Kookmin Shares Up on Report of Kazakh Stake Buy

Shares in South Korea's Kookmin Bank rose more than 2 percent after a local report said it is buying up to half of Kazakhstan's No. 6 bank, CenterCredit, for 1 trillion won (US$1 billion).

Kookmin declined to confirm the report, repeating that it was looking at Kazakhstan for expansion via stake purchases in banks or other options but that nothing in detail has been determined.

Analysts welcomed the reported deal, which would mark a step forward in Kookmin's effort to become a regional player and reduce reliance on interest income.

"Banks should grow their non-banking business or go abroad. In that regard, the reported purchase is positive," said Han Jeong-tae, a banking analyst of Hana Daetoo Securities. "Other banks will follow suit, although questions remain over their ability to run and grow the foreign bank and create synergies."

The Maeil Business Newspaper cited unnamed regulatory and banking sources as saying that Kookmin will sign an agreement soon to buy a 30 percent stake in the Kazakhstan bank for 600 billion won from its top shareholders.

Under the contract, Kookmin could exercise an option to increase its ownership to 50.1 percent by spending an additional 400 billion won three years later.

Speculation about a takeover by a foreign player had sent shares in CenterCredit higher in mid-January, although the bank denied the rumors at the time.

The deal, if it goes through, would be Kookmin's first major cross-border acquisition after a consortium including Kookmin bought a controlling stake in Indonesia's sixth-largest lender, PT Bank Internasional Indonesia in 2003.

In November, retail-heavy Kookmin acquired unlisted domestic brokerage Hannuri Investment & Securities for $290 million, in a move to boost investment banking and non-interest income.

Kookmin saw its $7.3 billion deal to buy Korea Exchange Bank (KEB) from U.S. private equity house Lone Star scrapped in 2006 because of protracted legal proceedings surrounding the investment fund in South Korea.

HSBC Holdings agreed to buy 51 percent of KEB from Lone Star for $6.3 billion last year, hinging on regulatory approval.