Korea eyes KDB Financial IPO in 2012: regulator

Korea will seek to list shares of state-run KDB Financial Group Inc. this year, the financial regulator said Thursday, in a move that is expected to accelerate its privatization.

Launched in October 2009, KDB Financial is a financial holding company whose flagships are the Korea Development Bank (KDB) and Daewoo Securities Co., the nation's No. 2 brokerage house by market cap.

"KBD and Korea Finance Corp. have started preparing for KDB Financial's initial public offering (IPO)," said Financial Services Commission chairman Kim Seok-dong.

Kang Man-soo, chairman of KDB Financial, told reporters in a separate meeting that the government is expected to sell its 10-percent stake in the state-run group this year, mostly to domestic institutional investors.

Kang, however, expressed skepticism about selling shares to foreign investors.

"Domestic institutional investors can manage a 10- to 30-percent stake (in KDB)," he said. "But there should be much discussions about how much of KDB shares can be sold to foreign investors, because of public sentiment (toward foreign investors)."

Under local law, the government, which owns 100 percent of the group, should start to reduce its stake no later than May 2014.

Kim's remarks come alongside views that the privatization, a major initiative of President Lee Myung-bak, may hit a snag when the next administration steps in following the December presidential election.

The Lee administration has pushed to privatize the banking group but has seen little progress after KDB Financial's attempt to take over another state-run financial holding firm Woori Finance Holdings Co. fell through in June due to strong public criticism.

KDB Financial, which largely focuses on corporate and investment banking, initially planned to go public after completing its acquisition of Woori Finance in a bid to bolster its retail base ahead of the planned privatization.

Kang, a former finance minister who took the helm of KDB Financial last year, said that the group will continue to seek takeovers at home and abroad as it expects to increase its branches of Korea Development Bank to around 100 this year and expand its deposit base.

"If there are opportunities for M&As, we will pursue them aggressively," he said.

Kang said talks with HSBC Holdings Plc to acquire the British company's 11 branches in Korea are "going smoothly" and will soon come to a conclusion, but he declined to go into details due to the sensitivity of the issue. (Yonhap)