KB Kookmin Bank Resolves to Acquire 67% Stake in Indonesia's Bukopin Bank

Securing Stable Management Control Over Two-Thirds Without Additional Failing Bank Acquisitions
Lowest Investment Price Among Indonesian Bank Acquisitions in the Past 5 Years
Establishing a Growth Foundation for an Indonesian Comprehensive Financial Group Through Affiliate Collaboration

[Asia Economy Reporter Kangwook Cho] KB Kookmin Bank announced on the 20th that it resolved at the board meeting held on the afternoon of the 16th to proceed with the additional acquisition of shares in Bank Bukopin, a mid-sized Indonesian bank (securing up to 67% of shares to become the largest shareholder).

A KB Kookmin Bank official said, "There were many difficulties in the acquisition negotiations due to movement restrictions caused by the novel coronavirus disease (COVID-19) and caution regarding foreign capital acquiring management rights," but added, "This share acquisition deal will secure a stable stake of more than two-thirds without paying a management premium, with active cooperation from local financial authorities (OJK) and Indonesian government agencies."

The Indonesian financial industry, in particular, has very high entry barriers for foreign capital in banking, and the shareholding limit for foreigners in local banks is 40%.

The official said, "With the cooperation of OJK, KB Kookmin Bank will be able to hold up to 67% of Bank Bukopin's shares by the end of August by simplifying the management approval process without additional acquisition of non-performing banks," adding, "This additional share acquisition is significant as it is practically the first case of acquiring management rights of an overseas listed bank of a certain scale." He also added, "In terms of investment price, it is expected to be confirmed at the lowest level among Indonesian bank mergers and acquisitions in the past five years."

Bank Bukopin is a mid-sized bank with an extensive operational network across Indonesia, including 412 branches and 835 ATMs. Traditionally, it has secured a customer base focused on MSMEs through pension loans, cooperative member loans, and SME loans. It holds a stable market position as the only BUKU3 bank with government shareholding, indicating abundant potential capabilities. KB Kookmin Bank plans to develop Bank Bukopin's retail strengths by integrating systematic risk management know-how and advanced digital capabilities after acquisition.

If this share acquisition deal is successfully completed, KB Kookmin Bank expects to establish a growth foundation as a "comprehensive financial group" in Indonesia together with KB Insurance, KB Card, and KB Capital, which have already entered or are planning to enter the local market. It is also expected to significantly contribute to restoring market trust in Bank Bukopin, which is experiencing liquidity outflows due to COVID-19 and other factors, and to alleviate customers' anxiety.

KB Kookmin Bank became the second-largest shareholder by acquiring a 22% stake in Bank Bukopin in July 2018. Since then, it has focused on preparing plans for transferring capabilities mainly in risk management, retail and digital banking, and IT sectors, while keeping an eye on opportunities to secure the largest shareholder status including management rights. This additional share acquisition is scheduled to be completed by the end of August.

This content was produced with the assistance of AI translation services.