globe-trotting financier who used to work for Credit Agricole Indosuez and Standard Bank in Hong Kong before serving the chief executive for Seoul-based Midas International Asset Management from 2000 to 2009. Kim Jeong-min, chief executive of KB Real Estate Trust, is a loyal Kookmin Bank fixture who has made his way to the top after joining the bank as a junior employee in 1970.

    Hong Se-yoon, chief executive of KB Investment, also made his way to the top at the venture capital company, which is expected to invest more than 350 billion won throughout this year.

    Jung Kyu-hyung, chief executive of KB Futures, is from Korea Housing Bank, which was merged with Kookmin in 2001, and is managing the firm’s increasingly expanding futures trading and related businesses.

    Yeo Won-sik, chief executive of KB Credit Information, has also risen from the bottom to the top, serving as Kookmin Bank’s vice chief executive in charge of retail banking before taking the post at KB Credit Information in March 2008.

    Jung Yun-keun, also a longtime Kookmin Bank loyalist, has served in various posts within the bank across the country before becoming vice chief executive in the private banking unit in 2004.


    *“Faces inside Korea’s conglomerates,” a regular weekly series about key figures in the nation’s major companies, will from now on also feature major figures within Korea’s giant financial groups. This week’s article will profile KB Financial Group, Korea’s largest financial group by assets.


    By Jung Ha-won [hawon@joongang.co.kr]
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