KDB in dilemma over sales of insurance unit

KDB Life Insurance's headquarters in central Seoul / Korea Time file

By Kim Bo-eun

KDB Life, the insurance arm of the Korea Development Bank (KDB), has become a headache for the state-run lender as its attempt to unload the debt-ridden affiliate has hit a snag amid the worsening market environment.

The KDB will have to pay a fine if it doesn't sell KDB Life by the end of March as it acquired the life insurer in March 2010 through a private equity fund (PEF) it set up with Consus Asset Management. The PEF and its subsidiary hold over a 90 percent stake in the firm.

Under current regulations, a PEF is not allowed to own a financial services firm for more than 10 years.

KDB put the unit up for sale in September last year, and had intended on selecting a preferred bidder by the end of 2019 to push forward with the sale early this year.

Only a few PEFs applied in preliminary bidding in November, so KDB extended the deadline.

"The preliminary bid is still ongoing," a KDB official said Wednesday. "We will proceed with the sale as planned."

However, it is unlikely that KDB Life will have a new owner by next month due to the low level of interest in the small insurer ― it ranks 13th in terms of assets among life insurers.

If KDB fails to sell the affiliate it will be the first time that a fine is imposed, and with no precedents, it is unclear how much this will be.

"We are looking into the legal aspects of the matter, as the definition of the 10 year period is unclear," the KDB official said.

This is the KDB's fourth attempt to sell the life insurer since 2014.