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| The lobby entrance of KB Financial Group's headquarters in downtown Seoul / Korea Times file |
By Lee Yeon-woo
KB Kookmin Bank's plan to increase capital in its Indonesian subsidiary, Bank KB Bukopin, is proceeding smoothly following recent approval from Indonesian financial authorities. KB Kookmin Bank anticipates that this subsidiary will start generating profits by 2025.
According to the bank on Thursday, it is planning to inject 1.08 trillion won ($808 million) of additional capital into its Indonesian subsidiary to stabilize its operations. The Indonesian Financial Authority, Otoritas Jasa Keuangan (OJK), recently approved the capital increase of Bank KB Bukopin.
Of the total, 700 billion won will be contributed by KB Kookmin Bank, while the remaining 300 billion won will be sought from external investment. STIC Investment and Eugene Private Equity are participating in the project as financial investors, with Meritz Securities involved as a limited partner. The Indonesian subsidiary of KB Insurance will also take part in the project.
The capital increase is expected to be finalized within this month.
Market watchers view that Bank KB Bukopin has demonstrated its potential for growth in the market by successfully attracting investors in this latest financing round.
Bank KB Bukopin was classified as an insolvent bank when it was acquired by KB Kookmin Bank in 2018. Since then, it has recorded a significant deficit, reaching 802.1 billion won last year.
The participation of Meritz Securities, a major securities firm in Korea, in the capital increase can be interpreted as a strong endorsement for the Indonesian bank's growth potential.
KB Kookmin Bank has expressed confidence in the normalization of Bank KB Bukopin's operations. The bank expects a financial turnaround by approximately 2025, with a contribution to KB's return on equity (ROE) expected around 2026.
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