Foreigner stakes in KB Financial exceed 80% as chairman seeks 2nd term
KB Financial Group headquarters in Seoul / Courtesy of KB Financial Group
Foreign ownership in KB Financial Group has surpassed 80 percent for the first time since the holding company was established in 2008, as aggressive share cancellations and expanded shareholder returns continue to attract global investors, company officials said Friday.
The development has fueled speculation over whether strong backing from overseas shareholders could bolster Chairman Yang Jong-hee's prospects for another term after his mandate expires later this year.
As of Thursday, overseas investors held 80.12 percent of KB Financial's shares, equivalent to more than 284.1 million shares, according to the Korea Exchange. Its foreign ownership far exceeds that of its major peers, including Shinhan Financial (61.59 percent), Hana Financial (68.37 percent) and Woori Financial (45.28 percent).
Global investors' stakes in Korean banks largely faded after the 2008 global financial crisis, with ownership levels across the sector largely settling into the 40 to 60-percent range for much of the past decade.
The surge in overseas ownership has also drawn attention to the future of Yang, whose term ends on Nov. 12.
KB Financial Group Chairman Yang Jong-hee / Courtesy of KB Financial Group
Some market participants believe the group's shareholder base could prove supportive of management continuity, particularly given investors' focus on profitability and capital returns.
Their argument is bolstered by a recent string of reappointments across the sector. In March, Woori Financial Group Chairman Yim Jong-ryong, Shinhan Financial Chairman Jin Ok-dong and BNK Financial Chairman Bin Dae-in all secured second terms despite facing varying degrees of governance-related scrutiny.
However, the situation may be different for Yang as financial authorities vow to overhaul the governance of financial groups, including the stricter oversight of incumbent leaders' attempt to extend their terms.
With the Financial Supervisory Service (FSS) gearing up to introduce the much-awaited governance reform, Yang's reappointment in November could be affected as the proposed changes will likely strengthen the independence of chairman nomination committees and tighten board governance requirements.
"We are reviewing whether additional governance-related measures can be incorporated into the legislation," FSS Governor Lee Chan-jin told repoters late March. "The revised Act on Corporate Governance of Financial Companies, which reflects the proposed reforms, is being pursued with the goal of taking effect in October."
Others also caution that KB's growing reliance on overseas investors may leave companies more exposed to the influence of proxy advisers such as ISS and Glass Lewis. A shareholder base increasingly concentrated in foreign hands could also amplify the impact of swings in international market sentiment.
Foreigner interest in the banking sector has seen a revival since the launch of the government's value-up campaign in 2024, which sparked expectations that long-discounted Korean financial stocks could command higher valuations. As the country's largest financial group by both earnings and market value, KB Financial has emerged as one of the biggest beneficiaries.
The latest jump seems to have been driven in large part by the group's share cancellation program.
In April, KB Financial said it would retire 14.26 million treasury shares worth roughly 2.3 trillion won ($1.5 billion). It also announced an additional 600 billion won buyback-and-cancellation plan. By reducing the number of total shares in circulation, the move effectively increases the value of each remaining share, making the stock more attractive to investors.
"KB Financial is expected to post a net profit of 1.97 trillion won in the second quarter, up 15 percent from a year earlier on the back of steady loan growth and higher interest income," said Choi Jung-wook, an analyst at Hana Securities. "That would represent a record quarterly result."
Choi added that the FSS had already reduced the penalty imposed on KB Kookmin Bank over the Hong Kong H-share equity-linked securities (ELS) scandal to about 300 billion won, with further cuts still possible. The incident triggered heavy losses for retail investors after the Hang Seng China Enterprises Index plunged in 2024.
A lower-than-expected final penalty could allow KB to reverse a portion of the losses it had previously incurred to cover ELS-related costs, providing an additional lift to earnings.
Market watchers note that the rise in foreign ownership reflects confidence in KB Financial's earnings outlook and commitment to shareholder returns.
"Part of the foreign ownership increase reflects the reduction in outstanding shares following treasury-share cancellations, but overseas investors have continued to add to their positions even after accounting for that effect," a KB Financial official said.
"Foreign capital that began flowing into the stock in 2024 has remained remarkably stable, supported by the view that KB Financial's governance and shareholder-return policies are in line with global standards."