By Park Hyong-ki
KB Financial Group will issue hybrid bonds worth 400 billion won ($350 million) in May to increase its capital base in an effort to "better take care of and manage" its capital adequacy ratio, said a source with knowledge of the situation.
It is analyzing demand for the bonds, which hold a characteristic of equity and debt, from potential institutional investors.
The group's fundraising comes amid the strengthened Basel Accord and its plan for future nonbank acquisitions.
"Its top priority is increasing KB's capital base for the ratio. If KB makes a deal in the future, the ratio would drop," the source said.
KB Financial's BIS adequacy ratio stands at 14.6 percent as of December 2018, according to the Financial Supervisory Service.
This is above the regulatory standard of 12 percent for the country's financial holding groups. The higher the ratio, the stronger and healthier they are against shocks from financial crises. Financial companies will be able to not only protect themselves but also their customers.
The rules requiring them to maintain a stronger capital base have toughened in line with the Basel Accord's adjustments to its risk framework.
KB will be issuing the hybrid bonds as the market interest rates are low.
But the source reiterated that the group seeks to "pre-emptively" boost its ratio under the circumstances, and at the same time "manage" its finances for future deals, although it does not yet have clear targets.
KB Financial Chairman Yoon Jong-kyoo said in a shareholders meeting in March that the group will actively pursue acquisitions of nonbank assets such as insurance to edge over Shinhan Financial Group.
Shinhan Financial became the No. 1 financial holding company again as it posted a consolidated net profit of 3.16 trillion won in fiscal 2018, up 237.9 billion won, or 8.2 percent, from the year before.
Yoon said he forecast there would be a lot of insurance companies seeking to sell their stakes ahead of stronger accounting rules on reserves.
The group will also boost KB Securities' competitiveness to become the top brokerage, the chairman added.
KB Financial Group will issue hybrid bonds worth 400 billion won ($350 million) in May to increase its capital base in an effort to "better take care of and manage" its capital adequacy ratio, said a source with knowledge of the situation.
It is analyzing demand for the bonds, which hold a characteristic of equity and debt, from potential institutional investors.
The group's fundraising comes amid the strengthened Basel Accord and its plan for future nonbank acquisitions.
"Its top priority is increasing KB's capital base for the ratio. If KB makes a deal in the future, the ratio would drop," the source said.
KB Financial's BIS adequacy ratio stands at 14.6 percent as of December 2018, according to the Financial Supervisory Service.
This is above the regulatory standard of 12 percent for the country's financial holding groups. The higher the ratio, the stronger and healthier they are against shocks from financial crises. Financial companies will be able to not only protect themselves but also their customers.
The rules requiring them to maintain a stronger capital base have toughened in line with the Basel Accord's adjustments to its risk framework.
KB will be issuing the hybrid bonds as the market interest rates are low.
But the source reiterated that the group seeks to "pre-emptively" boost its ratio under the circumstances, and at the same time "manage" its finances for future deals, although it does not yet have clear targets.
 |
| KB Financial Chairman Yoon Jong-kyoo |
Shinhan Financial became the No. 1 financial holding company again as it posted a consolidated net profit of 3.16 trillion won in fiscal 2018, up 237.9 billion won, or 8.2 percent, from the year before.
Yoon said he forecast there would be a lot of insurance companies seeking to sell their stakes ahead of stronger accounting rules on reserves.
The group will also boost KB Securities' competitiveness to become the top brokerage, the chairman added.
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