Kookmin Bank's Expansion into Indonesia Shocked by 'Ppeongtwigi' Compensation Lawsuit... Sued for 1.6 Trillion Won

Indonesian Bank Bukopin's Second Largest Shareholder Files 1.6 Trillion KRW Compensation Lawsuit
Kookmin Bank "Will Begin Legal Review Immediately Upon Receipt of Complaint"

[Asia Economy Reporter Park Sun-mi] KB Kookmin Bank, which has been praised for its "successful entry into Indonesia" through the acquisition of Bank Bukopin, has unexpectedly become embroiled in a large-scale lawsuit. The amount claimed in damages alone is around 1.6 trillion KRW, double the 800 billion KRW capital of Bank Bukopin.

According to the Financial Supervisory Service disclosure system and Kookmin Bank on the 26th, the Bosowa Group, the second-largest shareholder of Bank Bukopin, filed a damage claim of 1.6295 trillion KRW against Kookmin Bank and the Indonesian Financial Services Authority (OJK). The Bosowa Group argues that Kookmin Bank's acquisition of management rights of Bank Bukopin violated local Indonesian laws and regulations, and that they must compensate for the resulting financial damages (such as stock acquisition costs) and non-financial damages (such as loss of time and market trust).

Last August, Kookmin Bank became the largest shareholder by acquiring 67% of Bank Bukopin's shares with the support of local financial authorities. The total investment was about 400 billion KRW. The Bosowa Group, which was the previous largest shareholder, saw its stake reduced to 11.7% due to Kookmin Bank's participation, becoming the second-largest shareholder.

At that time, OJK supported excluding the Bosowa Group from management and allowing Kookmin Bank to acquire additional shares to save Bank Bukopin, which was on the brink of a "bank run" crisis. Normally, if a foreign bank wants to acquire more than 40% of a local bank's shares, it must also take on one additional failing bank, but OJK made an exception for Kookmin Bank's acquisition and merger (M&A). As a result, Kookmin Bank became the first foreign bank to secure management rights of a local bank without having to take on a failing bank.

Kookmin Bank believes that the Bosowa Group, politically aligned with the opposition party, filed the lawsuit against the government and authorities after losing the largest shareholder position to a foreign bank. Previously, the Bosowa Group filed a lawsuit against OJK at the Jakarta court regarding Kookmin Bank's acquisition of Bank Bukopin, and the court recently ruled in favor of the Bosowa Group in the first trial.

A Kookmin Bank official stated, "We have not yet received the complaint, but once it is received, we will review it legally and respond accordingly," adding, "Since the Bosowa Group's lawsuit is mainly based on conflicts between the local government and companies, even if the lawsuit proceeds, there is no possibility that Kookmin Bank's acquisition of Bank Bukopin will be reversed." Kookmin Bank also considers the damage claim amount, which is twice the capital of Bank Bukopin, to be unreasonable.

An industry insider familiar with local circumstances said, "Since lawsuits in Indonesia take more than two years to resolve, the Bosowa Group likely filed the maximum amount initially to increase pressure on OJK and Kookmin Bank."

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