Banks All-Out to Own Brokerage Houses
By Na Jeong-ju
Staff Reporter
Korean banks are stepping up efforts to own brokerage houses ahead of the implementation of the Capital Market Consolidation Act scheduled for 2009.
Industrial Bank of Korea (IBK) is considering creating a brokerage unit or acquiring an existing securities firm in a bid to expand its non-banking businesses, the bank said Wednesday.
On Tuesday, IBK President Kang Kwon-seok said the lender may set up a securities firm in line with the government's plan to ease regulations for the creation of new brokerages.
``We are considering various ways to advance into the securities market,'' an IBK official said. ``We will either set up a securities firm or take over an existing one. A decision will need weeks of deliberation.''
The official said owning a securities firm matches the bank's vision of becoming a comprehensive financial services provider that has strength in both banking and non-banking areas. In the long term, the state-run bank seeks to advance into developing markets in the world, he said.
On Tuesday, the Financial Supervisory Service said it is considering removing the entry barrier for the securities market in a bid to promote the consolidation of the capital market. The regulator said the barrier has raised the price of existing firms, obstructing mergers in the market.
Kookmin Bank, the country's largest lender, is reportedly in talks to take over management control of Hannuri Investment & Securities, a Seoul-based small brokerage focusing on corporate-oriented services. The Maeil Business Daily reported that Kookmin is in a final stage to buy Hannuri, citing industry sources.
Kookmin officials declined to confirm the report, citing confidential agreements.
``We cannot confirm the report. But I think the report went a bit far,'' a Kookmin spokesman said. ``Hannuri is one of brokers we are contacting,'' he said.
Kookmin has been contacting a number of brokerages to find out a potential merger target.
``Setting up a securities unit is very crucial for the bank's future,'' Kookmin Vice President Kim Ki-hong said. ``If there is an opportunity to purchase a good securities company, we want to grab it. However, nothing has been decided yet.''
Hannuri is 33.5 percent owned by J.D.K Investment of the United States, and has an equity capital of 110 billion won. Earlier this month, the bank dropped its bid to take over KGI Securities, citing a soaring bid price.
Nonghyup Bank, a state-owned lender, also said it has signed a business cooperation agreement with NH Investment & Securities. It plans to buy more than 3 million shares of the securities firm soon to become a strategic business partner.