Korean Bank Intends To Sell Its Stake In Kazakh Bank CenterCredit
Korean Kookmin Bank intends to sell its stake in Kazakh Bank CenterCredit (BCC), Korea Times reports.
KB Kookmin Bank will sell its stake in a Kazakh bank that it acquired in 2008 after the Kazakh enterprise suffered huge losses.
The bank confirmed Sunday that it will discuss the sale of Bank CenterCredit (BCC) in Kazakhstan at a board of directors meeting this week.
The country’s top bank bought a 41.9 percent stake in BCC for 939.2 billion won in 2008 as part of a globalization strategy, on a positive outlook for the Central Asian country with ample resources and growth potential.
International Finance Corporation (IFC) under the World Bank Group participated in the deal as a joint investor. It holds a 10 percent stake in the BCC, for which KB provided a put option. KB promised to buy back its stake, but the put option expires next month.
However, BCC, which is among the top five players in the country’s banking sector, has incurred huge losses.
The global financial crisis hit the bank, which has been heavily engaged in the mortgage business. The value of KB’s stake in BCC fell even further when Kazakhstan devalued the tenge, the country’s currency, in 2014.
KB had to adjust the value of BCC several times, to 185.8 billion won in 2012 and finally to 1,000 won last year. It means KB virtually lost the 939.2 billion won it invested.
The huge loss led to resignation of KB Kookmin Bank CEO Kang Chung-won in 2010.
Local media reported that KB is likely to suffer further losses because the Kazakh financial regulator was demanding a capital increase under new regulations. The put option for IFC will incur further losses for KB, the media reported.
A KB spokesperson denied the report.
“It is true that we are proceeding with the sale of BCC, but the report about further loss is not true,” the spokesperson said. ” Put option will disappear when we sell the stake, and we have already reflected the loss from BCC in the books.”
After selecting a preferred bidder, the bank plans to sell its total stake within next month.