KDB all-out to buy SC First branches

By Kim Jae-won

KDB Financial Group is looking to buy branches from SC First Bank and HSBC. The state-run company said Friday it is interested in acquiring 15 branches of SC First, which would broaden the retail base of its banking unit Korea Development Bank.

SC First has not reopened those outlets since the lender temporarily shut them this summer due to an all-out strike by the labor union.

“We would be happy if we could buy some branches from SC First. We need to increase our deposits to leap forward one step further,” said a high-ranking KDB Financial official on condition of anonymity due to the sensitivity of the matter.

Expanding its retail base is critical to KDB who is seeking to be privatized through an initial public offering. The company thinks that its value has been underestimated and wants to overcome this by equipping itself with a strong customer and deposit base.

This is part of KDB’s effort to grow as one of the top 50 world-class commercial investment banks by 2020. The company has tried to lure retail customers by launching new online services and allowing them to use automated teller machines (ATMs) at Korea Post without any fees.

But, SC First said the Korean unit of the British banking group Standard Chartered, has no intention of selling the branches, and will reopen them, though a timescale has not yet been fixed.

“We temporarily closed the branches due to the labor strike. Nothing has been decided on whether we will shut them permanently,” said a spokeswoman of the bank.

SC First closed 43 branches, about 10 percent of its total number during the strike against the management’s plan to implement a performance-based salary system. The bank reopened 28 after about 3,000 employees went back to work.

KDB is also in negotiations with HSBC over buying 11 retail branches from the London-based global banking giant, according to sources.

Both sides are discussing price and employment among other issues. One source familiar with the matter said that KDB would welcome talented staff from the lender.

“It’s definitely good if we can gain experienced employees through the merger.”

KDB is also expanding its presence overseas and plans to complete its acquisition deal of the biggest Uzbekistan lender from the Royal Bank of Scotland (RBS) next month.

The lender plans to merge its existing unit in the country with the RBS one and launch the merged bank at the end of next year, in a move to strengthen its foothold in central Asia.

In December 2010, KDB signed a stock purchase agreement for a controlling 82.35 percent stake in the local RBS unit. The deal is estimated to be worth around 20 billion won ($18 million).

RBS Uzbekistan, which manages some $23 million, operates foreign currency exchange and remittance services for global corporations in Uzbekistan.