By Kang Seung-woo
Staff reporter
Despite his reputation as a friend of President Lee Myung-bak, analysts are taking a wait-and-see attitude withholding any immediate reaction about the nomination of Euh Yoon-dae as chairman of KB Financial Group.
They say that filling the vacancy is a good thing, clearing up uncertainty about the future of Korea's leading bank, while believing that Euh's relationship with Lee may help him if he pushes KB to take over the government's controlling stake in Woori Bank when it is privatized. But some say this sort of move may turn out to be ill-advised.
"Appointing the chairman itself is a good sign for the group at a crucial juncture because the absence of a boss has stopped strategic decision-making," said Ku Yong-uk, a senior analyst at Daewoo Securities. "Rather than evaluating him now, it is better for us to see how he will reorganize and lead the company first."
Euh, 65, has been working on a blue-ribbon committee to burnish Korea's overseas image. He was a professor at Lee's alma mater Korea University, and had been considered for the post of governor of the Bank of Korea, according to reports.
His appointment is subject to approval by a shareholders' meeting next month.
Kim Young-joon, head of equities at NH-CA Asset Management said, "The new chairman-to-be will supply investors with guidance and that should help ease the uncertainty."
Euh's appointment came after a series of setbacks befalling the banking group.
KB Financial's former head was forced to step down, while the head of its flagship, KB Bank, was sidelined from his attempt to take over the holding firm.
Euh said after being appointed that he wants to nurture KB Financial Group as a large financial firm and seek a merger with Woori Finance.
He also said that he was more interested in the state-run Korea Development Bank (KDB) than the Korea Exchange Bank (KEB), which are also up for sale.
However, the analysts said that any megabank deal may now be off the cards.
"I think Euh is the right one to pursue KB's globalization and mergers and acquisitions (M&A), but I am not sure if there will be any potential synergy if KB takes over Woori because both work in the same areas," said Jeon Hyo-chan, a research fellow at the Samsung Economic Research Institute (SERI).
"If KB wants to emerge bigger, it should go abroad."
Ku said it was not the right time to assess his intentions.
"What Euh said is that he means to beef up the group's size and nurture its non-banking sectors," he said.
Its eight affiliates excluding Kookmin Bank represent less than 10 percent of its net profits.
"Rather than deciding whether the takeover is right or wrong, we had better wait and see how he can create synergy via it."
Due to his relationship with the President, speculation that the government will try to exert its influence on the company has been looming among foreign investors.
"It is premature to conclude that he is government-friendly," Ku said.
"As for the foreign investors, it is no wonder they think there is a connection between them because they are familiar with the Korean situation and he was a close aide to the President."