KDB expected to package Daewoo

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KDB expected to package Daewoo

Details of Korea Development Bank’s sales plans for KDB Daewoo Securities are expected to be decided during its board meeting next week, and industry sources say KDB will probably look to sell its entire 43 percent stake in the brokerage, as well as KDB Asset Management, in one package.

“We will proceed with the sale based on three principles: speedy sell-off, maximization of selling price and its contribution to the betterment of the local capital market,” a KDB official said.

Based on Monday’s closing price of 13,000 won ($11), the value of Daewoo Securities stake owned by KDB is around 1.8 trillion won, while its asset management firm, which used to be an affiliate of Daewoo Securities, is estimated to be around 600 billion won.

“An all-stake sale will be given a priority, but a partial stake sale - 30 percent and more - could also be considered depending on market conditions,” a senior Financial Supervisory Service official said.

KDB Daewoo Securities shares are still up more than 30 percent this year, but have also come down around 28 percent from a peak reached in late April.

KB Financial Group and China’s Citic are said to be interested in Daewoo, with the former particularly motivated after failing to buy Woori Investment & Securities, which was acquired by Nonghyup Financial Group and re-named NH Investment & Securities.

The sale of Daewoo Securities comes at a time when local commercial lenders are struggling to make profits with the key interest rate at a record low. The low rate has deteriorated net interest margins, a key measure of local banks’ profitability.

But securities firms have seen robust sales growth as local money flooded the markets in search of higher returns, helping firms see a jump in brokerage fees.

KDB Daewoo’s net profit for the first half of this year is estimated at 229.4 billion won, up more than 130 percent from the 98 billion won posted during the second half of 2014.

“We expect great synergy with Daewoo Securities,” said a KB Financial official. “Once the buyout process begins, we will seriously consider it.”

According to local media reports, KB Financial has already poached a number of senior managers from Daewoo, seeking to use their talents to learn more about the brokerage as it prepares for a buyout.

KB Financial Group is widely seen as relying more on traditional commercial banking businesses, while its rivals, such as Shinhan Financial Group, have managed to develop more diverse business portfolios.

If KB Financial acquires Daewoo Securities, it will own the country’s largest brokerage firm in assets, at 4.8 trillion won

NH Investment & Securities, the current No. 1, has an estimated asset size of 4.4 trillion won.

Korea Investment Holdings, which owns Korea Investment & Securities and Kyobo Life Insurance are also said to be interested in Daewoo.

KDB Daewoo Securities, which had been a unit of the now-defunct conglomerate Daewoo Group, was acquired by the Korea Development Bank back in 2000 in the aftermath of the Asian financial crisis in the late 1990s.

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]
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