FSC approves spin-off of KEB Card

The Financial Services Commission (FSC) yesterday approved a spin-off of Korea Exchange Bank’s credit card business, a positive sign for the possible early merger of KEB and Hana Bank, which KEB’s labor union opposes.

In a regular meeting, the commission gave approval for the spin-off of KEB Card, which will later merge with Hana SK Card. The spin-off of KEB Card is a meaningful step toward the early merger of KEB and Hana Bank, which the banks want to achieve by the end of the year.

Hana Financial Group will fully own KEB Card with 643.3 billion won ($634 million) in capital.

The separation of KEB’s card unit was preliminarily approved by the FSC in May and the bank invested 28 billion won in the split.

Last week, Hana Bank President Kim Jong-jun and KEB President Kim Han-jo said they agreed to speed up the merger of the two institutions. It had been 50 days since the early merger was suggested by Hana Financial Group Chairman Kim Jung-tai.

The banks have said that to ensure future growth, a merger should be completed this year instead of waiting until 2017, the date that Hana Financial Group initially set when it bought a majority of KEB’s shares in 2012.

But the two banks announced on Tuesday that they have decided to delay board meetings concerning the early merger due to objections from KEB’s labor union.

In another KEB shareholders’ meeting slated for Sept. 1, the bank will seek to immediately merge with Hana, said KEB in a press release.

When KEB Card and Hana SK Card are integrated, the new company’s assets will total 6 trillion won, accounting for 8.1 percent of the local card market and making it the sixth-largest credit card company.

KEB estimated the integration of the two card units will save the bank 160 billion won by reducing costs and increasing profits.

“Hana SK Card’s growth is one of the group’s key goals,” said an official at Hana Financial Group. “We will focus on growth of the card business by seeking synergy with [KEB Card].”

BY SONG SU-HYUN [ssh@joongang.co.kr]