Korea Development Bank eyes deals in Southeast Asia, Egypt

KDB chief says bank is targeting overseas investment and is in talks over mergers or acquisition in Southeast Asia, African and Middle East, with possible deals in Egypt

Korea Development Bank is in talks over a number of deals with Southeast Asia-based banks, including an estimated $1 billion stake purchase, and is reviewing targets in Egypt, its chief executive said.
The state-run bank is looking outside the saturated domestic market to build global bridgeheads with an emphasis on overseas mergers or acquisitions.
"We are looking at sizeable banks in several countries ... There are a few (deals) in the last stages of negotiations," Min Euoo-sung said in an interview with Reuters on Tuesday.
However, he did not offer many more clues on the talks, citing confidentiality.
"We have to acquire a bank to gain a foothold before ten ASEAN (Association of South East Asian Nations) members are united," Min said.
The potential deals represent the latest effort by Min to pursue acquisitions abroad after KDB pulled out of bidding for an estimated $900 million stake in Thailand's Siam City Bank early last year, and failed to buy more than 25 per cent stake in Min's former employer Lehman Brothers.
"That was too bad," Min recalled the failed attempt on Lehman stake purchase.
But he needs the bank's only shareholder, the South Korean government, on his side through any transaction.
"We won't have any problem with the Volcker rule this time; we have reduced the asset size a lot," Min said of one of the reasons KDB walked away from the Siam City Bank bid.
He was referring to the U.S. rule named after former Federal Reserve chairman Paul Volcker that prohibits banks from trading in securities, derivatives and certain other financial instruments and bans their investing in or sponsoring of hedge funds or private equity funds.
LARGE-SCALE INVESTMENT BANK
Min clinched a small deal for an 82.35 per cent stake in Royal Bank of Scotland Plc's Uzbekistan operation, reportedly worth around 20 billion won, in December last year.
The next target regions after Southeast Asia will be the Middle East and Africa.
"Egypt is possible. (We are) keeping a close eye on the market," the 56-year-old veteran investment banker said, adding that KDB was studying a few targets it had yet to approach.
KDB, whose parent plans to float its shares this year in the domestic market, would be able to establish local funding bases via acquisitions to meet the growing need for fresh investment in social infrastructure across Asia, Min added.
"We are spreading a net now to fish later ... I'm envisioning a large-scale investment bank such as Deutsche Bank AG ... There's no change to our expansion strategy and we'll actively precede with M&A plans," he said.
Compared with domestic rivals such as KB Financial Group and Shinhan Financial Group, KDB has a relatively small retail branch network in the country.
The bank was in discussions with the government to start a credit card business as part of its plan to secure its deposit base and transform into a commercial bank.
Min, formerly an investment banker with Morgan Stanley and now-defunct Lehman Brothers, joined KDB as the first senior executive without a public sector background.
Now Min is working to privatise KDB, which helped fund South Korea's rise to Asia's fourth-largest economy from the rubble of a war in just over a generation.
As part of the privatisation process, KDB's initial public offering plan may take longer to fulfill since the government halted last December the country's biggest-ever financial sector privatisation of Woori Finance Holdings.
"The government's earlier position was to finish Woori and then move on to KDB, but now we will see what the government decides," Min said.
His term at KDB ends in June but the passionate, outspoken Min said ongoing efforts to handing the bank over to the market from government hands must go on.
"I laid the groundwork to make a hardware structure. We are now building software to secure the competitiveness."
KDB aims to complete the sale of the country's top logistics firm Korea Express Co Ltd by June, although its creditors, which include KDB, have yet to decide on a specific sale method.
A number of local conglomerates including POSCO were interested in bidding for stakes in Korea Express, Min said.
The world's No.3 steelmaker has made public its interest in a $1 billion stake in Korea Express.
Meanwhile, the bank would restart the stalled sale of Daewoo Shipbuilding & Marine Engineering Co Ltd but was waiting until the sale of Korea Express was completed, he said.