KB boosts BIS ratio through fundraising
By Park Hyong-ki
KB Financial Chairman Yoon Jong-kyoo
KB Financial Group said Friday that its BIS capital adequacy ratio is expected to rise to 15 percent from 14.83 percent after it issued 400 billion won ($350 million) in hybrid bonds to institutional investors.
Last month, a source with knowledge of the situation told The Korea Times that the group was planning to issue the bonds to boost its capital base.
This was to “better take care of and manage” the group's BIS ratio, which stood at 14.6 percent as of the end of December 2018, the source added.
“KB's issuance of the hybrid bonds was aimed foremost at improving its BIS ratio and boosting market trust in the group's finances,” said a KB Financial spokesman.
The group initially sought to raise 300 billion won. But due to growing institutional demand, it issued 5-year and 10-year bonds worth 400 billion won in total, it said in a press statement.
KB's ratio remains above the regulatory standard of 12 percent. The higher the ratio, the stronger and healthier they are against shocks from financial crises. Financial companies will be able to protect themselves, as well as their customers.
The fundraising came amid the Basel Accord's adjustments to its risk framework, requiring financial companies to maintain a stronger capital base.
Also, the group could use some of the funds it raised from institutional investors to pursue acquisitions of non-bank assets, the source said.
KB Financial Group Chairman Yoon Jong-kyoo said in a shareholders meeting in March that the group will seek to acquire assets such as insurance in an effort to boost its non-bank business and edge over Shinhan Financial Group.