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| Employees of Bank KB Bukopin work at one of the bank's branches in Indonesia. Courtesy of KB Kookmin Bank |
By Anna J. Park
KB Kookmin Bank might need to inject additional capital into its Indonesian subsidiary, Bank KB Bukopin, as the Southeast Asian country's financial authority urged Seoul's Financial Supervisory Service (FSS) to cooperate on reducing the Indonesia-based bank's debts.
According to the financial industry, Tuesday, the Indonesian financial authority has stressed the need to get rid of the subsidiary bank's bad loans, calling on the Korean financial supervisory agency to discuss the matter. An FSS official explained that the Indonesian financial authority has asked for a capital increase on the part of KB Kookmin Bank to normalize Bank KB Bukopin's management.
Regarding such calls, KB Kookmin Bank said that the bank is currently looking closely into its Indonesian subsidiary's financial statements and situation to see whether it needs a further capital increase.
"As of now, nothing has been specifically determined as to the capital increase plan," an official from KB Kookmin Bank told The Korea Times, Tuesday. "Currently, the bank is closely examining the situation."
Recently, KB Financial Group's key management officials, including Co-Vice Chairman Lee Dong-cheol and financial group CFO Seo Young-ho, made a business trip to Indonesia to carry out a due diligence audit on the subsidiary bank. Key officials are also planning to make another visit to the country next month.
After KB Kookmin Bank acquired a 22 percent stake in Bank KB Bukopin for 116.4 billion won ($90 million) in 2018, the Korean bank became the major shareholder of the Southeast Asian bank by increasing its stake to 67 percent by 2020. So far, KB Kookmin has injected more than 813 billion won into the subsidiary. If it decides on the further capital increase this time, more than 1 trillion won ($770 million) will have been poured into the bank.
Despite the seemingly endless money injections into the subsidiary, KB Financial Group Chairman Yoon Jong-kyu expressed his full support, saying that the group purchased the Indonesian bank knowing that it's a bad bank and its management environment has worsened more than expected amid the pandemic.
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